Seven electronic stocks to keep an eye on post chip shortage

Highlights

• Amphenol Corp’s (NYSE:APH) dividend yield is 0.77%. The stock rose 17.08% YTD.
• Turtle Beach Corp’s (NASDAQ:HEAR) P/E ratio is 10.98. Its stock rose 31.79% YTD.
• Cisco Systems’ (NASDAQ:CSCO) dividend yield is 2.49%; the stock gained 32.31% YTD.

The electronics industry is booming. Thanks to the rapid innovation of different products, from smartphones to AI-driven gadgets. However, the global microchip shortage in recent months has cast a shadow on its progress. Moreover, reports of Taiwanese chipmaker TSMC’s plans to increase prices of its processor chips may have generated some interest this week. Although it hasn’t revealed such a plan, media reports claimed there is a possibility.   

If that happens, the costs of many electronic goods, including smartphones of major global brands, may skyrocket. Additionally, the automakers have been reeling under the chip crisis, pushing companies to adjust their production and delivery timelines. It will be interesting to see how the electronics industry copes with these challenges.

Market experts, however, forecast an improvement in the situation by next year when the covid-related disruptions would have significantly reduced. Here we explore seven electronic stocks that stand to gain from an improvement in the chip crisis.

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Amphenol Corporation (NYSE:APH)

The company is headquartered in Connecticut and develops high-speed cable, electrical, electronic, fiber-optic connectors, sensors, and antennas. APH went public in 1991.

The company’s net sales and net income for the second quarter ended June 30, 2021, were US$2.65 billion and US$370 million, respectively. In the same quarter of the previous year, its net sales were US$1.99 billion, and its net income was US$258 million. 

Amphenol has a P/E of 33.53 and a forward P/E one year of 31.64. The company pays an annual dividend of US$0.58. Its dividend yield is 0.77%, and its market cap is US$45.23 billion.

The stock rose 17.08% YTD at the closing price of US$75.62 on Aug 26, 2021.

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Turtle Beach Corporation (NASDAQ:HEAR)

Turtle Beach is a gaming and accessory brand based in California. Donerail Group is one of the largest shareholders of Turtle Beach. The company floated its IPO in 2012.

Turtle’s revenue in the June quarter was US$78.6 million compared to US$79.7 million in the year-ago quarter. Its net income was US$1.7 million against US$8.2 million in the prior year. 

The company has a market cap of US$449.8 million, a P/E ratio of 10.98, and a forward P/E one year of 17.55. The stock closed at US$27.38 on Aug 26 and gave a 31.79% return YTD.

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Knowles Corporation (NYSE:KN)

Knowles is an Illinois-based company and provides audio processing, micro-acoustic microphones & speakers besides precision-device solutions. The products are used in electric vehicles, defense, industrial, communication and consumer devices.

Knowles’s revenue in the June quarter was US$199.8 million compared to US$152 million in the same period of 2020. Its net income was US$17.6 million against a net loss of US$19.5 million in the June quarter of the previous year.

In August, the company announced a US$160,000 grant to female students at the College of Engineering, Illinois University, Chicago, as part of a multi-year commitment. 

Knowles’s IPO came in 2014. The company has a market capitalization of US$1.8 billion, a P/E ratio of 28.37, and a forward P/E one year of 17.50. The stock closed at US$19.6 on Aug 26. It rose 7.92% YTD.

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Dolby Laboratories (NYSE:DLB)

This audio and imaging technology company is headquartered in California. It develops home audio systems, broadcast and surround sound for cinema, and in-car entertainment systems.

Dolby’s revenue in the quarter ended June 25, 2021, was US$286.8 million against US$246.9 million in the same period of 2020. Its net income was US$54.6 million compared to US$67.3 million in the same quarter of 2020.

The company went public in 2005. Its market capitalization is US$10 billion, its P/E ratio is 35.5, and the forward P/E ratio one year is 34.37.

It has a dividend yield of 0.88% and annualized dividend of US$0.88. The DLB stock rose by 2.46% YTD. It closed at US$99.32 on Aug 26.

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Advanced Micro Devices, Inc. (NASDAQ:AMD)

This semiconductor company is based in California and provides microprocessors, graphic processing units, chip products for gaming, PC, and data centers.

AMD’s revenue and net income for the quarter ended June 26, 2021, were US$3.85 billion and US$710 million, respectively. In the same period of 2020, its revenue was US$1.93 billion, and net income was US$157 million. 

The company’s IPO came in 1979. It has a market cap of US$135 billion, a P/E ratio of 39.71, and a forward P/E one year of 47.26. The stock soared 21.53% YTD. The AMD stock closed at US$107.27 on Aug 26.

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Cisco Systems, Inc. (DE) (NASDAQ:CSCO)

The company is headquartered in California and supplies computer hardware and software. Its products include routers, switches, wireless applications, firewalls, etc.

Cisco went public in 1990. It has a market capitalization of US$250 billion.

In FY 2021, ended July 31, its revenue was US$49.82 billion compared to US$49.30 billion in FY 2020. The net income was US$10.59 billion in FY 2021 against US$11.21 in FY 2020. 

The company’s P/E ratio is 23.68, forward one-year P/E is 19.22, the dividend yield is 2.49%, and annualized dividend is US$1.48. The stock gained 32.31% YTD. It closed at US$59.2 on Aug 26.

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Universal Electronics Inc. (UEIC)

The company is based in Arizona and develops and manufactures electronic products like audio-video accessories, wireless automation, and software.

The company’s net sales and net income in the June quarter of 2021 were US$150.5 million and US$5.59 million, respectively. In the same quarter of 2020, its net sales and net income were US$153 million and US$14.4 million, respectively.

The company launched its IPO in 2013. Universal has a market capitalization of US$680 million, a P/E ratio of 23.14, and a forward P/E one year of 20.07.

The stock closed at US$49.37 on Aug 26, 2021. It fell 3.85% YTD.

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Bottomline

It takes more than one company in the supply chain to make an electronic device. Some companies are involved in making components while others assemble them. As such, any disruption in the raw material supplies could potentially disrupt the entire industry. Nevertheless, the electronic market is hopeful of a smooth recovery from the covid pandemic.