Is there more upside for these two semiconductor stocks?

Chris Lau, Kapitall: These two semiconductor stocks are making moves. Keep an eye out for this opportunity!

After slipping lower for several weeks, Micron Technology (MU) rose over 10 percent on the week. Its rival, SanDisk Corp. (SNDK) forecast higher profitability for the year. SanDisk’s market capitalization is now close to $19 billion. It is closing in on Micron’s $25.6 billion market cap.

Gross margins strong

SanDisk boosted its gross margin forecast to as high as 49 percent. The firm previously expected gross margin would be between 45– 48 percent. Revenue of $6.4-$6.8 billion in 2014 was also in line with consensus forecasts.

In Q1, SanDisk earned $1.44 per share, beating estimates by $0.19 per share. Revenue was up 1.51 billion compared to last year.

Micron’s Elpida acquisition pays off

Not to be outdone, Micron also showed its Elpida acquisition was contributing well to profits. Yet Micron’s shares did not surge higher after quarterly results. The firm is cautious with its outlook, as it mentioned 3D NAND technology and the transition to other new products will create some short term uncertainty. This helped SanDisk outperform Micron over the last three months.

SanDisk more attractive

SanDisk appears to be a more attractive semiconductor play at this time. Its stock offers a dividend of $0.225 per share quarterly, which yields 1.1 percent. Micron does not pay a dividend.

SanDisk also introduced new products in three categories: e nterprise solid state drives (SSDs) with a capacity that ranges from 100 GB to 960 GB; an embedded flash storage called iNAND Extreme that supports 64GB storage for mobile (Android) devices; and  a 128GB microSD chip that pushes the limits of mobile storage.

Do you think semiconductors are a good investment? Use the links below to start your own research.

1. SanDisk Corp. ( SNDK): Designs, develops, manufactures, and markets NAND-based flash data storage card products that are used in various consumer electronics products. Market cap at $17.08B, most recent closing price at $75.81.

 

2. Micron Technology Inc. ( MU): Engages in the manufacture and marketing of semiconductor devices worldwide. Market cap at $25.89B, most recent closing price at $24.75.

(Written by Chris Lau, a Kapitall contributor. All data sourced from Zacks Investment Research.)

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