In this article, we will look at the 7 beaten-down semiconductor stocks that Jim Cramer likes. If you want to explore similar beaten-down semiconductor stocks that are on Jim Cramer’s radar, you can also read Jim Cramer Likes These 3 Beaten-Down Semiconductor Stocks.
Analysts and investors are treading carefully as they are exploring growth areas in the semiconductor space. The semiconductor industry was one of the most heavily impacted industries by the COVID-19 pandemic. The global chip shortage dragged down the semiconductor industry and many other industries along with it. According to Deloitte’s 2022 Semiconductor Industry Outlook, the automobile industry reportedly lost sales of $210 billion in 2021 due to chip shortages. Regardless, Deloitte expects the global semiconductor industry to grow by 10% in 2022 and reach $600 billion by the end of the year. This growth is expected to be primarily driven by the increasing use of semiconductors in a variety of industries that are not limited to its typical end-markets such as electronic devices and automobiles.
Even though the semiconductor industry is in distress, stock market experts like Jim Cramer of CNBC’s Mad Money, see potential in the space. Jim Cramer identified which semiconductor names fit the GARP, or growth at a reasonable price, category. He shared his list of the semiconductor stocks he finds “enticing”, given that they have above earnings growth and price-to-earnings multiples, and are trading below their respective earnings growth rates. Here is what Jim Cramer thinks about the semiconductor space:
“I think there’s a sense that the chipmakers will get hurt as we head into the Fed-mandated recession…Plus all things tech have been crushed lately so to some extent these hardware plays are simply collateral damage. At these levels, I think a bunch of them have started to look pretty enticing. Obviously, others did too or they couldn’t have been so darn strong today, especially because they got hit with some very real negative price target cuts. When we ran our growth and valuations in the semiconductor cohort, we came up with seven names that passed the growth at a reasonable price or GARP test.”
While Jim Cramer is bullish on a set of semiconductor stocks, other semiconductor stocks that have received consensus Buy ratings from Wall Street analysts over the past three months include NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and QUALCOMM, Incorporated (NASDAQ:QCOM).
Our Methodology
The stocks listed in this article were mention by Jim Cramer in his recent program on CNBC. Along with each stock, we have mentioned the analyst and investor sentiment around it. We have also mentioned relevant metrics and growth catalysts that make the stock fall into the GARP category. We derived the hedge fund sentiment from Insider Monkey’s database which, as of Q1 2022, tracks more than 900 elite hedge funds.
7. Skyworks Solutions, Inc. (NASDAQ:SWKS)
Number of Hedge Fund Holders: 39
Skyworks Solutions, Inc. (NASDAQ:SWKS) manufactures semiconductors for applications in Radio Frequency and mobile communications systems. Jim Cramer thinks Skyworks Solutions, Inc. (NASDAQ:SWKS) has reasonable valuations and sees upside to its earnings growth. As of July 22, Skyworks Solutions, Inc. (NASDAQ:SWKS) has a trailing twelve-month PE ratio of 12.87 and is offering a forward dividend yield of 2.11%, which the company supports with its free cash flows of $1.02 billion.
Wall Street analysts are slashing price targets across the semiconductor sector. On July 12, KeyBanc analyst John Vinh cut his price target on Skyworks Solutions, Inc. (NASDAQ:SWKS) to $140 from $160 but reiterated a buy-side Overweight rating on the shares. The analyst said that Skyworks Solutions, Inc. (NASDAQ:SWKS) has an edge over its peers since one of its clients is Apple, Inc. (NASDAQ:AAPL). Demand for Apple, Inc. (NASDAQ:AAPL) products remains robust, while the Chinese smartphone market is declining, which is why the analyst trimmed his price target. On July 15, Goldman Sachs analyst Toshiya Hari trimmed her price target on Skyworks Solutions, Inc. (NASDAQ:SWKS) to $97 from $120 and reiterated a Neutral rating on the shares.
