Semiconductor Equipment Growth Stays Massive: 5 Stocks to Buy for Now and 2018

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Entegris

This small cap play has seen some very solid insider buying over the last year. Entegris, Inc. (NASDAQ: ENTG) is a global developer, manufacturer and supplier of microcontamination control products, specialty chemicals and materials handling solutions for manufacturing processes in the semiconductor and other high-technology industries.

The Company operates in three business segments: Specialty Chemicals and Engineered Materials (SCEM), Advanced Materials Handling (AMH) and Microcontamination Control (MC).

The analysts remain very positive on the stock and recently reiterated their Buy rating on the shares and raised the price target to $28 from $26. This compares with a consensus figure of $27.94. The stock closed trading on Friday at $24.55.

MKS Instruments

This is a company that flies somewhat lower under the radar, but offers solid upside. MKS Instruments (NASDAQ: MKSI) provides instruments, subsystems, and process control solutions that measure, control, power, monitor, and analyze critical parameters of manufacturing processes in the United States and internationally. The company operates through four segments: Advanced Manufacturing Capital Equipment, Global Service, Asia Region Sales, and Other.

MKS offers pressure measurement and control products used for various pressure ranges and accuracies; materials delivery products, including gas flow measurement products and vacuum valves; automation and control products, such as automation platforms, programmable automation controllers, temperature controllers, and software solutions for use in automation, I/O and distributed programmable I/O, gateways, and connectivity products; and vacuum products comprising vacuum containment components, effluent management subsystems and custom stainless steel chambers, vessels, and pharmaceutical process equipment hardware and housings.

The Stifel analysts feel the increase in Applied Material’s display equipment business will have positive implications for MKS as they supply many key subsystems for Applied’s display tools. In addition, MKS acquired Newport last year and added the company’s iconic Spectra-Physics laser brand to its product line-up.

MKS shareholders receive a 0.9% dividend. The Stifel price target is posted at $85, and the consensus is set at $73. Shares closed Friday at $79.20.

Teradyne

This a lesser known industry leader that could also have solid upside potential. Teradyne (NYSE: TER) provides automatic test equipment (ATE) serving semiconductors, printed circuit board assemblies, and other (automotive, broadband etc.) segments. Its products deliver a competitive advantage to semiconductor, electronics, automotive, and network systems companies. Teradyne operates in three segments: Semiconductor Test Systems, Assembly Test Systems, and Other Test Systems.

The analysts like this company as a somewhat ancillary play to the sector and cited the growing emerging robotics silo as more of a reason to own the shares than the fundamentals related to wafer fab equipment. The company also consistently buys stock back.

Shareholders are paid a small 0.85% dividend. The Stifel price target is posted at $40, and the consensus is set at $38.33. Shares closed Friday at $33.97.

It may make sense to buy partial positions now and see how earnings come out. Given the strong moves by these top companies, they will have to deliver strong results and positive guidance to push higher in the near-term.