Texas Instruments
This old-school semiconductor company offers solid value at current levels and is a great pick for more conservative investors looking for a technology idea. Texas Instruments Inc. (NASDAQ: TXN) is a broad-based supplier of semiconductor components, ranging from digital signal processors to high-performance analog components, to digital light-processing technology and calculators.
Some 65% of the company’s sales are exposed to the well-diversified, business-to-business industrial, automotive, communications infrastructure and enterprise markets. While business from those sectors, especially automotive, could suffer in the near term, the analyst feels the solid dividend should support the shares. The company is also a big Apple supplier, so the long-term outlook for this venerable leader makes it a safer bet for investors with less risk tolerance.
The company is also a big Apple supplier, so the long-term outlook for this venerable leader makes it a safer bet for investors with less risk tolerance.
Investors receive a 2.81% dividend. BMO Capital Markets has set its price target at $215, and the consensus target is $183.45. On Thursday, Texas Instruments stock closed at $174.99.
United Microelectronics
BofA Securities initiated coverage of this Taiwanese semiconductor company in January with a Buy rating. United Microelectronics Corp. (NYSE: UMC) operates as a semiconductor wafer foundry in Taiwan, Singapore, China, Hong Kong, Japan, the United States, Europe and elsewhere. The company provides circuit design, mask tooling, wafer fabrication and assembly and testing services. It serves fabless design companies and integrated device manufacturers.
Like many chip companies, United Microelectronics has seen some tough sledding, but many think that the supply chain issues that have dogged the industry for the past year are finally starting to ease. Some on Wall Street feel the stock has the potential that industry powerhouse Taiwan Semiconductor has shown.
Shareholders receive a 6.02% dividend. The BofA Securities target price for United Microelectronics stock is $8.90. The $7.38 consensus target is lower than Thursday’s close at $8.36.
While these companies certainly are established and have excellent product silos, semiconductor stocks are volatile and can be very cyclical. They are only suitable for aggressive growth inventors with a high risk tolerance. With that caveat in place, the chip industry is embedded in virtually every product imaginable, and demand for power, memory, storage and a host of other needs will remain indefinitely.
Originally published at 24/7 Wall St.
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