Two under-the-radar chipmakers have made huge moves in the space this week.
Wolfspeed, formerly Cree, rallied more than 30% on Thursday in its best one-day gain ever after reporting a narrower loss than anticipated and sharing upbeat guidance.
Teradyne, the second-best performer in the SOXX semi ETF, also surged after getting an upgrade to outperform from Cowen and a double upgrade to buy at UBS following its own quarterly report.
Wolfspeed and Teradyne are just the latest to release results – AMD and Texas Instruments also reported in recent days. This comes ahead of earnings from semiconductor companies such as Qualcomm, NXP and Skyworks scheduled for next week.
Chipmaker companies are currently tackling a supply chain crunch that has impacted industries such as tech and autos. Even so, the SOXX ETF is within striking distance of records, less than 2% from a September high.
Quint Tatro, president of Joule Financial, said it's important for investors to drill down on each stock for opportunity rather than viewing the semis space as a collective.
"Take Wolfspeed for instance, many people might remember the previous name Cree. They were in the LED space, they sold that business, they've moved headlong into a silicon carbide chip that is basically going to become the gold standard in the EV space," Tatro told CNBC's "Trading Nation" on Thursday.
"Another company that's flying under the radar that we like is Axcelis. This is a company that is trading around 15 to 16 times forward earnings and set to grow those earnings around 30%," said Tatro. "This is a company that fabricates semiconductors. Huge order flow should be coming down the pike as people ramp up their semiconductors."
Nancy Tengler, chief investment officer at Laffer Tengler Investments, looked to the large caps among the semis space for her picks. Her first, Taiwan Semiconductor Manufacturing, has underperformed this year, but could pay investors to wait for its turnaround.
"Taiwan Semi had a great quarter, they raised guidance, they committed to 51% to 53% gross margins even in spite of price increases and they have a 1.7% dividend yield and they grow it at about 15% a year," Tengler said during the same segment.
"Lam Research is another that doesn't get talked about very much," she said. "They had a decent quarter, they just raised the dividend 15%, and it's a name that you can own for a very long time. It's off its highs [and] it's attractive on a valuation level."
Lam beat earnings estimates. The shares are up 20% this year, but have fallen roughly 16% from a June high.
Disclosure: Joule Financial holds WOLF and ACLS. Laffer Tengler Investments holds LRCX and TSM.
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