At the close of Q1 2022, 39 hedge funds were eager on Skyworks Solutions, Inc. (NASDAQ:SWKS) and held stakes worth $780.51 million. This is compared to 41 hedge funds in the preceding quarter with stakes of $842.47 million.
In the first quarter of 2022, Citadel Investment Group raised its stakes in Skyworks Solutions, Inc. (NASDAQ:SWKS) by 106%, bringing them to $166.96 million. The investment covers 0.03% of Ken Griffin’s 13F portfolio.
Like NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), Apple, Inc. (NASDAQ:AAPL), and QUALCOMM, Incorporated (NASDAQ:QCOM), Skyworks Solutions, Inc. (NASDAQ:SWKS) is taking a beating in 2022 and has lost more than 30% of its value so far.
6. KLA Corporation (NASDAQ:KLAC)
Number of Hedge Fund Holders: 52
KLA Corporation (NASDAQ:KLAC) designs, manufactures, and markets process control and yield management solutions for the semiconductor and related nanoelectronics industries worldwide. Jim Cramer thinks KLA Corporation (NASDAQ:KLAC) is reasonably valued at current levels and has solid earnings growth moving forward. As of July 22, KLA Corporation (NASDAQ:KLAC) has a PE ratio of 17.18 and is offering a forward dividend yield of 1.16%, which the company supports with its trailing twelve-month free cash flows of $2.66 billion.
On June 24, KLA Corporation (NASDAQ:KLAC) announced that its board of directors has authorized $3 billion worth of accelerated share repurchase programs with Goldman Sachs and Citibank. Under the terms of the agreement, KLA Corporation (NASDAQ:KLAC) will initially buy back 6.55 million shares, and by the end of the company’s fiscal second quarter of 2022, the company will buy back any of the remaining shares of its common stock.
Wall Street analysts are bullish on KLA Corporation (NASDAQ:KLAC). On July 15, Goldman Sachs analyst Toshiya Hari trimmed his price target on KLA Corporation (NASDAQ:KLAC) to $344 from $437 and reiterated a Buy rating on the shares. On July 18, Deutsche Bank analyst Sidney Ho lowered his price target on KLA Corporation (NASDAQ:KLAC) to $385 from $425 and maintained a Buy rating on the shares.
At the end of Q1 2022, 52 hedge funds disclosed ownership of stakes in KLA Corporation (NASDAQ:KLAC). The total stakes of these hedge funds amounted to $1.88 billion. This is compared to 49 positions in the previous quarter with stakes of $2.41 billion.
As of March 31, Alkeon Capital Management is the largest shareholder in KLA Corporation (NASDAQ:KLAC) with stakes worth $593.51 million in the company. The investment covers 1.18% of the fund’s 13F portfolio.
Here is what Vltava Fund, an investment management firm, had to say about KLA Corporation (NASDAQ:KLAC) in its first-quarter 2022 investor letter:
“We then used the money freed up to, among other things, open three new positions. The stock price declines during the Russian invasion brought a lot of good prices to the market. Out of all the possibilities we considered, we picked the stock of KLA Corporation (KLAC).
KLA Corporation develops leading-edge equipment and services that enable innovation throughout the electronics industry. It specialises in process management and control in semiconductor manufacturing and the related nanoelectronics industries. During manufacturing processes, products must be inspected for defects and correct critical dimensions in order to identify and eliminate possible sources of problems. As customers continue to enforce Moore’s Law, smaller chips must meet more precise specifications, which in turn increases the need for advanced inspection and diagnostic tools. This is a key step within the entire manufacturing process and one in which the company has built a very strong, and in places dominant, global position. We have been watching and waiting for an opportunity to acquire this stock for some time already, and this year’s drop in its price finally prompted us to buy.”
5. Lam Research Corporation (NASDAQ:LRCX)
Number of Hedge Fund Holders: 59
Lam Research Corporation (NASDAQ:LRCX) designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits. Jim Cramer thinks Lam Research Corporation (NASDAQ:LRCX) is attractively valued right now. As of July 22, Lam Research Corporation (NASDAQ:LRCX) has a trailing twelve-month PE ratio of 14.51 and is offering a forward dividend yield of 1.26%, which the company backs with its FCF of $3.56 billion.
