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The Zacks Analyst Blog Highlights: VanEck Vectors Semiconductor, iShares PHLX Semiconductor, PowerShares Dynamic Semiconductor, SPDR S&P Semiconductor and First Trust Nasdaq Semiconductor
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For Immediate Release
Chicago, IL – April 18, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include VanEck Vectors Semiconductor ETF (SMH - Free Report) , iShares PHLX Semiconductor ETF (SOXX - Free Report) , PowerShares Dynamic Semiconductor (PSI - Free Report) , SPDR S&P Semiconductor ETF (XSD - Free Report) and First Trust Nasdaq Semiconductor ETF (FTXL - Free Report) .
Should You Snap Up Downtrodden Semiconductor ETFs Now
The once-soaring semiconductor space had hit the wall in late March afterNvidia,one of the best performing semiconductor stocks in the S&P 500 over the past year, tumbled 8% upon suspending self-driving car tests on public roads. The announcement came after a self-driving Uber car deploying Nvidia technology struck and killed a woman in Arizona (read: 5 Reason Why FANG ETFs Lost Their Charm in March).
There is another reason for which the semiconductor stocks are little subdued this year. The slump in the cryptocurrency market have hit the space hard. Mining of cryptocurrencies needs the usage of semiconductors. A hardware known as an ASIC (Application-Specific Integrated Circuit) is designed explicitly for mining bitcoin. Since bitcoin is down about 27% so far this year, semiconductors are sure to fall flat(read: Ethereum ETF? The Bitcoin Crushing Digital Currency Explained).
Overall, VanEck Vectors Semiconductor ETF was down 2.1% in the last one month (as of Apr 13, 2018), though it is still up 6.6% in the year-to-date frame.
Time to Buy the Dip?
Upbeat Sales Fundamentals
After generating record annual sales in 2017, the global semiconductor industry was off to great 2018. Per the Semiconductor Industry Association (SIA), global sales of semiconductors grew 21% year over year to $30.4 billion in February 2018.
Worldwide sales in February were 2.2% lower than the January 2018 due to seasonality. February marked the 19th successive month of “year-to-year sales increases and growing by double-digit percentages across all major regional markets.”
Tax Reform Benefit
Trump’s tax reform is another tailwind for the space. Big semiconductor companies have huge cash piles overseas and are likely to bring that cash back thanks to the one-time repatriation tax and overall lower tax rate. After repatriation, this cash may be used to dole out dividends to shareholders and used to buy back shares (read: Tax Bill: What ETF Investors Need to Know).
Bitcoin to Bounce Back with Tax Day Pressure Passed?
Many Bitcoin investors expect a price rebound after Tax Day. This is because investors are needed to pay taxes on their cryptocurrency holdings if they realize capital gains. “But since many cryptocurrency exchanges don't send customers tax documents, many may not even know they have to pay taxes on their coins - or how much.” In order to pay the taxes on those gains, “investors may have sold some of their coins”, contributing to selling pressure, according to an article published Business Insider.
Now with tax-paying pressure not in place, bitcoin will likely set in a rally and touch $25,000 by the end of 2018, per the head of research at Fundstrat Global Advisors. If this really happens, semiconductor stocks may see some way up.
Upgrade in Nvidia’s Rating
Morgan Stanley (MS) upgraded its rating for Nvidia shares to overweight from equal-weight this month. The company foresees that the company will report profits above expectations in its fiscal 2019 thanks to its leading positions in the artificial intelligence and gaming markets. This strength will more than make up for the slump in the cryptocurrency market and the resultant loss of the semiconductor companies.
Notably, Nvidia is expected to report on May 8, 2018. The stock has a Zacks Rank #3 (Hold) and an Earnings ESP of +0.76%. According to our methodology, a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) when combined with a positive Earnings ESP increases our chances of predicting an earnings beat.
