Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 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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6 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 6 undervalued stocks in the Semiconductors & Semiconductor Equipment industry for Wednesday, October 09, 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.

ASE Technology Holding Co., Ltd.’s Value Grade

Value Grade:

ASE Technology Holding Co., Ltd., together with its subsidiaries, provides semiconductors packaging and testing, and electronic manufacturing services in the United States, Taiwan, Asia, Europe, and internationally. It develops, constructs, sells, leases, and manages real estate properties; produces substrates; offers information software, equipment leasing, investment advisory, and warehousing management services; commercial complex, after-sales, and support services; manages parking lot services; processes and sells computer and communication peripherals, electronic components, telecommunications equipment, and motherboards; and imports and exports goods and technology. ASE Technology Holding Co., Ltd. was founded in 1984 and is based in Kaohsiung, 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.

ASE Technology Holding Co., Ltd. has a Value Score of 92, which is considered to be undervalued.

When you look at ASE Technology Holding Co., Ltd.’s price-to-sales ratio at 0.07 compared to the industry median at 3.39, this company has a lower price relative to revenue compared to its peers. This could make ASE Technology Holding Co., Ltd.’s stock more attractive for value investors.

ASE Technology Holding Co., Ltd.’s price-earnings ratio is 45.00 compared to the industry median at 30.70. This means it has a higher share price relative to earnings compared to its peers. This could make ASE Technology Holding Co., Ltd. less attractive for value investors.

Now, let’s assess ASE Technology Holding Co., Ltd.’s EV/EBITDA ratio, also known as enterprise multiple. At 7.3, when compared to the industry median of 19.2, 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. ASE Technology Holding Co., Ltd.’s shareholder yield is higher than its industry median ratio of (0.75%). 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. ASE Technology Holding Co., Ltd.’s price-to-book ratio is lower than its industry median ratio of 2.62. This could make ASE Technology Holding Co., Ltd. more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at ASE Technology Holding Co., Ltd.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. ASE Technology Holding Co., Ltd.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 38.35. This could make ASE Technology Holding Co., Ltd. more attractive because the lower P/FCF ratio indicates that ASE Technology Holding Co., 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.

AXT, Inc.’s Value Grade

Value Grade:

AXT, Inc. designs, develops, manufactures, and distributes compound and single element semiconductor substrates. The company offers indium phosphide for use in data center connectivity using light/lasers, high-speed data transfer in data centers, 5G communications, fiber optic lasers and detectors, consumer devices, passive optical networks, silicon photonics, photonic integrated circuits, thermo-photovoltaics, RF amplifier and switching, infrared light-emitting diode (LEDS) motion control, lidar for robotics and autonomous vehicles, and infrared thermal imaging. It also provides semi-insulating gallium arsenide (GaAs) substrates for use in Wi-Fi and IoT devices, transistors, direct broadcast television, power amplifiers, satellite communications, and solar cells; and semi-conducting GaAs substrates that are used in LEDs, screen displays using micro-LEDs, printer head lasers and LEDs, 3-D sensing using VCSELs, data center communication using VCSELs, sensors for industrial robotics/near-infrared sensors, optical couplers, solar cells, night vision goggles, lidar for robotics and autonomous vehicles, and other lasers, as well as laser machining, cutting, and drilling. In addition, the company offers germanium substrates for use in multi-junction solar cells for satellites, optical sensors and detectors, terrestrial concentrated photo voltaic cells, infrared detectors, and carrier wafer for LED. Further, it provides 6N+ and 7N+ purified gallium, boron trioxide, gallium-magnesium alloy, pyrolytic boron nitride (pBN) crucibles, and pBN insulating parts. It sells its products through direct salesforce in the United States, China, and Europe, as well as through independent sales representatives and distributors in Japan, Taiwan, Korea, and internationally. The company was formerly known as American Xtal Technology, Inc. and changed its name to AXT, Inc. in July 2000. AXT, Inc. was incorporated in 1986 and is headquartered in Fremont, 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.

AXT, Inc. has a Value Score of 70, which is considered to be undervalued.

AXT, Inc.’s price-to-book ratio is higher than its peers. This could make AXT, Inc. less attractive for value investors when compared to the industry median at 2.62.

You can read more about AXT, 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.

