With the second quarter underway and first-quarter earnings starting to pour in, many across Wall Street are beginning to look at the best avenues for the rest of 2021. One industry that looks like a sure winner is semiconductor capital equipment, and with good reason. For the third time in recent months, Goldman Sachs has raised its estimates on wafer fabrication equipment (WFE), which are machines that make and process semiconductors.
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Goldman Sachs expects this market to grow 22% year over year in 2021 and 10% in 2022, with 2021 sales of a massive $71 billion and 2022 sales of $78 billion. The analysts revised price targets and the research report said this:
We update estimates and 12-month price targets across our Semiconductor Capital Equipment and Semiconductor Materials coverage universe, as we account for recent industry checks (i.e. universally positive) and the improved WFE market outlook. Note our updated estimates are, for the most part, above FactSet consensus, which we expect to trend higher over the next few months as the market digests first quarter 2021 earnings season and positive data points related to customer spending (i.e. continued tightness in supply, increased evidence of growing government support, etc.).
Goldman Sachs has four top stocks are rated Buy, and they are very attractive additions for aggressive growth investors looking to add positions to this fast-growing industry. Remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Applied Materials
This is a premier semiconductor capital equipment stock. Applied Materials Inc. (NASDAQ: AMAT) provides manufacturing equipment, services and software to the semiconductor, display and related industries. It operates through three segments.
The Semiconductor Systems segment develops, manufactures and sells various manufacturing equipment that is used to fabricate semiconductor chips or integrated circuits. This segment also offers various technologies, including epitaxy, ion implantation, oxidation/nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching and selective deposition and removal, as well as metrology and inspection tools.
The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity comprising spares, upgrades, services, remanufactured earlier generation equipment and factory automation software for semiconductor, display and other products.
The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays, organic light-emitting diodes and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smartphones and other consumer-oriented devices, as well as equipment for processing flexible substrates.
Investors receive just a 0.72% dividend. Goldman Sachs raised the price target to $151 from $133. The Wall Street consensus target is in line at $133.75. Applied Materials stock has drifted lower this month and recently slipped below $134 a share.
Entegris
This outstanding mid-cap play has seen some very solid insider buying over the past year. Entegris Inc. (NASDAQ: ENTG) engages in the development, manufacture and supply of specialty materials for the microelectronics industry.
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