The semiconductor industry has been dominated by big names like Nvidia, but there are other players that have been overlooked. Tower Semiconductor (TSEM), SkyWater Technology (SKYT), and Semtech (SMTC) are three undervalued companies worth considering.
Tower Semiconductor, based in Israel, specializes in manufacturing integrated circuits (ICs) for various industries such as automotive, medical, and industrial automation. The IC sector is projected to reach $500.7 billion by the end of the year, with a compound annual growth rate of 6.22% until 2027. Tower Semiconductor’s market capitalization is just over $3 billion, and its shares trade at an undervalued multiple of 6X earnings and 2.13X revenue. Analysts rate the stock a moderate buy with a price target of $36.50.
SkyWater Technology, headquartered in Minnesota, is the only U.S.-owned pure-play silicon foundry. This is significant considering the disruptions in the global semiconductor supply chain caused by the Covid-19 crisis. With China’s overtures towards Taiwan, which dominates the foundry market, the risks to the global economy are high. SkyWater provides geopolitical confidence and trades at only 1.42X sales, well below the sector median of 3X. Analysts unanimously rate the stock a strong buy.
Semtech, based in California, supplies analog and mixed-signal semiconductors for a range of applications in consumer, enterprise computing, communications, and industrial markets. Despite some choppiness in 2023 and a slow start to the new year, Semtech has potential as connectivity and signal conditioning remain essential in various industries. The stock trades at a low multiple of 1.58X trailing-year revenue and is consistently profitable. Analysts also rate Semtech a consensus strong buy with an average price target of $29.70.
While the semiconductor industry may have its darlings, investors should consider these undervalued stocks that offer growth potential and relevance in vital market segments. Tower Semiconductor, SkyWater Technology, and Semtech present promising investment opportunities in an increasingly interconnected world.
The source of the article is from the blog papodemusica.com