CVD Equipment Corporation’s Value Grade

Value Grade:

CVD Equipment Corporation, together with its subsidiaries, designs, develops, manufactures, and sells equipment to develop and manufacture materials and coatings in the United States and internationally. It operates through three segments: CVD Equipment, Stainless Design Concepts, and CVD Materials. The CVD Equipment segment offers chemical vapor deposition, physical vapor transport, and thermal process equipment under the FirstNano brand for various markets, such as high power electronics, aerospace advanced materials for gas turbine jet engines, and nanomaterials used in batteries, as well as semiconductors, LEDs, carbon nanotubes, nanowires, solar cells, and other industrial and research applications. The Stainless Design Concepts segment provides ultra-high purity gas and chemical delivery control systems, including gas cylinder storage cabinets, custom gas and chemical delivery systems, gas and liquid valve manifold boxes, and gas isolation boxes for semiconductor fabrication processes, aerospace, solar cells, LEDs, carbon nanotubes, nanowires, and industrial applications. The CVD Materials segment offers products related to advanced materials and coatings, such as MesoPlasma printing services and products comprising heaters, antennas, and sensors to aerospace, satellite, power generation, defense, and other markets. The company also provides annealing, diffusion, and low pressure chemical vapor deposition furnaces; and standard and custom fabricated quartz-ware used in its equipment and other customer tools. The company was incorporated in 1982 and is headquartered in Central Islip, New York.

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.

CVD Equipment Corporation has a Value Score of 66, which is considered to be undervalued.

CVD Equipment Corporation’s price-to-book ratio is higher than its peers. This could make CVD Equipment Corporation less attractive for value investors when compared to the industry median at 2.62.

You can read more about CVD Equipment 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.

Pixelworks, Inc.’s Value Grade

Value Grade:

Pixelworks, Inc., together with its subsidiaries, develops and markets semiconductor and software solutions for mobile, home and enterprise, and cinema markets in the United States, Japan, China, Taiwan, Korea, and Europe. The company offers imageprocessor integrated circuits, such as embedded microprocessors, digital signal processing technology, and software that control the operations and signal processing within high-end display systems; visual processor integrated circuits that works with a mobile application processor; and transcoder integrated circuits which includes software that control the operations and signal processing for converting multiple bitrates, resolutions and codecs to provide bandwidth efficient video transmissions based on industry standard protocols. It also provides software and platform licensing products comprising Pixelworks Pro Software, a software that enables development and customize the “look and feel” of mobile products by use of various features, such as absolute color accuracy, HDR tone mapping, SDR-to-HDR conversion, and others; and TrueCut Motion Platform, content creation tool which provides the ability to dial in a motion look on a shot-by-shot basis. The company distributes its products to integrators, branded manufacturers, and branded suppliers. Pixelworks, Inc. was founded in 1997 and is based in Portland, Oregon.

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.

Pixelworks, Inc. has a Value Score of 68, which is considered to be undervalued.

Pixelworks, Inc.’s price-to-book ratio is higher than its peers. This could make Pixelworks, Inc. less attractive for value investors when compared to the industry median at 2.62.

You can read more about Pixelworks, 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.

TOYO Co., Ltd.’s Value Grade

Value Grade:

TOYO Co., Ltd. engages in the upstream production of wafer and silicon, midstream production of solar cell, downstream production of photovoltaic (PV) modules, and other stages of the solar power supply chain. Additionally, the company also manufactures solar PV modules. The company was founded in 2022 and is based in Tokyo, Japan.

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.

TOYO Co., Ltd. has a Value Score of 68, which is considered to be undervalued.

TOYO Co., Ltd.’s price-earnings ratio is 11.0 compared to the industry median at 30.7. This means that it has a lower price relative to its earnings compared to its peers. This makes TOYO Co., Ltd. more attractive for value investors.

TOYO Co., Ltd.’s price-to-book ratio is higher than its peers. This could make TOYO Co., Ltd. less attractive for value investors when compared to the industry median at 2.62.

You can read more about TOYO Co., Ltd.’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.

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 69, which is considered to be undervalued.

Trio-Tech International’s price-earnings ratio is 26.1 compared to the industry median at 30.7. 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 2.62.

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.

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 6 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.

• ASE Technology Holding Co., Ltd. stock has a Value Grade of A.
• AXT, Inc. stock has a Value Grade of B.
• CVD Equipment Corporation stock has a Value Grade of B.
• Pixelworks, Inc. stock has a Value Grade of B.
• TOYO Co., Ltd. stock has a Value Grade of B.
• Trio-Tech International stock has a Value Grade of B.

Now that you have a bit more background about each of the 6 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.

• 6 Undervalued Semiconductors & Semiconductor Equipment Stocks for Wednesday, October 09
• 6 Undervalued Semiconductors & Semiconductor Equipment Stocks for Tuesday, October 08
• 3 Undervalued Semiconductors & Semiconductor Equipment Stocks for Monday, October 07
• 5 Undervalued Semiconductors & Semiconductor Equipment Stocks for Friday, October 04

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