Semiconductor stocks were battered by the recent market sell-off, but tech has made a strong recovery, and with several interesting trends like the Internet of Things and artificial intelligence on the rise, it is still an exciting time to be investing in chip-making corner of the technology sector.
While tech behemoths like Microsoft (MSFT – Research Report) and Apple (AAPL – Research Report) may hog all the headlines, it has really been the companies powering their technologies—the semiconductor manufacturers—that have been garnering the attention of Wall Street.
Indeed, as our “Computer and Technology” sector has gained nearly 19% over the past year, semiconductor companies have been a driving factor behind its growth. The aforementioned emerging tech trends have created new consumer demand, and the semiconductor makers are delivering.
Luckily, the proven Zacks stock picking methods are effective across all industries. Check out these Zacks Rank #1 (Strong Buy) semiconductor stocks right now:
Top 10 Medical Stocks To Own For 2019: Mobile TeleSystems OJSC(MBT)
Russia’s Public Joint-Stock Company Mobile TeleSystems isn’t exactly a monopoly, but with annual revenue of $7.7 billion, it’s easily the biggest telecom provider in the Russian Federation (according to data from S&P Global Market Intelligence).
Approximately 92% of MTS’s revenue comes from Russia — $7 billion annually, versus $5.5 billion for No. 2 MegaFon and $4.7 billion for Veon, which round out Russia’s Big 3 telcos. And with a much bigger business comes much bigger profit margins. S&P Global data show MTS reaping a monster 21.5% operating profit margin from its business, versus Veon’s 18.1% and Megafon’s 16.2%.
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These margins helped Mobile TeleSystems earn $891 million in profit last year, but on a $9.6 billion market capitalization, that means investors can acquire a piece of this dominant telecom for the low, low price of just 10.8 times earnings. Is that a fair price?
I think so. With almost all of its profit translated immediately into dividends (a payout ratio of 92%), MTS pays its shareholders a 10.5% dividend yield. This in and of itself would come close to justifying the P/E ratio. But MTS is also growing strongly despite repeated rounds of sanctionsbeing imposed on Russia from abroad. Analysts who follow the company’s fortunes predict MTS will grow earnings at 14% annually over the next five years.
Which just goes to show — even just a "virtual" monopoly can make for a mighty rewarding investment.
Top 10 Medical Stocks To Own For 2019: Devon Energy Corporation(DVN)
Devon Energy (NYSE:DVN) is one of the top oil and gas producers in the country. However, after running into some production problems earlier in the year, shares of the shale giant have tumbled nearly 15% even though oil prices are still moving higher. Consequently, Devon Energy’s stock sells for one of the lowest valuations in its peer group.
That dirt-cheap price doesn’t reflect Devon’s ability to cash in on higher oil prices since it’s on pace to produce more than $2.5 billion in free cash through 2020, and that’s assuming $60 oil, which might be conservative now that crude is in the upper $60s. Devon seems to agree that its stock is just too inexpensive right now, which is why the company recently authorized a $1 billion share buyback program — enough to retire 6% of its outstanding shares. That might be just the beginning because Devon is planning to sell as much as $5 billion in noncore assets, which when combined with its growing free cash flow, could give it a huge war chest to repurchase shares, making it an excellent oil stock to buy while it’s still cheap.
Top 10 Medical Stocks To Own For 2019: QUALCOMM Incorporated(QCOM)
Qualcomm recently announced a new stock repurchase plan.
The chipmaker said late on Wednesday that it is rolling out a $10 billion share-repurchase program, adding that the repurchase plan will have no expiration date. The move will replace a $15 billion repurchase authority that the company established in 2015 and has $1.2 billion remaining.
Qualcomm also recently said that it will be reducing its workforce in order to cut down costs.
QCOM shares surged 2% after hours yesterday.
Top 10 Medical Stocks To Own For 2019: Procter & Gamble Company (PG)
Dividend investors know that businesses focusing on consumer goods can be cash cows. Procter & Gamble’s track record of annual dividend increases is over 60 years long. And its current dividend yield of almost 4% shows that the company behind products like Tide laundry detergent and Pampers diapers isn’t skimping on its payouts.
Some investors aren’t entirely comfortable with the fact that the pace of P&G’s dividend growth has slowed in recent years. After a long period of double-digit-percentage annual increases, boosts since 2015 have been in the 1% to 4% range, culminating with its increase earlier this spring. That reflects some of the difficulties that Procter & Gamble has seen in maintaining the pace of sales growth that it would like, with its fiscal second-quarter results in April having shown only a 1% rise in organic sales. Yet with moves like improved supply-chain logistics, a transformed marketing message, and the search for more promising new products, Procter & Gamble is positioning itself to see its stock do better and reward patient investors for their loyalty.
Top 10 Medical Stocks To Own For 2019: Alexion Pharmaceuticals, Inc.(ALXN)
US pharma stock Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is best known for rare blood disorder drug Soliris. So far this drug has proved extremely successful. Now the company is looking to expand Soliris into new treatment opportunities, including for Generalized Myasthenia Gravis (gMG). This is a chronic autoimmune neuromuscular disease that causes weakness in skeletal muscles.
Five-star Cowen & Co analyst Eric Schmidt calls Alexion a ‘top pick’. He is looking forward to the new possibilities for Soliris in gMG. “We think a favorable financial outlook, strong launch for Soliris in gMG, and increased confidence in ALXN1210’s profile could position ALXN shares for a potential re-rating as investors gain confidence in the growth and durability of the company’s complement franchise,” Schmidt told investors on April 26.
Indeed, the gMG launch is now on track to be the drug’s best-ever launch says Schmidt. He estimates that gMG sales might have reached between $20-25 million. Bearing in mind solid Q1 financials and strong underlying demand trends, Schmidt predicts upside potential of 40%. This would take shares all the way from $118 to $163.
Overall, ALXN demonstrates an overwhelmingly positive outlook from the Street. In the last three months, 14 out of 15 analysts have published ‘Buy’ ratings on ALXN. Their average price target of $157 is 33% above the current share price.