3 Small-Cap Semiconductor Stocks Surging to New Highs

The ongoing semiconductor chip shortage has affected several industries, primarily forcing electronics and automotive manufacturers to cut production. However, according to a Vox report, ‘The chip shortage has a silver lining.’ Investors’ interest in the semiconductor industry is evident from the SPDR S&P Semiconductor ETF’s (XSD) 22.7% gains over the past month.

The Biden administration has been taking steps to incentivize domestic production of semiconductor chips amid the global supply chain crisis. Moreover, the growing demand for chips across most industries is expected to help the industry grow. According to an International Data Corporation report, the semiconductor market is expected to grow 17.3% in 2021.

Against this backdrop, we think it could be wise to bet on quality small-cap semiconductor stocks Camtek Ltd. (CAMT), Axcelis Technologies, Inc. (ACLS), and SMART Global Holdings, Inc. (SGH). They are hovering near their new highs but still have plenty of upsides left.

Camtek Ltd. (CAMT)

Headquartered in Migdal HaEmek, Israel, CAMT develops, manufactures, and sells inspection and metrology equipment. It serves various semiconductor industry segments and sells its products across the Asia Pacific, the U.S., and Europe. It has a market capitalization of $2.11 billion.

CAMT’s revenues increased 76.4% year-over-year to $70.69 million for the fiscal third quarter ended September 30, 2021. The company’s gross profit came in at $35.79 million, representing an 84.3% year-over-year rise. Its net income increased 207.2% year-over-year to $18.50 million.

For fiscal 2022, analysts expect CAMT’s revenue to be $290 million, representing an 8.2% year-over-year rise. The company’s EPS is expected to increase 1.3% year-over-year to $1.60 in fiscal 2022. Over the past year, the stock has gained 159.3% to close Friday’s trading session at $48.15, after hitting its 52-week high of $49.40.

CAMT’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

Also, the stock has an A grade for Sentiment, and a B grade for Growth, Momentum, and Quality. Within the Semiconductor & Wireless Chip industry, it is ranked #36 out of 102 stocks. Click here to see the additional POWR Ratings for Value and Stability for CAMT.

Axcelis Technologies, Inc. (ACLS)

With a market capitalization of $2.05 billion, ACLS designs, manufactures, and services ion implantation and other processing equipment used in the fabrication of semiconductor chips. In addition, it offers a complete line of high energy, high current, and medium current implanters for all application requirements.

On November 2, ACLS introduced the GSD Ovation high current and high energy batch implanters. The company’s President and CEO, Mary Puma, commented, "Since 2015, 200mm fab construction and expansion has been surging, resulting in a shortage of new and used 200mm equipment. This growth in 200mm IC production is unprecedented. Axcelis is committed to support this significant demand, by providing an evolutionary batch configuration designed to seamlessly integrate with our installed base as well as provide new 200mm fabs with the industry's best 200mm batch implant solution."

For the fiscal third quarter ended September 30, 2021, ACLS’ total revenue increased 60% year-over-year to $176.69 million. The company’s gross profit came in at $76.51 million, up 58.9% year-over-year. Its income from operations came in at $36.39 million, up 162.2% year-over-year.

ACLS’ revenue is expected to come in at $646.78 million in fiscal 2021, representing a 36.3% year-over-year rise. In addition, the company’s EPS is expected to increase 98.5% year-over-year to $2.68 in the current year. Also, it surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 142.3% to close Friday’s trading session at $61.41. It is currently trading 2.9% below its 52-week high of $63.23, which it hit on November 10, 2021.

It is no surprise that ACLS has an overall B rating, equating to a Buy in our proprietary rating system. In addition, it has a B grade for Growth, Momentum, and Quality.

ACLS is ranked #11 in the same industry. Click here to see ACLS’ ratings for Sentiment, Value, and Stability as well.

SMART Global Holdings, Inc. (SGH)

SGH designs and manufactures specialty solutions for the computing, memory, and LED markets in the United States, Brazil, China, Europe, and internationally. It operates through Memory Solutions, Intelligent Platforms Solutions, and LED Solutions segments. It has a market capitalization of $1.46 billion.

On October 12, 2021, SGH’s CEO Mark Adams said, “As we enter fiscal 2022, we believe we have the right platform to continue to execute our growth and diversification strategy while increasing value for our stakeholders.”

SGH’s net sales increased 33.7% year-over-year to $1.50 billion for the fiscal fourth quarter ended August 27, 2021. Its gross profit came in at $308.38 million, representing a 42.5% year-over-year rise. Its operating income came in at $55.22 million, up 33.6% year-over-year.

Analysts expect SGH’s revenue to grow 21.1% year-over-year to $1.82 billion in fiscal 2022. In addition, the company’s EPS is expected to increase 22.8% to $6.41 in the current year. Also, it surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 105.6% to close Friday’s trading session at $59.86 after hitting its 52-week high of $60.75.

SGH’s strong fundamentals are reflected in its POWR ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.

In addition, it has an A grade for Growth, and a B grade for Value and Momentum. It is ranked #48 in the same industry. Click here to see the additional POWR Ratings for SGH (Stability, Sentiment, and Quality).

CAMT shares were trading at $47.34 per share on Monday afternoon, down $0.81 (-1.68%). Year-to-date, CAMT has gained 116.07%, versus a 26.12% rise in the benchmark S&P 500 index during the same period.

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

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