Semiconductor stocks are being sold! Yikes. What should a trader do?
First off, realize the earnings growth is there. That is keeping the fire lit on the bullish outlook for these types of large cap stocks over a longer annual time frame.
The broad catalysts for another run are indeed in place. The Zacks Industry Rank for the 8 General Semiconductor stocks is #4 out of 265 this week. There are also 2 new positive analyst earnings estimate revisions showing up in our system, and 0 negative revisions.
Looking at our proprietary Heat Map shows the industry ranking is never lower than #11 over the past 8 weeks. That is a hot industry.
Why the selling—and likely the hedge fund shorting—now on a prepackaged daily trading schedule?
Look into the leading stock's valuation metrics. They are mostly terrible. The exception right now, in terms of where value might be found, is in the granddaddy of semi chip stocks — Intel.
I concluded quickly on this analysis. Selling has more room to run on this industry. Finding a tasty share price bottom won't be easy.
So it must follow: those who make money owning stocks like this, are going to have to buck the crowd and buy. But wait for now.
3 Zacks #1 Rank Stocks Picks
Intel Corporation (INTC): The forward P/E valuation ratio is a low 13.75, giving the stock a nice long-term Zacks VGM score of B.
The PEG ratio is 1.63, which is below 2.0, where the valuation issues usually lie.
This company is one of the world's largest semiconductor chipmaker. It develops advanced integrated digital technology products, primarily integrated circuits (ICs), for industries such as computing and communications.
Intel designs and manufactures computing and communications components, such as microprocessors, chipsets, motherboards, and wireless and wired connectivity products, as well as platforms that incorporate these components.
The company sells its products primarily to original equipment manufacturers, original design manufacturers, PC and network communications products users, and other manufacturers of industrial and communications equipment.
Intel Corp. is based in Santa Clara, California.
NVIDIA Corp. (NVDA): The forward P/E valuation ratio is a nosebleed 47.92, giving the stock a terrible long-term Zacks VGM score of F.
The PEG ratio is 4.28, which is well over 2.0 (actually double that), where valuation issues lie.
The company is the worldwide leader in graphics processors and media communications devices. The NVIDIA Tesla accelerated computing platform gives modern data centers the power to accelerate both artificial intelligence and high-performance computing workloads. NVIDIA DGX™Systems are built on the new, revolutionary NVIDIA Volta GPU platform. Powered by NVIDIA® Tesla® GPUs and NVIDIA NVLink, the HGX reference architecture standardizes the design of data centers accelerating AI in the cloud-from autonomous driving and personalized healthcare to superhuman voice recognition.
NVIDIA GPU Cloud (NGC) is a GPU-accelerated platform that runs everywhere. Data scientists and researchers can now rapidly build, train and deploy neural network models to address some of the most complicated A.I. challenges.
Their researchers operate as a think tank, accelerating advances in product technologies, including A.I. innovations like facial animations and light transport.
STMicroelectronics (STM): The forward P/E valuation ratio is a bit above the S&P500's 18.3 — at 24.13. This gifts the stock a terrible long-term Zacks VGM score of F.
The PEG ratio is 4.83, which is well over 2.0 (nearly 2.5X that), where valuation issues surely lie.
The company is a global independent semiconductor company. It designs, develops, manufactures and markets a broad range of semiconductor integrated circuits and discrete devices used in a wide variety of microelectronic applications.
This includes: telecommunications systems, computer systems, consumer products, automotive products and industrial automation and control systems.
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STMicroelectronics N.V. (NYSE: STM): Free Stock Analysis Report
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