Wall Street is bullish on Lam Research Corporation (NASDAQ:LRCX). On July 15, Goldman Sachs analyst Toshiya Hari cut his price target on Lam Research Corporation (NASDAQ:LRCX) to $448 from $612 and reiterated a Buy rating on the shares. On July 18, Deutsche Bank analyst Sidney Ho lowered his price target on Lam Research Corporation (NASDAQ:LRCX) to $480 from $560 and reiterated a Hold rating on the shares.
At the close of Q1 2022, 59 hedge funds were long Lam Research Corporation (NASDAQ:LRCX) with stakes worth $3.48 billion. This is compared to 62 hedge funds in the previous quarter with stakes worth $5.02 billion.
As of March 31, Ken Fisher’s Fisher Asset Management owns over 1.9 million shares of Lam Research Corporation (NASDAQ:LRCX) and is the largest shareholder in the company. The fund’s stakes were valued at roughly $1.02 billion.
Vulcan Value Partners, an investment management firm, mentioned Lam Research Corporation (NASDAQ:LRCX) in its first-quarter 2022 investor letter. Here is what the firm said:
“Lam Research Corp. designs and manufactures equipment used in the fabrication of semiconductors. Recent supply chain issues have negatively impacted the industry and has resulted in chip shortages. The industry is performing well, exceeding our expectations, and Lam Research’s fundamentals remain strong. The long-term secular drivers of demand and growth in the industry continue to be very powerful. Lam Research is experiencing increasing returns on capital, higher margins, and more stable results.”
4. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 74
Applied Materials, Inc. (NASDAQ:AMAT) provides manufacturing equipment, services, and software to the semiconductor, display, and related industries. The company has three business segments: Semiconductor Systems, Applied Global Services, and Display & Adjacent Markets. As of July 22, Applied Materials, Inc. (NASDAQ:AMAT) has a price-to-earnings ratio of 13.59 and is offering a forward dividend yield of 1.00%, which the company supports with trailing twelve-month free cash flows of $5.21 billion.
On July 15, after trimming his price target on Applied Materials, Inc. (NASDAQ:AMAT) to $95 from $133, Goldman Sachs analyst Toshiya Hari reiterated a Buy rating on the stock. On July 18, Deutsche Bank analyst Sidney Ho cut his price target on Applied Materials, Inc. (NASDAQ:AMAT) to $110 from $135 but maintained a Buy rating on the shares.
At the end of Q1 2022, 74 hedge funds held stakes in Applied Materials, Inc. (NASDAQ:AMAT). The total value of these stakes came in at $4.30 billion. This is compared to 78 positions in Q4 2021 with stakes of $5.43 billion.
As of March 31, Generation Investment Management is the most prominent shareholder in Applied Materials, Inc. (NASDAQ:AMAT) having stakes worth $560.98 million. The investment covers 2.56% of the fund’s 13F portfolio.
Vulcan Value Partners, an investment management firm, mentioned Applied Materials, Inc. (NASDAQ:AMAT) in its fourth-quarter 2021 investor letter. Here is what the firm said:
“Applied Materials, another material contributor for the quarter, provides materials engineering solutions for semiconductor fabrication equipment and manufacturing tools for advanced displays. Similar to Lam Research, Applied Materials is executing well and continuing to experience the tailwinds from consolidation and growth within the industry.”
Big tech names that Wall Street remains bullish on include NVIDIA Corporation (NASDAQ:NVDA), Apple, Inc. (NASDAQ:AAPL), Advanced Micro Devices, Inc. (NASDAQ:AMD), and QUALCOMM, Incorporated (NASDAQ:QCOM).
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Disclosure: None. Jim Cramer Likes These 7 Beaten-Down Semiconductor Stocks is originally published on Insider Monkey.
