Monday, August 15, 2022
HomeInvestorsFive-Star Analyst Vijay Rakesh Likes These 2 Semiconductor Stocks

Five-Star Analyst Vijay Rakesh Likes These 2 Semiconductor Stocks


If the market were a rollercoaster, this (year) would have been one of the biggest rides in recent times. The rug has been pulled from under the feet of investors several times this year. Understandably, their sentiments are still very sensitive to any news as they look out for a bottom to this bear market while being cautious, leading to stock prices swinging sharply at every drop of a hat.

Inflation shows no signs of dying down, and the Russia-Ukraine war is still raging with greater intensity. Moreover, experts are suggesting sharper interest raise hikes to curb the 40-year-high inflation to avoid a 1970s-era situation of high inflation and low/negative economic growth, and the Federal Reserve is likely to be considering walking down that path.

Given the current situation, expert opinions have never been as crucial as they are now. However, among the plethora of market experts, which include insiders, analysts, hedge fund managers, financial bloggers, and influential individual investors, it sometimes becomes difficult to track the activities of those at the top of their game.

That is why we have been regularly easing the process by discussing the credentials, stock activities, opinions, and recommendations of various experts with the help of TipRanks’ Expert Center.

Spotlight on Today’s Expert

In today’s Expert Spotlight piece, we talk about one of the five-star analysts ranked by TipRanks, whose stock recommendations have generated a 20.5% average return per rating.

Vijay Rakesh, Managing Director and senior analyst of semiconductors and automotive Technologies at Mizuho (MFG) Securities, is an alumnus of the University of California, MBA. He worked for various renowned financial firms, including Oppenheimer and Sterne Agee, before joining Mizuho in 2015.

Rakesh holds the #114 position among all 7,911 analysts tracked on TipRanks, and #152 among 20,283 overall experts in the TipRanks universe. This rating was the result of a complex Star Ranking system that considers an expert’s success rate, along with the average returns generated per transaction or rating and statistical significance, which increases with each rating.

The analyst has a success rate of 56% with his ratings. Furthermore, his recommendations generated an alpha of 8.9% over the S&P 500 (SPX) index and 3.5% over the technology sector performance in the past year.

Rakesh’s most accurate stock recommendation was ON Semiconductor (ON) in the year between April 7, 2020, and April 7, 2021, during which the stock had gained 235.9%.

The analyst made 10 recommendations in June so far, among which nine were Buy recommendations. However, we picked two stocks from the Buy list based on his success with rating each of them.

Telecommunications major Qualcomm specializes in the development of wireless products, equipment, and services. The company has been leading the industry in 3G, 4G, and 5G wireless technologies and is expected to maintain its leading position for a long time on the back of its patents and technical expertise and an industry tenure of more than three decades.

Rakesh, though optimistic about the longer-term prospects, highlighted the near-term headwinds that Qualcomm, or the whole microchip sector for that matter, is expected to continue to face. These headwinds include weakening PC and smartphone demand.

The analyst noted that several checks conducted on the smartphone supply chain indicate that not only have the supply issues kept the June quarter performance under pressure but they are also expected to hang heavy on the rest of the year’s performance.

This is why Rakesh reiterated his Buy rating on Qualcomm but slashed his price target to $168, from $185.

Wall Street is cautiously optimistic about the stock, with a Moderate Buy rating based on 12 Buys and seven Holds. The average QCOM price forecast of $192.24 implies 46.1% upside potential.

Rakesh is a Qualcomm stock bull and has been recommending a Buy for the stock for at least the past two years. Importantly, 53% of Rakesh’s ratings on the QCOM stock have been successful. Moreover, had an investor followed the analyst’s ratings on this stock, he/she would have earned an average of 4.6% returns on investment.

Advanced Micro Devices (NASDAQ: AMD)

The stock of semiconductor giant AMD has been pummeled by the current economic headwinds and has lost about 44% this year thus far. However, that doesn’t mean that the company’s prospects should be undermined. After all, AMD has always been an outperformer until this unusually tough year.

In its analyst day held earlier this month, AMD seemed confident about its business strength and reinforced its full-year guidance. The company further projected its revenues to witness a CAGR of 20% in the medium term.

Moreover, the addition of peer Xilinx to its business in Q1 this year led to an expansion of TAM (total addressable market) to about $110 billion. This acquisition is expected to bode well for AMD in terms of earnings per share, margins, and cash flows.

However, it is important to note here that, as mentioned above, the microchip sector is expected to be under pressure this entire year due to issues like dwindling PC demand. This slowdown is likely to trickle into AMD’s business as well, despite the company having strong momentum in its Ryzen PC processors.

However, amid all the turmoil, Rakesh believes that AMD has several growth catalysts that will help the company gain share, including server market share gains and a solid lineup of gaming consoles.

The analyst maintained a Buy rating on AMD with a price target of $145.
Moreover, 50% of Rakesh’s ratings on AMD were successful so far, returning 5.6% per rating on an average.

Among all the Wall Street analysts covering AMD, although the bulls are higher in number, the bears are still making sure that the overall stance is cautiously optimistic. AMD has a Moderate Buy consensus rating based on 15 Buys and 10 Hold ratings assigned in the past three months. The average AMD price target of $136.71 implies 69.2% upside potential.

Ending Note

Even though analysts may sometimes differ in opinion about a particular stock, it makes sense to take their analyses and research into consideration and make investment decisions consciously, especially in a bear market that is possibly heading into a recession.

Disclosure



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