2 Semiconductor Stocks To Buy In March, 2 To Avoid

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As the global economy gathers steam this year, fueled by mass COVID-19 vaccinations and a substantial increase in demand, a concern has been growing among industries that depend on semiconductors. That’s because the semiconductor industry faces a supply crunch, and with rising demand for devices and electric vehicles, a chip shortage could thoroughly hamstring the operations of swaths of end-product manufacturers.

Against this backdrop, leading semiconductor companies STMicroelectronics N.V. (STM - Get Rating) and O2Micro International Limited (OIIM - Get Rating) have been ramping up production to meet the ballooning demand. These companies have delivered promising top-line growth and are well-positioned to outperform the market in the days to come.

Conversely, Cree, Inc. (CREE - Get Rating) and SemiLEDs Corporation (LEDS - Get Rating) have reported negative earnings in their last reported quarter as they continue to confront challenges associated with the broader macro environment. We think their weak fundamentals and unimpressive financials could prevent them from capitalizing on the surge in demand.

Stocks to buy:

STMicroelectronics N.V. (STM - Get Rating)

Headquartered in Geneva, Switzerland, STM is a designer, manufacturer, and marketer of semiconductor products in Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company operates through the following segments:  Automotive and Discrete Group, Analog, MEMS and Sensors Group, and Microcontrollers and Digital ICs Group.

STM  recently developed the world’s smallest MEMS mirror with Intel to enable continuous laser scanning across the entire field of view. This second-generation micro-mirror should break ground in  3D scanning and detection applications and help the company meet the technical needs of its customers.

This month, the company is extending its long-term plan to boost automotive innovation to support customers of STM’s SPC56 automotive microcontrollers. This development would enable customers to extend the lifetime of their products because they could continue to depend on the performance of automotive microcontrollers.

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