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Kritika Sarmah

Top 3 Chip Stocks Diagnosing Weekly Potential for December Profits

With continuous innovation and flexibility, semiconductors stand at the forefront of the technological revolution, molding and facilitating the development of a more interconnected, intelligent, and efficient world.

So, quality chips stocks Trio-Tech International (TRT), Qualcomm Inc. (QCOM), and Photronics, Inc. (PLAB) could be ideal investments for weekly profits this month.

The global semiconductor market thrives due to the extensive use of chips across various applications, including electronics, industrial equipment, automotive, networking, communications, and data processing.

In addition, the adoption of Industry 4.0 and smart manufacturing practices involves the integration of sensors, automation, and data analytics, driving the demand for chips in manufacturing processes.

According to the Semiconductor Industry Association, the worldwide sales of semiconductors totaled $134.70 billion during the third quarter of 2023, up 6.3% quarter-over-quarter.

Also, the global semiconductor market is expected to grow at a 12.3% CAGR until 2032.

Moreover, the surge in generative AI and the increasing deployment of AI applications require high-performance GPUs and streamlined semiconductor devices. According to Gartner's projections, AI chip revenue in the semiconductor industry is anticipated to reach $53.4 billion this year, reflecting a growth of 20.9% compared to the previous year. Looking ahead to 2027, the AI chip revenue is forecasted to surpass twice the current year's market size, reaching $119.40 billion.

Furthermore, as consumer electronics continue to evolve and become more sophisticated, there is a higher demand for advanced semiconductor components. According to Statista, revenue in the consumer electronics market will amount to $1.03 trillion in 2025 and is expected to grow at a CAGR of 2.3% until 2028.

In light of these encouraging trends, let's look at the fundamentals of the three best Semiconductor & Wireless Chip stocks, beginning with number 3.

Stock #3: Trio-Tech International (TRT)

TRT offers manufacturing, testing, and distribution services to the semiconductor industry. It operates through four segments: Manufacturing; Testing Services; Distribution; and Real Estate.

TRT’s trailing-12-month EBITDA margin of 16.62% is 81.6% higher than the industry average of 9.15%. Its trailing-12-month ROCE and ROTA of 3.13% and 2% are favorably higher than the 1.01% and 0.26% industry average.

TRT’s total revenues for the fiscal first quarter that ended September 30, 2023, amounted to $9.97 million. The company’s total operating expenses decreased 1.3% year-over-year to $2.52 million. Net income attributable to TRT’s common shareholders stood at $230 thousand, and EPS amounted to $0.05.

Moreover, comprehensive income attributable to TRT common shareholders came in at $26 thousand, compared to a loss of $314 thousand in the prior-year quarter.

The stock has soared 10.1% over the past nine months to close the last trading session at $4.90.

TRT’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted optimally.

It has an A grade for Value and Momentum and a B for Sentiment. It is ranked #16 out of 91 stocks in the Semiconductor & Wireless Chip industry.

Click here to see TRT’s Growth, Stability, and Quality ratings.

Stock #2: Qualcomm Inc. (QCOM)

QCOM engages in developing and commercializing foundational technologies for the wireless industry worldwide. It operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI).

QCOM’s trailing-12-month net income margin of 20.19% is 819.7% higher than the 2.20 industry average. Its 24.15% trailing-12-month EBIT margin is 414.8% higher than the industry average of 4.69%.

On September 11, 2023, QCOM partnered with Apple Inc. (AAPL) to provide Snapdragon 5G Modem-RF Systems for smartphone releases in 2024, 2025, and 2026.

The company pays an annual dividend of $3.20, which translates to a yield of 2.47% on the prevailing price level. It has raised its dividend payouts at a CAGR of 7% over the past three years.

During the fiscal fourth quarter that ended September 24, 2023, QCOM’s total revenues came in at $8.63 billion. Its non-GAAP net income was $2.28 billion, while its non-GAAP EPS was $2.02. In addition, its net cash provided by operating activities increased 182.8% year-over-year to $4.09 billion.

Analysts expect QCOM’s EPS and revenue to rise 9.1% and 5.3% year-over-year to $9.19 and $37.71 billion in the fiscal year 2024, ending September 2024. It surpassed the EPS estimates in three of the trailing four quarters, which is remarkable.

Over the past three months, the stock has gained 12.6% to close the last trading session at $129.95. It returned 18.2% year-to-date.

QCOM’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

It has a B grade for Value, Momentum, and Quality. It is ranked #10 in the same industry.

To see QCOM’s Growth, Sentiment, and Stability ratings, click here.

Stock #1: Photronics, Inc. (PLAB)

PLAB manufactures and sells photomask products and services in the United States, Taiwan, China, Korea, Europe, and internationally.

PLAB’s trailing-12-month EBIT margin of 28.44% is 506.3% higher than the industry average of 4.69%. Its trailing-12-month EBITDA margin of 37.43% is 309% higher than the industry average of 9.15%.

PLAB’s revenues for the third quarter ended July 30, 2023, rose 2% year-over-year to $224.21 million. Its gross profit rose 3.5% year-over-year to $86.80 million. Its operating income increased 14.1% year-over-year to $1.15 billion. The company’s net income came in at $48.26 million. In addition, its EPS came in at $0.44.

Street expects PLAB’s EPS for the fiscal first quarter (ending January 2023) to increase 22% year-over-year to $0.49. Its revenue is expected to rise 4.2% from the year-ago quarter to $220 million in the same quarter. In addition, the company exceeded the consensus revenue estimates in three of the trailing four quarters.

PLAB’s shares gained 24.5% year-to-date to close the last trading session at $20.96.

PLAB’s POWR Ratings reflect its sound outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

It has an A grade for Momentum and a B in Value and Quality. It is ranked #5 in the same industry.

Beyond what is stated above, we’ve also rated PLAB for Stability, Growth, and Sentiment. Get all PLAB ratings here.

What To Do Next?

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QCOM shares were trading at $130.41 per share on Tuesday morning, up $0.46 (+0.35%). Year-to-date, QCOM has gained 21.79%, versus a 20.86% rise in the benchmark S&P 500 index during the same period.

About the Author: Kritika Sarmah

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.


Top 3 Chip Stocks Diagnosing Weekly Potential for December Profits
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