ETFs in Focus
If investors are bullish on the long-term fundamentals, they can tap the space with the following ETFs.
iShares PHLX Semiconductor ETF
PowerShares Dynamic Semiconductor
SPDR S&P Semiconductor ETF
First Trust Nasdaq Semiconductor ETF
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: VanEck Vectors Semiconductor, iShares PHLX Semiconductor, PowerShares Dynamic Semiconductor, SPDR S&P Semiconductor and First Trust Nasdaq Semiconductor
For Immediate Release
Chicago, IL – April 18, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include VanEck Vectors Semiconductor ETF (SMH - Free Report) , iShares PHLX Semiconductor ETF (SOXX - Free Report) , PowerShares Dynamic Semiconductor (PSI - Free Report) , SPDR S&P Semiconductor ETF (XSD - Free Report) and First Trust Nasdaq Semiconductor ETF (FTXL - Free Report) .
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Tuesday’s Analyst Blog:
Should You Snap Up Downtrodden Semiconductor ETFs Now
The once-soaring semiconductor space had hit the wall in late March afterNvidia,one of the best performing semiconductor stocks in the S&P 500 over the past year, tumbled 8% upon suspending self-driving car tests on public roads. The announcement came after a self-driving Uber car deploying Nvidia technology struck and killed a woman in Arizona (read: 5 Reason Why FANG ETFs Lost Their Charm in March).
There is another reason for which the semiconductor stocks are little subdued this year. The slump in the cryptocurrency market have hit the space hard. Mining of cryptocurrencies needs the usage of semiconductors. A hardware known as an ASIC (Application-Specific Integrated Circuit) is designed explicitly for mining bitcoin. Since bitcoin is down about 27% so far this year, semiconductors are sure to fall flat(read: Ethereum ETF? The Bitcoin Crushing Digital Currency Explained).
Overall, VanEck Vectors Semiconductor ETF was down 2.1% in the last one month (as of Apr 13, 2018), though it is still up 6.6% in the year-to-date frame.
Time to Buy the Dip?
Upbeat Sales Fundamentals
After generating record annual sales in 2017, the global semiconductor industry was off to great 2018. Per the Semiconductor Industry Association (SIA), global sales of semiconductors grew 21% year over year to $30.4 billion in February 2018.
Worldwide sales in February were 2.2% lower than the January 2018 due to seasonality. February marked the 19th successive month of “year-to-year sales increases and growing by double-digit percentages across all major regional markets.”
Tax Reform Benefit
Trump’s tax reform is another tailwind for the space. Big semiconductor companies have huge cash piles overseas and are likely to bring that cash back thanks to the one-time repatriation tax and overall lower tax rate. After repatriation, this cash may be used to dole out dividends to shareholders and used to buy back shares (read: Tax Bill: What ETF Investors Need to Know).
Bitcoin to Bounce Back with Tax Day Pressure Passed?
Many Bitcoin investors expect a price rebound after Tax Day. This is because investors are needed to pay taxes on their cryptocurrency holdings if they realize capital gains. “But since many cryptocurrency exchanges don't send customers tax documents, many may not even know they have to pay taxes on their coins - or how much.” In order to pay the taxes on those gains, “investors may have sold some of their coins”, contributing to selling pressure, according to an article published Business Insider.
Now with tax-paying pressure not in place, bitcoin will likely set in a rally and touch $25,000 by the end of 2018, per the head of research at Fundstrat Global Advisors. If this really happens, semiconductor stocks may see some way up.
Upgrade in Nvidia’s Rating
Morgan Stanley (MS) upgraded its rating for Nvidia shares to overweight from equal-weight this month. The company foresees that the company will report profits above expectations in its fiscal 2019 thanks to its leading positions in the artificial intelligence and gaming markets. This strength will more than make up for the slump in the cryptocurrency market and the resultant loss of the semiconductor companies.
Notably, Nvidia is expected to report on May 8, 2018. The stock has a Zacks Rank #3 (Hold) and an Earnings ESP of +0.76%. According to our methodology, a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) when combined with a positive Earnings ESP increases our chances of predicting an earnings beat.
ETFs in Focus
If investors are bullish on the long-term fundamentals, they can tap the space with the following ETFs.
iShares PHLX Semiconductor ETF
PowerShares Dynamic Semiconductor
SPDR S&P Semiconductor ETF
First Trust Nasdaq Semiconductor ETF
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.