Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 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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5 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 5 undervalued stocks in the Semiconductors & Semiconductor Equipment industry for Thursday, October 24, 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 0.08 compared to the industry median at 3.26, 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 46.30 compared to the industry median at 30.20. 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 19.9, 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 (0.85%). 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 2.48. 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 34.90. 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.

Canadian Solar Inc.’s Value Grade

Value Grade:

Canadian Solar Inc., together with its subsidiaries, provides solar energy and battery energy storage products and solutions in in Asia, the Americas, Europe, and internationally. The company operates through two segments, CSI Solar and Recurrent Energy. The CSI Solar segment designs, develops, and manufactures solar ingots, wafers, cells, modules, and other solar power and battery storage products. It offers standard solar modules and battery storage solutions; solar system kits, such as inverters, racking systems, and other accessories; power electronic products; and engineering, procurement, and construction (EPC) services, as well as operates battery energy storage projects. The Recurrent Energy segment engages in the development, construction, maintenance, and sale of solar power and battery storage projects; and operation of solar power plants; and sale of electricity. This segment provides operation and maintenance (O&M;) services, including monitoring, inspections, repair, and replacement of plant equipment; and site management and administrative support services for solar projects, as well as asset management services. It has a fleet of solar and battery energy storage plants in operation with an aggregate capacity of approximately 1,005 MWp and 600 MWh. It serves distributors, system integrators, project developers, and installers/EPC companies, as well as utility companies or grid operators, public utilities, licensed suppliers, corporate offtakers, and commercial, industrial or government end users. It sells its products primarily under its Canadian Solar brand name. Canadian Solar Inc. was incorporated in 2001 and is based in Guelph, Canada.

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.

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

Canadian Solar Inc.’s price-earnings ratio is 22.4 compared to the industry median at 30.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Canadian Solar Inc. more attractive for value investors.

Canadian Solar Inc.’s price-to-book ratio is higher than its peers. This could make Canadian Solar Inc. less attractive for value investors when compared to the industry median at 2.48.

You can read more about Canadian Solar 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.

Magnachip Semiconductor Corporation’s Value Grade

Value Grade:

Magnachip Semiconductor Corporation, together with its subsidiaries, designs, manufactures, and supplies analog and mixed-signal semiconductor platform solutions for communications, the Internet of Things, consumer, computing, industrial, and automotive applications. It provides display solutions, including source and gate drivers, and timing controllers that cover a range of flat panel displays used in mobile communications, automotive, entertainment devices, monitors, notebook PCs, tablet PC and TVs applied with liquid crystal display, organic light emitting diodes (OLED), and micro light emitting diode (Micro LED) panel. The company also offers metal oxide semiconductor field-effect transistors, insulated-gate bipolar transistors, AC-DC converters, DC-DC converters, LED drivers, regulators, and power management integrated circuits for a range of devices comprising televisions, smartphones, mobile phones, wearable devices, desktop PCs, notebooks, tablet PCs, and other consumer electronics, as well as for power suppliers, e-bikes, photovoltaic inverters, LED lighting, and motor drives; and OLED display driver integrated circuit products. It serves consumer, computing, communication, automotive and industrial electronics OEMs, original design manufacturers, and electronics manufacturing services companies, as well as subsystem designers in the Asia Pacific, the United States, and Europe. The company sells its products through a direct sales force, as well as through a network of agents and distributors. Magnachip Semiconductor Corporation was incorporated in 2003 and is based in Cheongju-si, South Korea.

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.

Magnachip Semiconductor Corporation has a Value Score of 97, which is considered to be undervalued.

Magnachip Semiconductor Corporation’s price-to-book ratio is higher than its peers. This could make Magnachip Semiconductor Corporation less attractive for value investors when compared to the industry median at 2.48.

You can read more about Magnachip Semiconductor 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.

Photronics, Inc.’s Value Grade

Value Grade:

Photronics, Inc., together with its subsidiaries, engages in the manufacture and sale of photomask products and services in the United States, Taiwan, China, Korea, Europe, and internationally. It offers photomasks that are used in the manufacture of integrated circuits and flat panel displays (FPDs); and to transfer circuit patterns onto semiconductor wafers, and FDP substrates. The company offers electrical and optical components. It sells its products to semiconductor and FPD manufacturers, designers, and foundries, as well as to other high-performance electronics manufacturers through its sales personnel and customer service representatives. The company was formerly known as Photronic Labs, Inc. and changed its name to Photronics, Inc. in 1990. Photronics, Inc. was incorporated in 1969 and is based in Brookfield, Connecticut.

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.

Photronics, Inc. has a Value Score of 80, which is considered to be undervalued.

Photronics, Inc.’s price-earnings ratio is 10.3 compared to the industry median at 30.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Photronics, Inc. more attractive for value investors.

Photronics, Inc.’s price-to-book ratio is higher than its peers. This could make Photronics, Inc. less attractive for value investors when compared to the industry median at 2.48.

You can read more about Photronics, 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.

SolarEdge Technologies, Inc.’s Value Grade

Value Grade:

SolarEdge Technologies, Inc., together with its subsidiaries, designs, develops, manufactures, and sells direct current (DC) optimized inverter systems for solar photovoltaic (PV) installations in the United States, Germany, the Netherlands, Italy, rest of Europe, and internationally. It operates in two segments, Solar and Energy Storage. The Solar segment offers power optimizers, inverters, batteries, storage solutions, electric vehicle chargers, smart tracking solutions, and smart energy management software products; Monitoring platform, a cloud-based monitoring platform, which collects power, voltage, current, and system data sent from inverters and power optimizers; and MySolarEdge app, that enables system owners to track their real-time system production and household energy consumption. This segment also provides Designer platform, an web-based tool that helps solar professionals to plan, build, and validate residential and commercial systems; Mapper application for registering the physical layout of new PV sites installed with DC optimized inverter systems; SetApp application that activates and configurate inverters; and grid services. The Energy Storage segment provides lithium-ion cells and containerized battery systems (BESS) solutions for commercial, industrial, and utility markets; modules and racks; purpose-built components and solutions, and hardware and software tools; and pre and post sales engineering support for designing, building, and managing battery and system solutions. The company offers e-mobility products, automated machines, and UPS products; and pre-sales support, ongoing trainings, and technical support and after installation services. It sells its products through solar installers and distributors, electrical equipment wholesalers, and PV module manufacturers, as well as engineering, procurement, and construction firms. SolarEdge Technologies, Inc. was incorporated in 2006 and is headquartered in Herzliya, Israel.

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.

SolarEdge Technologies, Inc. has a Value Score of 87, which is considered to be undervalued.

SolarEdge Technologies, Inc.’s price-to-book ratio is higher than its peers. This could make SolarEdge Technologies, Inc. less attractive for value investors when compared to the industry median at 2.48.

You can read more about SolarEdge 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 & 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 5 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.
• Canadian Solar Inc. stock has a Value Grade of B.
• Magnachip Semiconductor Corporation stock has a Value Grade of A.
• Photronics, Inc. stock has a Value Grade of B.
• SolarEdge Technologies, Inc. stock has a Value Grade of A.

Now that you have a bit more background about each of the 5 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.

• 5 Undervalued Semiconductors & Semiconductor Equipment Stocks for Thursday, October 24
• 4 Undervalued Semiconductors & Semiconductor Equipment Stocks for Wednesday, October 23
• 4 Undervalued Semiconductors & Semiconductor Equipment Stocks for Tuesday, October 22
• 4 Undervalued Semiconductors & Semiconductor Equipment Stocks for Monday, October 21

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