5 Highly Liquid Semiconductors Undervalued By EPS Trends

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 |  Includes: EXAR, PLAB, POWI, VECO, VSH
by: Kapitall

Do you like looking for potentially undervalued stocks? For ideas on how to start your own value search, we ran a screen you may be interested in.

We began by screening the semiconductors industry for stocks with strong liquidity, with current ratios above 3. The current ratio is current assets/current liabilities, so ratios above 3 indicate the company has at least 3 times the liquid assets to cover their short-term liabilities.

Then we screened for those stocks that may also be undervalued, by comparing price trends to changes in EPS estimates over the last month.

Based on the assumption that P/E is equal to a constant k, increases in EPS should be matched by increases in price. When they don't match up, a mispricing may have occurred.

We screened for stocks with faster growth in EPS estimates than price over the last month, which may indicate that these names are being undervalued.

For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

Tool provided by Kapitall.

Do you think these stocks are trading below their fair value? Use this list as a starting point for your own analysis.

List sorted by increase in EPS estimate over the last month.

1. Veeco Instruments Inc. (NASDAQ:VECO): Designs, manufactures, and markets equipment to make high brightness light emitting diodes, solar panels, hard-disk drives, and other devices. Market cap at $1.29B, most recent closing price at $33.24. Current ratio at 4.84. The EPS estimate for the company's current year increased from 1.28 to 1.52 over the last 30 days, an increase of 18.75%. This increase came during a time when the stock price changed by -5.22% (from 35.24 to 33.4 over the last 30 days).

2. Power Integrations Inc. (NASDAQ:POWI): Designs, develops, manufactures, and markets proprietary, high-voltage, analog, and mixed-signal integrated circuits in the United States and internationally. Market cap at $1.13B, most recent closing price at $39.70. Current ratio at 8.64. The EPS estimate for the company's current year increased from 1.58 to 1.85 over the last 30 days, an increase of 17.09%. This increase came during a time when the stock price changed by -5.86% (from 41.81 to 39.36 over the last 30 days).

3. Exar Corp. (NASDAQ:EXAR): Engages in the design, contract manufacture, and sale of silicon, software, and subsystem solutions for industrial, telecom, networking, and storage applications. Market cap at $339.44M, most recent closing price at $7.56. Current ratio at 6.31. The EPS estimate for the company's current year increased from 0.17 to 0.19 over the last 30 days, an increase of 11.76%. This increase came during a time when the stock price changed by -4.83% (from 8.07 to 7.68 over the last 30 days).

4. Vishay Intertechnology Inc. (NYSE:VSH): Manufactures and supplies semiconductors and passive electronic components in the United States, Europe, and Asia. Market cap at $1.61B, most recent closing price at $10.23. Current ratio at 4.38. The EPS estimate for the company's current year increased from 1.03 to 1.14 over the last 30 days, an increase of 10.68%. This increase came during a time when the stock price changed by -13.04% (from 11.73 to 10.2 over the last 30 days).

5. Photronics Inc. (NASDAQ:PLAB): Engages in the manufacture and sale of photomasks primarily in the United States, Europe, and Asia. Market cap at $337.52M, most recent closing price at $5.59. Current ratio at 3.47. The EPS estimate for the company's current year increased from 0.54 to 0.57 over the last 30 days, an increase of 5.56%. This increase came during a time when the stock price changed by -2.23% (from 5.82 to 5.69 over the last 30 days).

*EPS data sourced from Yahoo! Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.