As supply chain snarls eased, the Semiconductor Industry Association (SIA) reported global industry sales of $574.1 billion last year, an increase of 3.3% compared to 2021. Moreover, on a regional basis, America recorded a 16.2% increase in sales, the largest among others.
Considering the increasing significance of semiconductors in today's world, it could be beneficial to invest in fundamentally sound stocks such as Nikon Corporation (NINOY), Park Aerospace Corp. (PKE), and Everspin Technologies, Inc. (MRAM), which are trading under $15.
Despite short-term fluctuations in sales this year owing to market cyclicality and macroeconomic conditions, the long-term outlook for the semiconductor market remains optimistic, thanks to the proliferating role of chips used in a wide range of devices ranging from smartphones and computers to automotive systems and medical equipment.
The revenue in the semiconductors market is expected to reach $599.80 billion in 2023. Furthermore, revenue is projected to exhibit a CAGR of 8.1%, resulting in a market volume of $818.60 billion by 2027.
Moreover, according to data from SIA, U.S. businesses have invested nearly $200 billion in domestic chip production as economies look to reduce dependence on Taiwan, the global leader in terms of semiconductor production.
Overall, the semiconductor industry is expected to stay buoyed due to its strategic significance in technological leadership. Governments around the world are prioritizing investments in the semiconductor industry to ensure a secure and competitive position in the global market.
With that being said, let us look into the fundamentals of the above-mentioned stocks in detail.
Nikon Corporation (NINOY)
Headquartered in Tokyo, Japan, NINOY manufactures and sells optical instruments through the Imaging Product; Precision Equipment; Healthcare; Components; and Industrial Metrology and Others segments. Its Precision Equipment Business segment offers FPD lithography systems and semiconductor lithography systems.
On May 23, NINOY introduced the ECLIPSE Ni-L upright microscope, which incorporates a specially balanced LED illumination system designed to mimic natural light properties. This innovation enables the microscope to display the original colors of specimens with greater accuracy, making it particularly valuable for observing pathological specimens and cells.
Inbuilt with comprehensive and functional features, the new device will likely be demanded by healthcare and pathology business units.
On April 27, NINOY announced that its subsidiary Nikon Americas Inc. (NAI) had entered into an equity purchase agreement with Avonix Imaging, LLC, a company specializing in the manufacturing, sales, and services of X-ray and CT Systems. This acquisition would enable both companies to advance the development of new products and enhance their businesses.
In the fiscal year that ended March 31, 2023, NINOY’s revenue increased 16.4% year-over-year to ¥628.11 billion ($4.49 billion), while its gross profit grew 22.5% from the year-ago value to ¥289.17 billion ($2.07 billion).
The company’s profit for the year and EPS amounted to ¥43.28 billion ($309.79 million) and ¥124.77, representing increases of 2.4% and 7.9% from the prior-year period, respectively. Also, its operating profit rose 9.9% from the year-ago value to ¥54.91 billion ($392.99 million).
The consensus revenue estimate of $4.44 billion for the fiscal year (ending March 2024) represents a 45.2% improvement year-over-year. The consensus EPS estimate for the current year is expected to be $0.85. Its EPS is expected to increase by 13.5% per annum in the next five years.
The stock has gained 25.5% year to date to close the last trading session at $11.09.
NINOY’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Value, Stability, and Quality. In the 91-stock Semiconductor & Wireless Chip industry, it is ranked #14. To see additional POWR Ratings of NINOY for Growth, Momentum, and Sentiment, click here.
Park Aerospace Corp. (PKE)
PKE is an aerospace company that develops and manufactures solution and hot-melt advanced composite materials, including film adhesives and lightning strike protection materials that are used to produce composite structures for the aerospace market.
On May 9, PEK unveiled its latest offering, the Aeroadhere™ FAE-350-1 Structural Film Adhesive Product, specifically developed for bonding aerospace primary and secondary structures. Notably, this adhesive product exhibits exceptional toughness and can withstand high temperatures. It is intended for use in aerospace original equipment and MRO applications.
This reflects the consistent efforts of its R&D and Engineering team behind getting it commercialized as the first offering in a major new aerospace adhesives product line.
On April 20, PKE announced a significant expansion of the manufacturing facilities in Newton, Kansas. This expansion received full approval and qualification from the company's largest customer, granting them the capability to produce for all of the customer's aircraft programs.
The expansion project of approximately $20 million involved the addition of approximately 90,000 square feet of manufacturing, laboratory, and office space, effectively doubling the size of the existing Newton facilities.
For the fourth quarter of fiscal year 2023 that ended February 26, PKE’s net sales increased 8.2% year-over-year to 13.53 million, while its gross profit came in at $3.85 million. The company’s net earnings amounted to $4.71 million and $0.23 per share, representing an increase of 140.6% and 130% from the prior-year period, respectively.
Its EPS is expected to improve by 15% per annum in the next five years. Additionally, it surpassed the consensus revenue and EPS estimates in three of the trailing four quarters.
PKE’s shares have gained 17.1% over the past nine months to close the last trading session at $12.97.
PKE’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.
It has a B grade for Growth, Sentiment, and Quality. Within the same industry, it is ranked #12. Click here to see the other ratings of PKE for Value, Momentum, and Stability.
Everspin Technologies, Inc. (MRAM)
MRAM is engaged in the manufacturing and sale of Magnetoresistive Random Access Memory (MRAM) products and solutions. Its offerings include Toggle MRAM, spin-transfer torque MRAM, tunnel magnetoresistance sensor products, and foundry services for MRAM products.
In the first quarter (ended March 31, 2023), MRAM’s total revenues increased 3.5% year-over-year to $14.85 million, while its gross profit grew marginally from the year-ago value to $8.43 million. The company’s net income came in at $761 thousand and $0.04 per share, respectively, for the same period. Also, its adjusted EBITDA stood at $2.32 million for the same period.
During the same period, its total current liabilities amounted to $6.26 million, declining 42.4% compared to $10.88 million as of December 31, 2022.
Analysts expect MRAM’s revenue for the second quarter (ending June 30, 2023) to increase 2% year-over-year to $15 million. Its EPS is expected to be $0.08 in the same period and increase by 20% per annum over the next five years. Moreover, the stock topped the consensus revenue estimates in each of the trailing four quarters, which is excellent.
The stock has gained 44% over the past year to close the last trading session at $7.69.
It’s no surprise that MRAM has an overall rating of B, which equates to Buy in our proprietary rating system. It has an A grade for Sentiment and a B for Value and Momentum. Out of 91 stocks in the same industry, it is ranked #6.
In addition to the POWR Ratings we’ve stated above, we also have MRAM’s ratings for Growth, Stability, and Quality. Get all MRAM ratings here.
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NINOY shares were trading at $10.92 per share on Friday afternoon, down $0.18 (-1.58%). Year-to-date, NINOY has gained 23.53%, versus a 10.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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