Why These 4 Semiconductor Stocks May Be the Absolute Best 5G Play

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Marvell Technology

This is one of the favored mid-cap picks at Jefferies. Marvell Technology Group Ltd. (NASDAQ: MRVL) is a fabless supplier of mixed-signal and analog semiconductor products to a number of storage, computing and communication applications, including hard disk drives, personal computers, servers, Ethernet switches, printers and connectivity markets.

Top analysts around Wall Street are very positive on the company’s purchase of Cavium, and many feel the deal adds significantly to the growth element for the stock. The addition also helps make Marvell solidly positioned in data center, cloud, enterprise, security and 5G.

The dividend yield is 1.07%. Jefferies has a $29 price target, while the consensus target is $26.68. Shares closed Tuesday at $22.40, up over 3% on the day.

Lattice Semiconductor

This stock was hit hard recently and offers investors a great entry point. Lattice Semiconductor Corp. (NASDAQ: LSCC) designs, develops and markets programmable logic products and related software. That includes semiconductor devices, evaluation boards, development hardware and related intellectual property licensing, services and sales.

The company provides smart connectivity solutions powered by its low-power FPGA, video ASSP, millimeter wave and IP products to the consumer, communications, industrial, computing and automotive markets. The stock was clobbered Monday when in presentation materials for its Analysts Day the company’s financial target model for three to four years included revenue growth in the low double digits and gross margin above 62%.

The $15.50 Jefferies price objective compares to the $14.79 consensus estimate. The stock was last seen trading at $12.16, up over 6% on the day.

Xilinx

Shares of this top chip company have been absolutely mauled over the past month and offer an incredible entry point. Xilinx Inc. (NASDAQ: XLNX) is a leading fabless supplier of high-density programmable logic devices, which are standard integrated circuits that offer significant advantages over custom logic chips, such as application-specific integrated circuits. They are used extensively in key end markets such as communications.

At its recent Analysts Day, the company reiterated its commitment to invest in research and development to drive growth with operating expense guidance of $1.35 billion, which was 4% above Street estimates. While that caused some to slightly lower earnings estimates, the stock setup looks especially attractive now after the recent 20% or so pullback after posting first-quarter results that missed on margins.

The Jefferies price target is $156. The consensus target is $131.78, and share rose almost 5% on Tuesday to close at $105.71.

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The bottom line for investors, and Jefferies is right on the money here, is that it will be quite a while before 5G wireless is sufficiently widespread for the average consumer in the United States to take advantage of it. In addition, tons of additional fiber will need to be deployed, and countless towers will need to be added as well. However, down the road a few short years, autonomous driving and other new catalysts could be huge for the companies involved.