Technology

Internet of Things Potential Gigantic for Semiconductors: 5 Stocks to Buy Now

Cypress Semiconductor

This stock is still trading below highs posted in 2015 and is a solid play for more aggressive accounts. Cypress Semiconductor Corp. (NASDAQ: CY) manufactures and sells embedded system solutions for the automotive, industrial, home automation and appliances, consumer electronics and medical markets.

Its product portfolio is comprised of programmable-systems-on-chip (PSoC), general purpose microcontrollers, analog integrated circuits, USB controllers, connectivity chips (Bluetooth, Wi-Fi, Zigbee) and memory chips.

The company has continued an expansion of its automotive portfolio, which will help enable manufacturers to bring high-tech automotive systems historically available only in luxury models to mainstream vehicles. Leveraging a wide range of differentiated products that includes microcontrollers, power management integrated circuits, memories and touch-sensing solutions, the portfolio enables value-added systems for Cypress’s top-tier automotive customers.

The Merrill Lynch team also see the company as leading the USB-C market, which provides a common interface for data, power, accessory and Ethernet. They see the mobile and PC industry to come on early and autos to follow.

Shareholders are paid a big 3.09% dividend. The 16 Merrill Lynch price target compares with the posted consensus target of $15.58. The stock closed most recently at $14.24.

Microchip Technology

Microchip Technology Inc. (NASDAQ: MCHP) not only is a huge IoT benefactor, but a leading provider of microcontroller, mixed-signal, analog and flash-IP solutions, providing low-risk product development, lower total system cost and faster time to market for thousands of diverse customer applications worldwide.

The company offers microcontrollers, such as 8-bit, 16-bit and 32-bit microcontrollers under the PIC brand name and 16-bit dsPIC digital signal controllers, as well as provides microcontrollers for automotive networking, computing, lighting, power supplies, wireless communication and wireless audio applications.

Microchip Technology investors are paid a very solid 2.85% dividend. The $85 Merrill Lynch price target is about the same as the $85.12 consensus price objective. The stock closed Tuesday at $76.73 per share.

Skyworks Solutions

This stock has been on a roll since last summer. Skyworks Solutions Inc. (NASDAQ: SWKS) designs, develops, manufactures and markets proprietary semiconductor products, including intellectual property worldwide.

The product portfolio includes amplifiers, attenuators, battery chargers, circulators, DC/DC converters, demodulators, detectors, diodes, directional couplers, diversity receive modules, filters, front-end modules, hybrids, LED drivers, low noise amplifiers, mixers, modulators, optocouplers/optoisolators, phase shifters, phase locked loops, power dividers/combiners, receivers, switches, synthesizers, technical ceramics, VCOS/synthesizers and voltage regulators.

Last year the company was reported to have made an offer to buy Microsemi, which provides a comprehensive portfolio of semiconductor and system solutions for communications, defense and security, aerospace and industrial markets. The results of the potential deal remain to be seen.

Skyworks Solutions investors are currently paid a 1.13% dividend. The Merrill Lynch price objective recently was raised to $110 from $96, and the consensus target price is at $102.46. Shares closed trading most recently at $104.

These five top companies all have a big hand in the growing IoT sphere. Given the big runs in their stocks, investors may want to buy partial positions now and see if May doesn’t bring some selling.