Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Semiconductors & Semiconductor Equipment 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 & Semiconductor Equipment 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.

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3 Undervalued Semiconductors & Semiconductor Equipment Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Semiconductors & Semiconductor Equipment industry for Monday, October 07, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Semiconductors & Semiconductor Equipment 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.

ChipMOS TECHNOLOGIES INC.’s Value Grade

Value Grade:

ChipMOS TECHNOLOGIES INC. engages in the research, development, manufacture, and sale of high-integration and high-precision integrated circuits, and related assembly and testing services in the People’s Republic of China, Taiwan, Japan, Singapore, and internationally. It operates through Testing; Assembly; Testing and Assembly for LCD, OLED and Other Display Panel Driver Semiconductors; Bumping; and Others segments. The company provides a range of back-end assembly and testing services, including engineering test, wafer probing, and final test of memory and logic/mixed-signal semiconductors, as well as leadframe-based and organic substrate-based package assembly services for memory and logic/mixed-signal semiconductors; and gold bumping, and testing and assembly services for LCD, OLED, and other panel display driver semiconductors. Its semiconductors are used in personal computers; office automation and consumer electronics; and communications equipment applications. The company was incorporated in 1997 and is headquartered in Hsinchu City, Taiwan.

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.

ChipMOS TECHNOLOGIES INC. has a Value Score of 64, which is considered to be undervalued.

When you look at ChipMOS TECHNOLOGIES INC.’s price-to-sales ratio at 0.76 compared to the industry median at 3.39, this company has a lower price relative to revenue compared to its peers. This could make ChipMOS TECHNOLOGIES INC.’s stock more attractive for value investors.

ChipMOS TECHNOLOGIES INC.’s price-earnings ratio is 282.00 compared to the industry median at 30.95. This means it has a higher share price relative to earnings compared to its peers. This could make ChipMOS TECHNOLOGIES INC. less attractive for value investors.

Now, let’s assess ChipMOS TECHNOLOGIES INC.’s EV/EBITDA ratio, also known as enterprise multiple. At 4.3, when compared to the industry median of 19.3, 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. ChipMOS TECHNOLOGIES INC.’s shareholder yield is higher than its industry median ratio of (0.65%). 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. ChipMOS TECHNOLOGIES INC.’s price-to-book ratio is lower than its industry median ratio of 2.75. This could make ChipMOS TECHNOLOGIES INC. more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at ChipMOS TECHNOLOGIES INC.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. ChipMOS TECHNOLOGIES INC.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 38.75. This could make ChipMOS TECHNOLOGIES INC. more attractive because the lower P/FCF ratio indicates that ChipMOS TECHNOLOGIES INC. 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.

Trio-Tech International’s Value Grade

Value Grade:

Trio-Tech International, together with its subsidiaries, offers manufacturing, testing, and distribution services to the semiconductor industry in the United States, Singapore, Malaysia, Thailand, and China. It operates through four segments: Manufacturing, Testing Services, Distribution, and Real Estate. The company develops and manufactures test equipment used in front-end and back-end manufacturing processes of semiconductors. It also offers equipment, which includes leak detectors, autoclaves, centrifuges, burn-in systems and boards, HAST testers, temperature-controlled chucks, wet benches, and others; and develops team integrated device manufacturers and fabless semiconductor companies in the testing process. In addition, the company provides electrical, environmental, and burn-in testing services to semiconductor manufacturers in testing laboratories, and end users of semiconductors and electronic components; support the asset-light strategy of customers by setting up test facilities; and providing component level, package level and system level testing services. Further, it distributes environmental chambers, mechanical shock and vibration testers, and other semiconductor equipment; components, such as connectors, sockets, cables, LCD displays, and touch screen panels; and invests in and rents real estate properties; as well as offers design consultancy and value-added services. The company serves automotive, avionics, defense, medical, research, and OEM/ODM manufacturers. Trio-Tech International was incorporated in 1958 and is headquartered in Van Nuys, California.

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.

Trio-Tech International has a Value Score of 72, which is considered to be undervalued.

Trio-Tech International’s price-earnings ratio is 25.0 compared to the industry median at 31.0. This means that it has a lower price relative to its earnings compared to its peers. This makes Trio-Tech International more attractive for value investors.

Trio-Tech International’s price-to-book ratio is higher than its peers. This could make Trio-Tech International less attractive for value investors when compared to the industry median at 2.75.

You can read more about Trio-Tech International’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.

United Microelectronics Corporation’s Value Grade

Value Grade:

United Microelectronics Corporation operates as a semiconductor wafer foundry in Taiwan, China, Hong Kong, Japan, Korea, the United States, Europe, and internationally. The company provides circuit design, mask tooling, wafer fabrication, and assembly and testing services. It serves fabless design companies and integrated device manufacturers. United Microelectronics Corporation was incorporated in 1980 and is headquartered in Hsinchu City, Taiwan.

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.

United Microelectronics Corporation has a Value Score of 83, which is considered to be undervalued.

United Microelectronics Corporation’s price-earnings ratio is 64.2 compared to the industry median at 31.0. This means that it has a higher price relative to its earnings compared to its peers. This makes United Microelectronics Corporation less attractive for value investors.

United Microelectronics Corporation’s price-to-book ratio is higher than its peers. This could make United Microelectronics Corporation less attractive for value investors when compared to the industry median at 2.75.

You can read more about United Microelectronics Corporation’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 & Semiconductor Equipment 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 & Semiconductor Equipment stocks as well as other industrys.

Choosing Which of the 3 Best Semiconductors & Semiconductor Equipment 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.

• ChipMOS TECHNOLOGIES INC. stock has a Value Grade of B.
• Trio-Tech International stock has a Value Grade of B.
• United Microelectronics Corporation stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Semiconductors & Semiconductor Equipment 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 & Semiconductor Equipment Stocks

Want to learn more about Semiconductors & Semiconductor Equipment 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.

• 3 Undervalued Semiconductors & Semiconductor Equipment Stocks for Monday, October 07
• 5 Undervalued Semiconductors & Semiconductor Equipment Stocks for Friday, October 04
• 4 Undervalued Semiconductors & Semiconductor Equipment Stocks for Thursday, October 03
• Mutual Funds Converting to ETFs for Tax Efficiency and Convenience

AAII Disclaimer

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