3 High-Growth Semiconductors Undervalued By EPS Trends

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Includes: CAVM, ENTR, MLNX
by: Kapitall

Do you look for value opportunities in the stock market? We ran a screen with that idea in mind.

We began by screening the semiconductors industry for high-growth stocks, with 5-year projected EPS growth above 15%.

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.

click for interactive chart

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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. Mellanox Technologies, Ltd. (MLNX): Engages in the design, development, marketing, and sale of interconnect products primarily in North America, Israel, Europe, and Asia. Market cap at $4.37B, most recent closing price at $107.84. 5-year projected EPS growth at 49.50%. The EPS estimate for the company's current year increased from 2.27 to 3.73 over the last 30 days, an increase of 64.32%. This increase came during a time when the stock price changed by 39.18% (from 76.82 to 106.92 over the last 30 days).

2. Cavium, Inc. (CAVM): Designs, develops, and markets semiconductor processors for intelligent and secure networks. Market cap at $1.54B, most recent closing price at $31.03. 5-year projected EPS growth at 20.64%. The EPS estimate for the company's current year increased from 0.27 to 0.32 over the last 30 days, an increase of 18.52%. This increase came during a time when the stock price changed by 12.55% (from 27.56 to 31.02 over the last 30 days).

3. Entropic Communications, Inc. (ENTR): Designs, develops, and markets systems solutions to enable connected home entertainment. Market cap at $486.58M, most recent closing price at $5.53. 5-year projected EPS growth at 17.39%. The EPS estimate for the company's current year increased from 0.34 to 0.36 over the last 30 days, an increase of 5.88%. This increase came during a time when the stock price changed by -1.43% (from 5.61 to 5.53 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.