World Semiconductor Trade Statistics (WSTS) forecasts the semiconductor space to grow by over 13% in 2024, led by the growth in the memory sector.
Trading.biz analyst Rahul Nambiampurath mentions that key stock players like Entegris (ENTG), ON Semiconductor (ON), ACM Research (ACMR), Advanced Micro Services (AMD), and Marvell Technology (MVRL) might be on the radar of short-to-mid-term investors.
“AMD is foraying rapidly into the AI chip space while ON has its sights set on sensor devices and power management, both key semiconductor-led, crucial use cases,” mentions Rahul.
He adds that for ACMR, the novel wet processing technology might be a game changer, whereas MVRL is already making giant strides in the optical digital signal processing market.
As a company specializing in manufacturing, developing, and supplying products aligned with the semiconductor space, the focus is currently on Entegris as a short-term buying opportunity. Rahul picks the following reasons for being bullish on ENTG:
- Beat market-wide earning expectations of 58 cents a share to reach 65 cents a share.
- Efficient asset utilization despite a weak year in 2023 regarding price action and performance
- Effective management and improved operational efficiency
- Conservative and practical earnings expectation of 63 cents a share for Q1, 2024
Here is what Entegris CEO Bertrand Loy has to add to make the investors more bullish, besides the 6-month price surge of almost 37% at the counter to date:
“Our unit-driven model has displayed strong resilience during the current industry downturn. We closed 2023 with fourth-quarter sales and non-GAAP EPS results above our guidance.
“For the year, we outperformed the market by 6 points, driven in large part by our strong position at the leading-edge technology nodes.
“In addition, we divested three non-core businesses and used the proceeds and free cash flow to pay off $1.3 billion of debt. We also continued to make significant R&D and capacity investments, which are vital for our long-term growth.”
He also mentioned that in 2024, the demand in the semiconductor space has stabilized, and the company expects a gradual industry-wide recovery.
ENTG broke out of a long-standing Cup-and-Handle pattern in October 2023, flashing buy signals at around $105. A similar Cup-and-Handle formation seems to have been completed last week, with $121 being the key buy level. At present, ENTG is trading at $131.17, and if the relative strength index (RSI) indicator can go above 70, even for a short while, the stock could quickly breach the $136 level.
