TECHNOLOGY STOCKS WITH GROWTH POTENTIAL

Investors today have access to a vast amount of information that can help them choose the best stocks. In fact, there is so much information that it can often lead to overwhelm and confusion rather than providing a clear signal.

Therefore, it might be best to stick to an uncomplicated mode and let the stock picking experts guide you. And on Wall Street right now, the best of them is Jeffries analystMark Lipacis. According to TipRanks, a platform that tracks and measures the performance of anyone providing financial advice online, 72% of Lipacis' recommendations have been successful over the past year. At the same time, his recommendations yielded an average return of 29.7%. These metrics have made this five-star expert the best analyst on the Street.

Recently, Lipacis has written positive reviews on a pair of semiconductor company stocks and believes they are poised for further growth. So let's take a look at what makes these stocks stand out above the rest.

GlobalFoundries $GFS

The first semiconductor stock we'll look at is GlobalFoundries, a major player in the U.S. chip industry with a large multinational presence. The company is headquartered in Malta, New York and has operations in the US, EU and East Asia with a large presence in Singapore. The company's products are used in smart mobile devices, IoT applications, personal computers, and in the automotive, aerospace and defense industries.

Unlike many U.S. chipmakers, GlobalFoundries has maintained a strong presence in its home country - with design and research centers on the West Coast and manufacturing and foundry facilities in the Northeast. This gives the company an advantage at a time of rising geopolitical tensions with China - a major technology competitor - over Taiwan - the world's largest chip exporter. In addition, GlobalFoundries is actively protecting its intellectual property and recently filed a lawsuit against technology and business giant IBM for alleged misuse of trade secrets.

The home-field advantage and safe secrets come in handy, but investors want to see results. GlobalFoundries' 1Q23 numbers were good, but not all the news pleased investors.

Quarterly top-line profit of $1.84 billion fell 5% year-over-year, but came in just above forecast, which it beat by $10 million. On the bottom line, GlobalFoundries' non-GAAP earnings of 52 cents per share were up 10 cents year-over-year and beat estimates by 3 cents. Also of note, the company reported liquidity reserves totaling $3.23 billion.

However, the stock fell after the results were released. Investors were concerned about the miss on adjusted EBITDA ($655 million versus analysts' expectations of $694.7 million) and the recent announcement of changes in the company's management team, with new people taking on the positions of CFO and CBO.

However, chief analyst Mark Lipacis is not worried. Reviewing the press, Lipacis said that an important advantage of the company is its "onshore" presence in the US, writing: "We view GFS as a leading analogue and mixed-signal foundry in the US, benefiting from IoT demand and customers moving to a fab-lite model. We continue to see GFS as a beneficiary of the trend towards nationalisation of the supply chain. As a result, we expect GFS to maintain a premium valuation multiple."

Based on this stance, Lipacis rates GFS stock a buy and sets a target price of $73, implying 22% upside potential over one year.

The leading Wall Street analyst is hardly an outlier in this regard. GFS stock has 12 recent analyst ratings, 11 of which are " Buy" versus 1 "Hold," for a consensus rating of "Strong Buy."

Texas Instruments $TXN

Next up is Texas Instruments, a Dallas-based company that has a long history in technology. Founded in 1930 as an electronics manufacturer, the company became a strong brand in consumer electronics in the 1960s, known for its popular calculator lines and "Speak & Spell" series of educational toys. Today, the company is known as a major supplier of analog technology, electronics and processor chips to the industrial economy and is a major supplier to the high-tech needs of the automotive and aerospace industries. TI still maintains a position in the education sector and has several graphing calculators on the market.

All of this forms the backdrop to one of the largest technology companies in the world. TI boasts a market capitalization of $155 billion, and last year it had sales of just over $20 billion. The company also has a strong track record of returning value to shareholders. Since 2004, the company has raised dividends for 19 consecutive years while reducing the number of shares outstanding by 47%. Over the same period, TI has also posted an 11% annual increase in free cash flow.

However, in the last reported quarter, 1Q23, TI posted mixed results. Top line revenue of $4.38 billion was nearly 11% lower than 1Q22 - but was $10 million better than expected. Earnings per share of US$1.85 were below the prior period's US$2.18, but beat forecasts by 7 cents, or 3.6%.

Still, the company did not meet its guide. Q2 revenue guidance was set at a range of $4.17 billion to $4.53 billion, versus consensus of $4.46 billion. As for earnings, the Q2 outlook calls for earnings per share in the range of $1.62 to $1.88; consensus was for $1.87.

Looking under the hood at TI after the results were released, Mark Lipacis remains optimistic. He notes weaker year-over-year results, but still feels confident about the long-term.

"We highlighted TXN as our top large-cap analog pick heading into the results because it was one of the few analog companies to see a substantial reduction in CY23 earnings per share estimates (~20%), and it was a bottom-quartile performing stock year-to-date... We continue to favor TXN as it is delivering below trend line and believe its internal manufacturing strategy will drive share gains... We remain buyers after the print," Lipacis noted.

As a result, Lipacis reiterated a Buy rating and $215 price target, which suggests room for 22% appreciation in the stock over the next 12 months.

Big tech names never fail to catch Wall Street's attention, and Texas Instruments has 19 analyst ratings on file, including 8 buyers, 9 holds and 2 sellers - a consensus rating of moderate buy.