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#Morningstar #TechStocks #StockPicks
These stocks should have the wind at their backs thanks to secular tailwinds.
00:00 Introduction
01:10 Marvell Technology MRVL
01:47 STMicroelectronics STM
02:25 Analog Devices ADI
Susan Dziubinski: I’m Susan Dziubinski with Morningstar. Today we’re looking at three stocks that Morningstar thinks will benefit from several growth trends.
How’d we come up with the list of stocks? Morningstar’s analysts score each company they cover on a series of growth themes. Themes like big data and analytics, or healthcare innovation, or next-gen transportation, to name a few. Scoring goes from a zero, which means the company has no exposure to a theme, to a four, which suggests that a sizable portion of the company’s revenue will be linked to that theme and will drive a net profit increase over the next five years. For today’s video, we looked for companies that earned scores of one or higher on at least four of Morningstar’s growth themes.
Now, companies that earn a score for more than one theme aren’t necessarily better companies than those that earn scores in just one theme or in no theme at all. However, companies that have exposure to more than one growth theme may appeal to investors who favor companies that are positioned to do well based on secular trends. However, we suggest buying the stocks of these companies only when they’re trading below our fair value estimates.
First company on our list this week is Marvell Technology. Marvell scores highly on three growth themes, big data and analytics, hyperconnectivity, and nanotechnology. To a lesser extent, Marvell also has exposure to the cloud computing theme. Morningstar views Marvell as a strong competitor in networking chips. In fact, we think the company has carved out a narrow economic moat with customer switching costs and a networking chip design that enables it to compete at the cutting edge. We think Marvell offers investors strong growth potential and impressive profitability, too.
Second company on our list is STMicroelectronics. ST scores well on the themes of nanotechnology and next-gen transportation and earns points for the themes of hyperconnectivity and energy transition, too. ST is one of Europe’s largest chipmakers and holds one of the broadest product portfolios in its industry. The company has carved out a narrow economic moat thanks to customer switching costs and intangible assets stemming from its design expertise. ST’s leading technologies and strong position in the automotive market are reasons to be optimistic about its future.
The final company on our list is Analog Devices. The company scores high for exposure to the nanotechnology and hyperconnectivity themes. The company earns points for its exposure to the themes of energy transition, next-gen transportation, and robotics, too. We think this leading analog and mixed signal chipmaker has carved out a wide economic moat. In the years ahead, Analog Devices is well-positioned to profit from more advanced and higher-priced semiconductor content in automobiles, communications equipment, and industrial applications like medical devices.
For more stock ideas, tune into The Morning Filter each week, wherever you get your podcasts. And be sure to visit Morningstar.com.
Morningstar strategist Brian Colello and analyst William Kerwin provided the research behind this segment.
Subscribe to The Morning Filter on Apple podcasts, or wherever you get your podcasts. https://podcasts.apple.com/us/podcast/the-morning-filter/id1792280057
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Read what our team is writing.
Susan Dziubinski https://www.morningstar.com/people/susan-dziubinski
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