Most tech stocks soared last year as the effects of the COVID-19 pandemic increased the world’s dependence on technology products and services. However, as the economy began recovering this year with fiscal and monetary policy support and a fast-paced mass vaccination program, investors rotated away from expensive tech stocks to quality cyclical stocks, driving a tech sell-off earlier this year. However, because recent corporate earnings have…
so far indicated solid performance by tech companies, and the demand for advanced technology is expected to continue increasing, investors are again focusing on quality tech stocks. This is evidenced by the tech-heavy Nasdaq Composite’s solid performance over the past month.
Investors’ renewed interest in tech stocks is also evident in the Technology Select Sector SPDR Fund’s (XLK) 7.9% returns over the past month versus the SPDR S&P 500 ETF Trust’s (SPY) 5.4% gains. And because the remote working and shopping trend is likely here to stay even after the pandemic subsides, several tech stocks that provide related software and technologies are expected to generate steady returns in the coming months.
As a result, we think it wise to bet on United Microelectronics Corporation (UMC – Get Rating), LG Display Co., Ltd. (LPL – Get Rating), Daktronics, Inc. (DAKT – Get Rating), and Computer Task Group, Incorporated (CTG – Get Rating). They are currently trading below $15 but hold immense upside potential based on the expected growth in their financials.
Headquartered in Hsinchu City, Taiwan, UMC is a semiconductor wafer foundry that operates internationally. The company does business through two segments—Wafer Fabrication and New Business. It provides circuit design, mask tooling, wafer fabrication, and assembly and testing services, and researches, develops, and manufactures products in the solar energy and LED industries.
UMC, eMemory and its subsidiary, PUFsecurity, last December announced the joint development of the world’s first PUF (Physical Unclonable Function)-based secure embedded flash solution. The product increases the security of MCU and SoC embedded NVM storage and protects user data and critical firmware assets. So, with an increasing need for products to protect software from bad actors and safeguard user data, the company should witness increasing demand with the solution.
UMC’s consolidated revenue increased 8.2% year-over-year to NT$45.30 billion for the fourth quarter, ended December 31, 2020. Its gross profit grew 178.3% year-over-year to NT$5.61 billion, while its net income increased 191.8% year-over-year to NT$11.20 billion. The company’s EPS increased 178.8% year-over-year to NT$0.92.
For the quarter ended March 31, 2021, analysts expect UMC’s EPS to come in at $0.10, which represents a 233.3% year-over-year increase. The company’s revenue is expected to increase 25.2% year-over-year in fiscal 2020 to $6.01 billion. The stock has gained 314.6% over the past year and closed yesterday’s trading session at $10.82.
UMC’s POWR Ratings reflect this promising outlook. The company has an A overall rating, which translates to a Strong Buy in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance.
The stock has a B grade for Momentum, Quality, Value, Growth, Stability, and Sentiment. Within the B-rated Semiconductor & Wireless Chip industry, UMC is ranked #1 of 98 stocks.
To see all the POWR Ratings for UMC, click here
Based in Seoul, South Korea, LPL manufactures and sells thin-film transistor liquid crystal display (TFT-LCD) and organic light emitting diode (OLED) technology-based display panels internationally. The company’s TFT-LCD and OLED technology-based display panels are primarily used in televisions, notebook computers, desktop monitors, tablet computers, and mobile devices.
In January, LPL unveiled its next-generation OLED TV display with improved picture quality at CES 2021 to demonstrate the evolution of OLED technology. The company plans to apply its advanced next-generation OLED technology to high-end TV models that are planned for launch later this year. It is also expected to introduce differentiated products, such as Film Cinematic Sound OLED (Film CSO). As a result of these introductions, LPL’s market dominance is expected to increase significantly in the premium TV markets.
LPL’s net sales increased 16% year-over-year to KRW7,461 billion for the fourth quarter, ended December 31, 2020. Its operating profit grew
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