These 4 Stocks Are Headed For A Big Rally In The Post-Coronavirus Era

As demand recovers, these 4 chip stocks could see a big boost.

The coronavirus pandemic is spurring on a big shift in the memory chip market.

Citigroup analysts led by Peter Lee said in a note this week that the COVID-era is pushing ahead a shift toward online and automation in manufacturing, particularly when it comes to digital infrastructure led by Multi-Access Edge Computing, or MEC, and the trend is sure to continue in a post-coronavirus world.

MEC, also referred to as edge computing, refers to a cloud-based IT service environment that’s found at the edge of a network that brings the data being processed to where the data is being used.

“Specifically, we expect the services sector to increase its reliance on the online space and the manufacturing sector to expedite its shift toward automation/smart factories while industrial infrastructure sees an increasingly larger role of digital infrastructure, especially with the rollout of 5G,” Lee wrote in the note to clients. 

According to the Citi analysts, cloud and MEC may join up to handle high-computing tests that edge devices like smartphones and laptops previously handled, and said MEC could also play a big role in online and automation services and cloud streaming gaming.

Given this, demand for DRAM (dynamic random-access memory) will see compound annual growth of 35%.

While the coronavirus pandemic has hurt demand for smartphones and other devices, and thus demand for memory chips, the Citi analysts anticipate the global memory market will see a recovery beginning in the second quarter of 2021.

“The recovery will be supported, in our view, by memory demand recovery and limited supply growth,” Lee wrote.

This recovery in demand will be a boon for stocks like LAM Research (NASDAQ: LRCX), Tokyo Electron (OTC: TOELY), and Advantest (OTC: ATEYY), which the Citi analysts rate as buys as they are the best semiconductor production and memory tester picks.

As for MEC, the analysts say SK Telekom (NYSE: SKM) is best positioned. 

Morgan Stanley analyst Joseph Moore also likes LAM Research, recently upgrading the stock to outperform.

Moore wrote that “multiple concerns have left us on the sidelines for a large move, and there are still myriad of challenges as we move through this year,” however, moving forward, “we favor LAM over peers given the higher exposure to memory… where we see trailing spending… improving from here.”

Trending Ideas

Featured Stocks On The Move

Daily Rundown

Top 3 Stocks in Leading Sectors
  • 3 Real Estate Developer Stocks To Buy Now

    IRSA Inversiones y Representaciones Sociedad Anónima (IRS) IRSA Inversiones y Representaciones Sociedad Anónima is a leading real estate company in Argentina, engaged in the acquisition, development, and management of diversified... Read More

  • 3 Gas Distribution Stocks To Buy Now

    New Jersey Resources Corporation (NJR) New Jersey Resources Corporation is an energy services holding company that provides regulated natural gas distribution services through its subsidiary, New Jersey Natural Gas. The... Read More

  • 3 Food Product Stocks To Buy Now

    The Chefs’ Warehouse, Inc. (CHEF) The Chefs’ Warehouse, Inc. is a premier distributor of specialty food products, serving high-end restaurants, hotels, and gourmet food stores across the United States and... Read More

  • 3 HVAC Stocks To Buy Now

    Featured Content Lennox International Inc. (LII) Lennox International Inc. is a global leader in energy-efficient climate control solutions, specializing in heating, ventilation, air conditioning, and refrigeration (HVACR) products. The company... Read More

  • 3 Hotel Stocks To Buy Now

    Featured Content Hyatt Hotels Corporation (H) Hyatt Hotels Corporation operates a global portfolio of luxury, full-service, and lifestyle hotels, as well as vacation properties. Known for its premium hospitality offerings,... Read More

  • 3 Tobacco Stocks To Buy Now

    Featured Content Turning Point Brands, Inc. (TPB) Turning Point Brands, Inc. is a consumer products company that manufactures and markets tobacco products and alternative smoking accessories. The company’s portfolio includes... Read More

  • 3 Life Insurance Stocks To Buy Now

    Featured Content F&G Annuities & Life, Inc. (FG) F&G Annuities & Life, Inc. specializes in annuities and life insurance products designed to meet the long-term financial planning needs of clients.... Read More

  • 3 Soft Beverage Stocks To Buy Now

    Featured Content Westrock Coffee Company (WEST) Westrock Coffee Company is a leading integrated coffee, tea, and extract service provider, offering comprehensive solutions from sourcing and roasting to packaging and distribution.... Read More

  • 3 Medical Info System Stocks To Buy Now

    Featured Content Clover Health Investments, Corp. (CLOV) Clover Health Investments, Corp. is a healthcare technology company focused on improving health outcomes for America’s seniors. The company offers Medicare Advantage plans... Read More

  • 3 Electric Power Stocks To Buy Now

    Featured Content Hawaiian Electric Industries, Inc. (HE) Hawaiian Electric Industries, Inc. is a holding company that provides electric utility services and financial services in Hawaii. Through its subsidiaries, it supplies... Read More

  • 3 Bank Stocks To Buy Now

    Featured Content Comerica Incorporated (CMA) Comerica Incorporated is a financial services company headquartered in Dallas, Texas, offering a range of banking products and services, including commercial and retail banking, wealth... Read More

  • 3 Machinery Stocks To Buy Now

    Featured Content Alta Equipment Group Inc. (ALTG) Alta Equipment Group Inc. is an integrated equipment dealership platform in the United States, operating through three segments: Material Handling, Construction Equipment, and... Read More