The rising concerns over multiple interest rate hikes this year may not bode well for the technology sector. However, the increasing adoption of advanced technology-based solutions and surging demand for high-speed data and connectivity should boost the 5G industry's growth.
The 5G revolution is making its way around the globe. The global 5G services market is expected to grow at a CAGR of 29.4% by 2030.
Given this backdrop, it could be wise to bet on lesser-known 5G stocks MACOM Technology Solutions Holdings, Inc. (MTSI) and CEVA, Inc. (CEVA). These two companies are not making headlines every day but are well-positioned to capitalize on the industry tailwinds.
Click here to checkout our 5G Industry Report for 2022
MACOM Technology Solutions Holdings, Inc. (MTSI)
MTSI designs and manufactures analog semiconductor solutions in wireless and wireline applications across the radio frequency, microwave, millimeter-wave, and lightwave spectrum internationally. The company offers a portfolio of standard and custom devices, including integrated circuits, multi-chip modules, diodes, amplifiers, switches and switch limiters, passive and active components, and subsystems.
On January 25, 2022, MTSI announced that four manufacturing sites had achieved AS9100D certification. AS9100D is the internationally recognized Quality Management System standard for Aviation, Space, and Defense organizations. Stephen G. Daly, President and CEO of MTSI, said, "Certifying our U.S. manufacturing sites to AS9100D supports our long-term growth strategy and exemplifies our team’s commitment to product quality."
MTSI’s revenue increased 7.5% year-over-year to $159.60 million for the fiscal first quarter ended December 31, 2021. The company’s adjusted operating income grew 29.6% year-over-year to $49 million, while its adjusted net income came in at $45.40 million representing a 41% year-over-year increase. Also, its adjusted EPS came in at $0.64, up 39.1% year-over-year.
Analysts expect MTSI’s EPS and revenue to increase 26.5% and 10.3% year-over-year to $2.72 and $669.53 million, respectively, in fiscal 2022. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past nine months, the stock soared 20% to close yesterday’s trading session at $61.27. It is currently trading 23.7% below its 52-week high of $80.30, which it hit on December 28, 2021.
MTSI’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Growth and Quality. Within the A-rated Semiconductor & Wireless Chip industry, MTSI is ranked #12 out of 97 stocks. Click here to see the additional POWR Ratings for MTSI (Value, Sentiment, Momentum, and Stability).
CEVA, Inc. (CEVA)
CEVA operates as a licensor of wireless connectivity and intelligent sensing platforms to semiconductor and original equipment manufacturer companies worldwide. It designs and licenses various digital signal processors, AI processors, wireless media, and complementary software for sensor fusion, image enhancement, computer vision, voice input, and artificial intelligence.
On January 26, 2022, CEVA announced that it had expanded its IP market reach by introducing the Fortrix SecureD2D IP solution, enabling secure data exchange between different chipsets within a Heterogeneous System on Chip. This could lead to increasing demand for its solutions.
CEVA’s revenue increased 21% year-over-year to $34.10 million for the fiscal fourth quarter ended December 31, 2021. The company’s non-GAAP operating income grew 8% year-over-year to $7.20 million, while its non-GAAP net income came in at $5.30 million representing a 13% year-over-year increase. Also, its non-GAAP EPS came in at $0.22, up 10% year-over-year.
For the quarter ending March 31, 2022, analysts expect CEVA’s EPS and revenue to increase 1,600% and 25% year-over-year to $0.17 and $31.76 million, respectively. It surpassed the consensus EPS estimates in three of the trailing four quarters. It is currently trading 45.9% below its 52-week high of $73.98, which it hit on February 17, 2021.
CEVA’s POWR Ratings reflect solid prospects. The company has an overall rating of B, which translates to Buy in our proprietary rating system. It has an A grade for Growth and a B grade for Quality and Sentiment.
Click here to see the additional POWR Ratings for CEVA (Stability, Momentum, and Value). CEVA is ranked #21 in the same industry.
MTSI shares were unchanged in after-hours trading Wednesday. Year-to-date, MTSI has declined -21.23%, versus a -5.97% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
2 Under the Radar 5G Stocks to Buy on the Dip: MACOM Technology Solutions and CEVA StockNews.com
