Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 stocks made the list for top value stocks in the Semiconductors industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Semiconductors Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

Click the button below to learn more about A+ Investor and subscribe today.

4 Undervalued Semiconductors Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 4 undervalued stocks in the Semiconductors industry for Friday, May 10, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Semiconductors industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Eltek Ltd’s Value Grade

Value Grade:

Eltek Ltd. manufactures, markets and sells custom made printed circuit boards (PCBs), including high density interconnect (HDI), flex-rigid and rigid, with high layer count boards. The Company manufactures and supplies custom made circuitry solutions for use in compact electronic products. The Company's principal customers include manufacturers of defense and aerospace, medical, industrial, telecom and networking equipment, as well as contract electronic manufacturers. The Company designs and develops manufacturing solutions pursuant to interconnect requirements of original equipment manufacturers, and provides its customers with a range of custom designed PCBs, including rigid, double-sided and multi-layer PCBs, as well as flexible circuitry (flex and flex-rigid boards) made of various types of base material. The Company also acts as an agent for the importation of PCBs from South East Asia. The Company provides fabrication of dense multi-layer PCBs.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Eltek Ltd has a Value Score of 62, which is considered to be undervalued.

When you look at Eltek Ltd’s price-to-sales ratio at 1.32 compared to the industry median at 3.55, this company has a lower price relative to revenue compared to its peers. This could make Eltek Ltd’s stock more attractive for value investors.

Eltek Ltd’s price-earnings ratio is 9.69 compared to the industry median at 24.08. This means it has a lower share price relative to earnings compared to its peers. This could make Eltek Ltd more attractive for value investors.

Now, let’s assess Eltek Ltd’s EV/EBITDA ratio, also known as enterprise multiple. At 8.5, when compared to the industry median of 19.1, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Eltek Ltd’s shareholder yield is lower than its industry median ratio of (0.79%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Eltek Ltd’s price-to-book ratio is lower than its industry median ratio of 2.94. This could make Eltek Ltd more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Eltek Ltd’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Eltek Ltd’s price-to-free-cash-flow ratio is lower than its industry median ratio of 42.06. This could make Eltek Ltd more attractive because the lower P/FCF ratio indicates that Eltek Ltd is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Himax Technologies, Inc. (ADR)’s Value Grade

Value Grade:

Himax Technologies, Inc. is a fabless semiconductor solution provider. The Company is engaged in display driver integrated circuits (IC) and timing controllers used in televisions, laptops, monitors, mobile phones, tablets, digital cameras, car navigation and other consumer electronics devices. The Company operates through two segments: Driver IC and Non-driver products. In addition, the Company designs and provides controllers for touch sensor displays, liquid crystal on silicon micro-displays used in palm-size projectors and head-mounted displays, light-emitting diode driver ICs, power management ICs, scaler products for monitors and projectors, video processing IC solutions and silicon IPs. It also offers digital camera solutions, including complementary metal-oxide-semiconductor image sensors and wafer level optics, which are used in a range of applications, such as mobile phone, tablet, laptop, televisions, personal computer camera, automobile, security and medical devices.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Himax Technologies, Inc. (ADR) has a Value Score of 67, which is considered to be undervalued.

Himax Technologies, Inc. (ADR)’s price-earnings ratio is 19.7 compared to the industry median at 24.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Himax Technologies, Inc. (ADR) more attractive for value investors.

Himax Technologies, Inc. (ADR)’s price-to-book ratio is higher than its peers. This could make Himax Technologies, Inc. (ADR) less attractive for value investors when compared to the industry median at 2.94.

You can read more about Himax Technologies, Inc. (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Peraso Inc’s Value Grade

Value Grade:

Peraso Inc. develops high-performance 60 Gigahertz (GHz) unlicensed and 5G millimeter wavelength (mmWave) wireless technology, offering chipsets, antenna modules, software, and intellectual property (IP). The Company supports a variety of applications, including fixed wireless access, immersive video, and factory automation. In addition, its solutions for data and telecom networks focus on accelerating data intelligence and multi-access edge computing, providing end-to-end solutions from the edge to the centralized core and into the cloud. Its mmWave products enable a range of applications, including multi-gigabit point-to-point (PtP), wireless links with a range of up to 25 kilometers and operating in the 60 GHz frequency band; multi-gigabit point-to-multi-point (PtMP), links in the 60 GHz frequency band used to provide fixed wireless access (FWA), services; FWA in the 5G operating bands from 24 GHz to 43 GHz to provide multi-gigabit capability and low latency connections; and others.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Peraso Inc has a Value Score of 79, which is considered to be undervalued.

Peraso Inc’s price-to-book ratio is higher than its peers. This could make Peraso Inc less attractive for value investors when compared to the industry median at 2.94.

You can read more about Peraso Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

TTM Technologies Inc’s Value Grade

Value Grade:

TTM Technologies, Inc. is a global manufacturer of technology solutions including mission systems, radio frequency (RF) components and RF microwave/microelectronic assemblies, and quick-turn and technologically advanced printed circuit boards (PCB). The Company's segments include PCB, and RF and Specialty Components (RF&S; Components). The PCB segment consists of approximately 16 domestic system, sub-system, and PCB plants; four PCB fabrication plants in China; one in Malaysia, and one in Canada. The RF&S; Components segment consists of one domestic RF component plant and one RF component plant in China. Each segment operates predominantly in the same industries with facilities that produce customized products for its customers and use similar means of product distribution. It offers a range of engineered systems, RF and microwave assemblies, high density interconnect (HDI) PCBs, rigid-flex PCBs, custom assemblies and system integration, integrated circuit (IC) substrates and others.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

TTM Technologies Inc has a Value Score of 77, which is considered to be undervalued.

TTM Technologies Inc’s price-to-book ratio is higher than its peers. This could make TTM Technologies Inc less attractive for value investors when compared to the industry median at 2.94.

You can read more about TTM Technologies Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Semiconductors Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Semiconductors stocks as well as other industrys.

Choosing Which of the 4 Best Semiconductors Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Eltek Ltd stock has a Value Grade of B.
• Himax Technologies, Inc. (ADR) stock has a Value Grade of B.
• Peraso Inc stock has a Value Grade of B.
• TTM Technologies Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 4 undervalued stocks in the Semiconductors industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Semiconductors Stocks

Want to learn more about Semiconductors stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 4 Undervalued Semiconductors Stocks for Friday, May 10
• 4 Undervalued Semiconductors Stocks for Thursday, May 09
• What You Need to Know About Allegro MicroSystems Inc's Q4 Earnings
• What You Need to Know About Ceva Inc's Q1 Earnings

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.