The arrival of 5G, the growth of the digital economy, the increasing digitization of systems and processes, and the development of computing are all major ongoing themes playing out for a few years. In fact, over the past decade, the use of electronics has risen significantly. These digital technologies require heavy use of semiconductors and chips. As a result, the order books of companies that make such semiconductor components and chips have swelled. So, if you are screening for semiconductor stocks to invest in now, then consider names like Texas Instruments, AMD, and Qualcomm. They are among the top semiconductor chip makers in the world. Texas Instruments is known for its analog chips and embedded processors. You may also recognize Texas Instruments for its TI series of calculators. The company is credit with being the inventor of the first hand-held calculator.
More On Valuations And Recent Results
Texas Instruments is currently trading at a PE ratio of around 27. The 5-year historical average is approximately 24. The price-to-book ratio is above 16, while the 5-year average is about 11. The price-to-sales ratio is around 11, while the 5-year average is 7.4. So, from a valuation perspective, the stock looks priced at a premium at this time. The dividend yield also points to a similar trend. The stock was trading at a yield of 2.26%, whereas the 5-year average is above 2.4%. Does this mean that you should not buy semiconductor stocks today, especially stocks like Texas Instruments? Let us look at the most recent quarterly result of Texas Instruments.
The company reported its Q12021 earnings results towards the end of April 2021. Revenues rose from $3.3 billion in Q12020 to $4.3 billion in Q12021, a growth of 29% year-on-year. Operating profit also jumped from $1.2 billion to $1.9 billion, an increase of 56% year-on-year. The net income per share also rose from $1.24 in Q12020 to $1.87 in Q12021, a growth of 51% year-on-year.