All three major U.S. indexes jumped around 2% on Tuesday on better-than-expected May retail sales figures. Alongside another sign that the U.S. economy is in coronavirus recovery mode, the Fed on Monday laid out its previously announced plans to buy U.S. corporate bonds and reports surfaced that the Trump administration is considering a $1 trillion infrastructure plan to help boost the economy.
Volatility could rear its head again but investors might still want to buy stocks. This means they should hunt for stocks with solid fundamentals within growth-focused industries. With this in mind, let’s dive into three semiconductor stocks that investors might want to buy both for the coronavirus rally and longer-term growth.
Marvell (NASDAQ:MRVL) Technology MRVL, offers semiconductor solutions for storage, processing, networking, security, and connectivity. MRVL topped our Q1 FY21 estimates at the end of May with revenue up roughly 5%. Marvell’s Q1 sales were driven by “stronger demand” for its “networking products from the datacenter and 5G infrastructure end markets.” CEO Matt Murphy said in prepared remarks that while it did “experience some COVID-19 supply chain impacts on our storage business in the first quarter, we expect a bounce back in the second quarter and we project our networking business to continue to grow.”
The infrastructure semiconductor solutions firm’s Q2 revenue is projected to jump 9.7%, with Q3 projected to climb 17.4%. MRVL’s FY21 sales are then expected to jump 11.6% to hit $3.01 billion, with FY22 projected to jump 16% higher—both of which would mark significant improvements from FY20’s 6% downturn. Meanwhile, Marvell’s adjusted earnings are projected to surge 25% in Q2 and 47% in Q3 to help lift its FY21 EPS figure by nearly 40% to $0.92 a share. Better still, its adjusted FY22 earnings are projected to climb 50% above our current-year estimate. Marvell closed at $34.74 with gain of $0.35 (1.02%). The 23 analysts offering 12-month price forecasts for Marvell Technology Group Ltd have a median target of $35.00, with a high estimate of $42.00 and a low estimate of $18.00. The median estimate represents a +3.77% increase from the last price of $33.73.
Inphi (NYSE:IPHI) Corporation IPHI, makes semiconductor components and optical subsystems for networking OEMs as well as cloud computing for telecom companies. IPHI is a leader in data movement interconnects between and inside data centers and helps “move big data fast, around the globe.” Inphi’s Q1 results wowed Wall Street on May 7 with revenue up 70%. Higher demand for cloud and telecom products helped drive sales, as did the inclusion of eSilicon, which it officially purchased in January.
Inphi’s record top-line growth came on top of the year-ago period’s 37% expansion. The firm was already benefiting from a data center boom, the transition to 5G, and more. CEO Ford Tamer thinks the “significant paradigm shifts” caused by the coronavirus, from remote work to e-commerce, might encourage “further acceleration of bandwidth upgrades.” And Inphi’s adjusted FY20 earnings are projected to surge 66%. Inphi has also seen its earnings revision activity turn completely positive to help it grab (Buy) right now. IPHI shares jumped following its Q1 release, with the stock now up 56% in 2020 and 150% in the last 12 months. Investors should note that Inphi’s shares are currently trading around 10% off their recent highs, which could set up a solid buying opportunity. Inphi closed at $114.84 with small loss of $0.67 (0.58%). 13 Wall Street analysts have issued ratings and price targets for Inphi in the last 12 months. Their average twelve-month price target is $107.81, suggesting that the stock has a possible downside of 6.12%. The high price target for IPHI is $135.00 and the low-price target for IPHI is $45.00. The forecast in a long-term is expected to increase, the "IPHI" stock price prognosis stands for $274.308. With a 5-year investment, the revenue is expected to be around +138.86%.
Nvidia NVDA, is a GPU giant that has proven for years its strength in the booming gaming market and its more recent expansion into data centers and cloud computing has impressed Wall Street. NVDA topped our Q1 estimates on May 21 with revenue up 39% driven by an 80% climb in data center revenue, which crossed the $1billion threshold for the first time. And NVDA’s new Ampere architecture is set to play a key role within AI-focused chips and in cloud computing.
Nvidia in late April also closed its largest ever $7 billion acquisition of Mellanox (NASDAQ:MLNX) Technologies to help bolster its data center business. Nvidia’s earnings estimates have turned far more positive since its Q1, estimates call for its revenue to jump 42% and 33% respectively in Q2 and fiscal 2021. Meanwhile, NVDA’s adjusted earnings are projected to soar 57% and 36.5% over this same stretch. And Nvidia’s adjusted FY22 EPS figure is projected to jump another 22% higher on 18% higher sales.
NVDA stock is now up 55% in 2020 against its industry’s 7% climb, and 150% in the last year. NVDA’s valuation picture is a bit stretched, but investors have been willing to pay a premium for Nvidia for five years now and its stock price sits 5% below its new highs. Wall Street might continue to scoop up Nvidia for its longer-term growth outlook within cloud computing, gaming, and more. Plus, Nvidia pays a dividend and boasts a strong balance sheet. Nvidia closed at $362.74. The 38 analysts offering 12-month price forecasts for NVIDIA Corp have a median target of $400.00, with a high estimate of $430.00 and a low estimate of $240.00. The median estimate represents a +10.16% increase from the last price of $363.10. For 5-year investment, NVIDIA estimate to target $1532.173.
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