Small-Cap Semiconductor Stocks You Need to Avoid.

Small-cap semiconductor stocks have been a topic of interest for many investors looking to capitalize on the rapid growth and technological advancements in the industry. However, recent financial health checks have raised concerns about the viability of these investments. In this article, we’ll take a closer look at the current state of small-cap semiconductor stocks and explore whether there are any hidden gems worth considering or if they are simply risky bets.

For those who have noticed, I haven’t published any new content in a while because I caught the influenza. I have been lying in bed, feeling sorry for myself and wallowing in man flu. But I am on my feet again, ready to write once more. Always #investinyourself. Health always comes first.

The TL;DR (Too Long; Didn’t Read)

• Small-cap semiconductor stocks are struggling, with many exhibiting poor profitability, growth, and overall financial performance.
• Most of these companies have experienced negative year-to-date (YTD) price changes, indicating a bearish market sentiment.
• NVE Corporation (NVEC) is an outstanding performer, with excellent ratings in profitability and liquidity, but has a negative YTD price change.
• Several companies, such as MaxLinear, Inc. (MXL), Navitas Semiconductor Corporation (NVTS), Intchains Group Limited (ICG), CEVA, Inc. (CEVA), and SkyWater Technology, Inc. (SKYT), have poor profitability, ROE, ROA, and Piotroski F-scores, which could be a cause for concern.
• Himax Technologies, Inc. (HIMX), ChipMOS TECHNOLOGIES INC. (IMOS), SMART Global Holdings, Inc. (SGH), and Alpha and Omega Semiconductor Limited (AOSL) present a mixed picture, with poor profitability metrics but fair to excellent liquidity and debt-to-equity ratios.
• Investors should be cautious and thoroughly assess the risks associated with these companies before making any investment decisions.
• The value and growth potential in the semiconductor industry appear to have shifted to the largest companies, contrary to the general rule that small-cap companies have more growth potential but higher risk.

So what is Small-cap? (short recap)

• Younger, less established companies.
• Can grow quickly but also riskier.
• Stock prices can change a lot and may be affected more by economic problems.
• Generally worth between $300 million and $2 billion. (market cap)

Quantative analysis Table

I would like to apologize in advance to readers on smaller screens. The upcoming table may not be as responsive as I would have liked it to be. This is because the pro package for the tables on this blog platform costs around $79 per year and i use the free version. Since this blog is currently a hobby for me and I don’t generate any income from it, I have chosen not to invest in the pro package at this time. However, if this project performs well and gains traction, I do plan to upgrade to the pro package to provide a better user experience for all readers.

Before we start we need to go into the blogs point system and understand what it means, so you can later check the table and understand the tables content and what it means.

In short the table represents a quantative analysis over the semiconductor industry board where we relate data to eachother and compare. Financial metrics which is used to evaluate a company’s performance, divided into five main categories: profitability, liquidity, growth, valuation, and financial health. Some users have emailed me about adding more context to the table in form of price performance and to not clutter the screen completely we go for the Year to date data to see how the companies perform. Let me know if you also want a industry comparison on price performance.. without further adue lets dive into Small-cap semiconductors companies.

Financial Health Check:

Outstanding Performers

• NVE Corporation (NVEC) stands out with excellent ratings in profitability and liquidity. Despite poor revenue growth, EPS growth, and FCF growth, NVEC has a strong Altman Z-score, indicating overall financial health. However, NVEC’s year-to-date (YTD) price change of -2.2185% indicates a negative market sentiment.

Potential Risks:

• Several companies, such as MaxLinear, Inc. (MXL), Navitas Semiconductor Corporation (NVTS), Intchains Group Limited (ICG), CEVA, Inc. (CEVA), and SkyWater Technology, Inc. (SKYT), have poor profitability, ROE, ROA, and Piotroski F-scores. This could be a cause for concern and may indicate underlying challenges in their business models or market conditions.
• These companies have experienced significant negative YTD price changes:
  • MaxLinear, Inc. (MXL): -23.7695%
  • Navitas Semiconductor Corporation (NVTS): -55.2664%
  • Intchains Group Limited (ICG): -34.519%
  • CEVA, Inc. (CEVA): -15.0594%
  • SkyWater Technology, Inc. (SKYT): -16.8399%
• The negative YTD price changes indicate a bearish market sentiment towards these companies.

Mixed Results

• Himax Technologies, Inc. (HIMX), ChipMOS TECHNOLOGIES INC. (IMOS), SMART Global Holdings, Inc. (SGH), and Alpha and Omega Semiconductor Limited (AOSL) present a mixed picture, with poor profitability metrics but fair to excellent liquidity and debt-to-equity ratios.
• These companies have experienced mixed YTD price changes:
  • Himax Technologies, Inc. (HIMX): 6.26%
  • ChipMOS TECHNOLOGIES INC. (IMOS): 0.3308%
  • SMART Global Holdings, Inc. (SGH): 6.603%
  • Alpha and Omega Semiconductor Limited (AOSL): 4.566%
• The mixed YTD price changes suggest that the market sentiment towards these companies is not entirely negative, but investors should still consider the risks associated with their poor profitability.

Overall, the small-cap semiconductor companies in this dataset appear to be struggling, with many exhibiting poor profitability, growth, and overall financial performance. The majority of these companies have experienced negative YTD price changes, indicating a bearish market sentiment. Investors should be cautious and thoroughly assess the risks associated with these companies before making any investment decisions.

Blogs commentary:

It seems like we are scraping the bottom of the barrel in the semiconductor industry. The value and growth potential appear to have shifted to the largest companies. And for those who have missed Large-Cap Check this link: https://bullishbeat.com/assessing-large-cap-semiconductor-stocks-financial-insights/

Even though they have challenges of their own, it seems like our rule of thumb, “Small-cap companies have more growth potential but higher risk,” does not apply to this industry. For semiconductor businesses, there is an anomaly for sure. Let’s dive into the mega-cap sector next. Is it too late to invest in NVDA? Hang tight.

And as per usual this is the blogs own subjective analysis upon the presented data.

Readers should keep in mind that this analysis is based on historical financial data and should not be considered as investment advice. It is essential for readers to conduct their own thorough research and consult with financial professionals before making any investment decisions. The information provided in this article is for educational and informational purposes only and should not be relied upon as a sole basis for investment choices.

Share your insights, experiences, and strategies in the comments below