6/20/2014 7:30 PM ET
StockScouter: 2 hot tech stocks under $10
Investors wary of unpredictable -- and often unprofitable -- Internet stocks have piled into revenue-raking semiconductor shares this year.
Compiled from StockScouter ratings by Verus Analytics
For the second straight week, no fewer than five chip makers appear on StockScouter's latest list of 10 recommended stocks. This week, two of them can be bought for less than $10 a share.
San Jose, Calif.-based Atmel (ATML), which closed Friday at $9.45, designs and manufactures microcontrollers, capacitive touch solutions, advanced logic, mixed-signal, nonvolatile memory and radio frequency components.
ON Semiconductor (ONNN), headquartered in Phoenix, designs, manufactures and markets semiconductor components for electronic systems with a focus on energy efficiency. ONNN shares closed at $9.13 Friday.
Shares of semiconductor companies have marched higher in 2014, as tech investors wary of unpredictable and often unprofitable social media and Internet stocks have sought to cash in on industry stalwarts rolling in revenue as the economy gathers steam.
The iShares PHLX Semiconductor ETF (SOXX) is up 18.7 percent on the year, compared to just a 6.5 percent gain in the broader Technology Select Sector SPDR (XLK) and a 5.4 percent return for the S&P 500 ($INX).
"The high demand for advanced computing power has led to strong earnings and rocketing share prices for a variety of well-known companies, including Intel (INTC ) and Micron Technology (MU)," writes David Fabian for Benzinga. "This outperformance can be attributed to investors shying away from social media and internet stocks in favor of more steadfast technology businesses."
However, as Bloomberg’s Callie Bost notes, some technology and small-cap stocks that tanked in March and April have come roaring back. Netflix (NFLX) has gained 21 percent in the past month, while Tesla (TSLA) is up 16 percent and TripAdvisor (TRIP) has rallied 19 percent in that time.
Atmel and ON Semiconductor both get a '10' from the StockScouter rating system on MSN Money, the highest score possible. Based on StockScouter's analysis, shares of ATML and ONNN are both expected to significantly outperform the market over the next six months with average risk or lower.
StockScouter Top 10 for June 20
Kodiak Oil & Gas (KOG)
Oil and gas
Juniper Networks (JNPR)
Marvell Technology Group (MRVL)
Annaly Capital Management (NLY)
Real estate investment trust (REIT)
ON Semiconductor (ONNN)
Offshore oil & gas drilling
Taiwan Semiconductor Manufacturing (TSM)
StockScouter beats the market
We think the StockScouter rating system developed by Verus Analytics for MSN Money is one of the best tools you can use when you're trying to decide where to invest.
StockScouter looks for stocks whose business fundamentals, price behavior, valuation and stock-ownership characteristics appear to predict a rising price in the future, based on how those factors have influenced stock prices in the past.
The system assigns each stock an expected six-month return and balances that return against the stock's expected volatility.
Scouter rates stocks on a scale of 1 to 10, and ratings can change daily. Ratings and data in the chart above were current as of this article's publication date.
In addition to the daily top 10 list described above, StockScouter is used by investment research firm Verus Analytics (previously known as the quantitative business unit of Gradient Analytics) to generate a monthly benchmark portfolio of stocks that, refreshed monthly, has outperformed the market since its inception in August 2001.
An investor who began in 2001 by investing in each of the benchmark portfolio's top 10 stocks at the start of the month, selling them at the end of the month and then starting fresh with a new group of 10 stocks, would have generated returns, before trading costs and taxes, of 1,057 percent through May 31, 2014.
Writer Jon Markman, at the time a columnist for MSN Money, collaborated with company researchers on the tool.
Markman suggested rolling over the top 10 stocks every six months to hold down trading costs, a strategy that might be a better fit for most investors; that would yield different results, which would vary based on your starting point.
Performance through May 31, 2014
Full 50 position portfolio
Top 10 portfolio
Inception: August 2001
VIDEO ON MSN MONEY
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[BRIEFING.COM] The stock market began the new trading week on the defensive note with small-cap stocks pacing the retreat. The Russell 2000 (-1.4%) and Nasdaq Composite (-1.1%) displayed relative weakness, while the S&P 500 lost 0.8% with all ten sectors ending in the red.
Global equities began showing some cracks overnight after China's Finance Minister Lou Jiwei poured cold water on hopes for new stimulus measures. Specifically, Mr. Lou said the government has no plans to change ... More
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