When prospectors traveled west to California during the gold rush, many had no intention of doing any digging. Instead, they’d set up businesses selling digging equipment with the gold hunters as clients. Striking it rich while hunting for gold was rare, but the people selling picks and shovels made money no matter how successful their clients turned out to be. That’s where the popular investing term “picks and shovels” originated, describing a company that sold tools to people participating in the hot industry of the day. Right now, that hot industry is semiconductors, and the market is once again reaching new all-time highs. Today, we’ll look at three under-the-radar stocks that fit the definition of “picks and shovels” semiconductor plays.
Small-cap stocks can be risky, but they also tend to provide more upside than larger companies. Each of the following three companies has a market cap below $10 billion and a crucial service or component required in advanced semiconductor production. As the demand for chips and memory increases, so should the value of these stocks.
