by EightFolding
Thinking about picking up semi stocks or funds? There may be substantial drops still to come.
A 25% decline in the semiconductor index would wipe out all the gains made during the pandemic. The SOX has fallen 32% this year through Wednesday’s close, its biggest annual decline since 2008.
Knowing what a central role semiconductors play in every aspect of our future I’m tempted by these current low prices to add new positions in companies involved in semiconductor manufacture and sales such as INTC, TXN, MU, TSM, GFS, AVGO, ON, WOLF, AMAT, KLAC, LRCX, QCOM, AMD, and NVDA.
However even though many of these semiconductor stocks are near 52 week lows, and appear to be good deals now, some analysts suggest they will drop much further than they already have. So the appearance of a bargain might be misleading.
Priced at 15 times projected profits, the semiconductor index is below the average valuation over the past decade, according to data compiled by Bloomberg. Micron Technology Inc. and Qualcomm Inc. are among the cheapest, trading at about 10 times.
Those multiples may not be as cheap as they look, given that earnings estimates are still falling. The Citigroup analysts, Christopher Danely and Kelsey Chia, see the industry “entering the worst semiconductor downturn in a decade given the recession and inventory build.”
Quotes are from Bloomberg News via BNN: www.bnnbloomberg.ca/almost-no-stock-spared-as-semiconductor-rout-spreads-1.1813392
[I have positions in AVGO and ON]