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The stocks I would like to assess in this part of the series are Nvidia, AMD, Infineon and ASML Holdings. In my opinion, semiconductor stocks have immense potential as we move into the future. Today, I am looking to add one or two of these stocks to my portfolio.
From company financials, efficiency, valuations and volatility:
Infineon Technologies trades at a 3x revenue multiple, while Nvidia trades at 18x, ASML Holdings at 11x and AMD at 5x.
Asml Holdings has nil debt on its books, while AMD comes in a close second at 5% Debt/Equity.
Return on common equity: ASML holdings leads the way with 59% adn Nvidia at 26.4% and Infineon at 18%.
Valuation: Infineon has the lowest PE ratio at 18.9, while AMD and Nvdia are currently at PE ratios of 95 and 88 respectively.
Infineon is the only stock that has a positive PEG ratio.
From trends in financial data:
Revenue growth trending lower for Nvidia, AMD and ASML holdings. Infineon delivers a consistent revenue growth rate.
Infineon operating income margin continues to see growth in a slowing growth environment. This could change later this year, analysts expect European earnings to bottom out in Q3 or Q4 this year.
Inventory on a rising trend for all four stocks. This could be a concern if there is a slowdown in the economy or business conditions.
Fair Value:
Using the DCF and DDM methods to estimate fair value. ASML Holdings and Nvidia are already trading above their fair value. While Infineon shows growth potential on both methods.
Post this quick evaluation of fundamentals, I will add Infineon to the portfolio while I add Nvidia, AMD and ASML Holdings to the watchlist.
There are other semiconductor stocks such as Intel, Qualcomm, ST Microelectronics and Texas Instruments that I have not considered yet but will circle back to at a later point.
In the next post, I evaluate Bonds as I look to add one or two positions to the portfolio.
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