For those looking for semiconductor exposure, you'll likely be thinking you need to head south of the border, or even internationally.
However, there are some top Canadian semiconductor stocks that you can buy right on the Canadian exchanges. They just aren't as notable of names such as Taiwan Semiconductor (TSM), Advanced Micro Devices (AMD), or Nvidia (NVDA). Canadian stocks are sometimes overlooked across various different industries.
Why Canadian semiconductor stocks?
Unless you've been living under a rock, you likely know that there has been a large semiconductor shortage ever since the COVID-19 pandemic started. Supply chain issues along with semiconductor companies simply not being able to keep up due to high demand has created a bottleneck in the industry, and investors are looking to take advantage.
Whether it is your automobile, smartphone, or tablet, semiconductors are critical to electronics and their demand will only continue to grow, especially as we enter new fields like the Internet of things and artificial intelligence.
For seasoned investors or those just learning how to buys stocks, there are some Canadian semiconductor companies that we can be aware of as the industry changes.
Is there a semiconductor ETF that holds the best semiconductor stocks?
If you're looking to buy all of the top semiconductor companies around the globe at once, you're in luck. That is because there is the Horizons Global Semiconductor Index ETF trading under the ticker CHPS.
It contains some of the fastest-growing companies in the industry, including Nvidia, ASML Holdings, Broadcom, Intel, Qualcomm, and Advanced Micro Devices.
With assets under management of just over $26M it is a relatively small ETF. However, considering it just started in June 2021, it is likely to continue picking up steam.
Looking for Canadian exposure instead? Let's look at some of the top Canadian semiconductor stocks to buy
A disclosure before we begin. All of the semiconductor stocks listed below are small/micro cap companies, prone to much larger swings in price and overall risks than the major players. Although they do promise more upside, it is extremely important you understand that they pose much higher risks if you choose to invest.
With that being said, lets get started.
Spectra Microsystems Inc. (SEV.V)
Though Spectra Microsystems Inc. has a smaller market cap than many of the other big players in the Canadian semiconductor industry - just $61.52 million - the company’s stellar performance over the course of 2021 has attracted attention from many investors. Between January 5, 2021, and January 5, 2022, the company’s stock rose by a remarkable 56 percent and is now trading at $2.41 per share. During this same time period, the company’s stock experienced a range of $1.00 to $3.03 per share.
Most technical indicators, including both the 50 and 200-day moving averages, the average directional index, and the relative strength index, all suggest that the stock is likely to experience a short-term rally - and the stock might also be fueled by increased demand for many of its products. The company, which designs and manufactures analog semiconductors, primarily partners with companies specializing in virtual reality, augmented reality, connectivity markets, and other growing sectors.
Despite the relatively limited market cap and relatively low trading volume (about 69,000 shares), there is ample reason to believe that Spectra Microsystems is poised to have a productive 2022. The stock is likely undervalued in the status quo and could be expected to, eventually, rally beyond the upper end of its recent trading range.
POET Technologies Inc. (PTK.V)
POET Technologies Inc. was originally incorporated in 1972 and is currently based in Toronto. The company is involved in many components of the optoelectronics industry, including design, development, manufacturing, selling, and distribution. Then company’s stock opened in 2020 trading at $0.38 per share and, largely thanks to a strong rally that occurred at the beginning of the coronavirus outbreak, was trading at $1.00 by the end of the year.
The stock experienced a slight retraction over the course of 2021, eventually dropping down to its current value - as of January 5, 2022 - of $0.91. Over the past 52 weeks, the company’s stock has had a range of $0.71 to $1.58, meaning that the current price is relatively low. There are currently about 365 million shares of POET Technology that have been issued, making the company’s market cap just north of $330 million. The average trading volume for POET technologies is 290,000.
Overall, POET’s price movements have mostly aligned with the semiconductor industry as a whole. The bullish future for cloud computing and related technologies will give POET plenty of opportunities to grow. The company also has a fairly desirable capital position - along with less volatility than some of its competitors - and has recently received about $15 million in a private placement. When combined, these factors could help create a bright future for POET Technologies.
Celestica Inc. (TSX:CLS)
Celestica Inc. (TSE:CLS) was originally founded in 1974 and is currently headquartered in Toronto. The company is one of the largest Canadian semiconductor producers and currently boasts a market cap of about $1.86 billion. As of January 5, 2022, the company’s stock is trading at $14.94 per share, with a 52-week price range between $8.94 and $15.28. Celestica experienced a strong price rally in 2021, growing by roughly 40% over the year.
This made Celestia Inc. one of the best recent-performing stocks within Canada’s still-growing semiconductor industry. The company currently has about 106 million shares outstanding and, contrary to most industry competitors, has a positive EPS at $0.91.
The company operates with two distinct segments—Advanced Technology Solutions (ATS) and Connectivity Cloud Services (CCS) - both of which are poised for long-term growth. Its products are also well-diversified and used across a wide range of different sectors, including aerospace, industry, energy, health, and capital equipment.
As the global supply chain continues to experience pandemic-related and other challenges, demand for CLS’s products can be expected to continue to grow. The company’s strong growth prospects are also, generally, reflected by most leading technical indicators, including both 50 and 200-day moving averages, and the relative strength index. The stock has also drawn attention from investors due to its relatively low price-to-book value.