3 Underfollowed Stocks With Solid Potential

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STMicroelectronics (STM - Free Report)

Given how strong semiconductors have been in 2017, can there really be a stock from this space that’s under-represented? Of course, there can. Take STMicroelectronics (STM - Free Report) as an example, which only has four covering analysts composing its Zacks Consensus Estimate. Yet, this company is up 115% year-to-date. It's part of the Semiconductor – General industry, which is highly ranked with a Zacks Industry Rank in the top 2% (sixth spot out of 256). Yet the space has only gained 48.1% this year, or less than half that of STM.

The company reported third-quarter earnings of 28 cents per share, which was 16.7% better than the Zacks Consensus Estimate. STM actually missed estimates in the previous two quarters, which may be one of the reasons why analysts have not been very excited about the company. However, that is likely to change moving forward as STM is enjoying solid demand across its product groups and geographies.

Revenues jumped 18.9% year over year to $2.14 billion in the quarter. All product groups recorded double-digit growth over the previous year due to solid demand in areas like smartphones, industrial, smart driving and, perhaps most importantly, Internet of Things.

STM does not expect a decline in demand for the fourth quarter...quite the opposite in fact. It expects revenues in this quarter to increase sequentially by about 10% at the mid-point, due to strong bookings and acceleration in its new program for wireless applications. For this year, revenues are expected to growth about 18% from the previous year.

There may only be four analysts covering this stock, but three of them have raised their estimates in the past 30 days. The Zacks Consensus Estimate for this year is up 8.4% in that time to 90 cents per share. Currently, we expect next year’s result to climb 33% to $1.20 per share, which marks an advance of 9% in the past 30 days.

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