4 Small-Cap Semiconductor Stocks To Buy For Q2 2021

macro photography of black circuit board

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Pandemic-driven, remote lifestyles have increased consumer spending on technology products and services over the past year. The ballooning demand has precipitated a semiconductor shortage worldwide. In response, President Biden has apportioned $50 billion for the semiconductor industry in his proposed $2 trillion infrastructure spending package.

So, investors are scrambling now to invest in semiconductor stocks to capitalize on the anticipated semiconductor boom. This is evidenced by iShares PHLX Semiconductor ETF’s (SOXX) 35.6% gains over the past six months compared to SPDR S&P 500 Trust ETF’s (SPY) 19.7% returns over the same period.

With most companies in the sector working to increase their semiconductor production to meet the high demand, the global semiconductor market is expected to grow at a CAGR of 4% over the next four years to reach $90.80 billion by 2024. Small-cap companies are expected to grow at a faster rate than their large-cap brethren.

Thus, we expect small-cap semiconductor companies Camtek Ltd. (CAMT), SMART Global Holdings, Inc. (SGH), ChipMOS Technologies Inc. (IMOS), and DSP Group, Inc. (DSPG) to generate robust returns this quarter.

Camtek Ltd. (CAMT)

Based in Israel, CAMT manufactures metrology and inspection equipment for the semiconductor industry and provides software solutions. The company services the advanced packaging, memory, complementary metal oxide semiconductor (CMOS) image sensors, micro electromechanical sensor (MEMS), radio frequency (RF) and other segments in the mid-end of the semiconductor industry worldwide.

It provides solutions and yield-enhancement data that enables manufacturers to improve yield and drive down production costs. It also provides tailor-made solutions in line with customers’ requirements. CAMT has a market capitalization of $1.39 billion.

On March 31, CAMT received $20 million worth orders for inspection and metrology systems from several companies in the field of advanced packaging and compound semiconductors. It expects these systems to be installed during the second and third quarters of 2021. And in January, one of the world’s top Integrated Circuits (IC) manufacturers selected CAMT’s Eagle 2D plus 3D model, the most advanced inspection and metrology equipment, for its global fabrication sites. Following the selection, CAMT has received multiple additional orders.

CAMT is scheduled to announce its fiscal 2021 first quarter financial results on April 28. During the fourth quarter, ended Dec. 31, 2020, CAMT’s revenues increased 46.4% year-over-year to $48.6 million. Its non-GAAP gross profit was $23.40 million, which represented a 47.2% improvement year-over-year.

The company’s non-GAAP operating income was $9.2 million, up 70.4% from the prior-year period. Its $8.8 million of non-GAAP net income for the quarter represents a 63% improvement year-over-year. Its non-GAAP EPS also increased 50% year-over-year to $0.21.

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