The Nasdaq has been in recovery mode over the past 3 weeks after a September rout that left many high-growth Tech stocks underwater. Leading stock Apple (AAPL) was down over 25% from its peak and the stock is still trying to get up off the mat.
Not all recently hit areas are having as tough a time rebounding however with leading Semiconductor stocks now hitting a new high on volume led by heavyweight stocks in this area such as Qualcomm (QCOM) and Taiwan Semiconductor (TSM).
My MEM Edge Report has been alerting readers to the outsized growth prospects for chip stocks for some time now as demand for 5G networks and faster PCs has been driving demand. Last week's sharp rally in Semis helped push the group to new highs with several smaller companies reversing recent downtrends.
DAILY CHART OF SEMICONDUCTOR ETF (SOXX)
Inphi Corp. (IPHI) is one such company and after reporting explosive 2nd quarter growth in early August with management guiding higher for both this year and next, the stock hit new highs that had Wall Street downgrading their outlook due to high valuations.
Inphi makes products that are critical for moving large amounts of digital information quickly between and within data centers. More recently, analysts are raising their price targets to as high as $157 as demand from 5G and telecom is expected to drive growth for many quarters to come.
Next up is Formfactor Inc. (FORM) which saw explosive gains last week in a delayed response to the company's mid- September news of the creation of engineering probes optimized for use in supercomputers. The cutting edge probes will be used to meet exponential growth in data center power consumption as well as the demand for high performance image sensors elsewhere.
DAILY CHART OF FORMFACTOR INC. (FORM)
While last week's rally pushed FORM back into an uptrend, the stock is currently extended out of a buy zone and would need a pullback to the $27 area before being attractive. Analysts are raising guidance for next year's earnings which call for 25% growth.
While both these smaller Semiconductor stocks are on my Watch List, subscribers to my MEM Edge Report were alerted to both Qualcomm (QCOM) and Taiwan Semiconductor (TSM) some time ago and subscribers have seen gains averaging 56% over the past several months.
For those who'd like to receive similar alerts with precise entry and exit points, take a 4-week trial of my bi-weekly MEM Edge Report for a nominal fee. You'll also receive in-depth market and sector analysis that will provide you with the confidence needed to outperform in this currently volatile market.
Mary Ellen McGonagle - MEM Investment Research