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Semiconductor stocks are poised to benefit as industry sales growth resumes in 2020 - MarketWatchConsider 2019 a ‘reset’ year, with better performance to come
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Semiconductor stocks aren’t for the faint of heart. But if you can withstand the volatility, they have proven to be excellent long-term investments.
The group has been greatly affected by the trade conflict between the U.S. and China, as computer chips are the U.S.’s third-largest export, according to the Semiconductor Industry Association. Next year, however, promises to be a return to growth.
The iShares PHLX Semiconductor ETF SOXX, +1.00%[4], which tracks the shares of 30 semiconductor manufacturers and equipment makers, has returned 33% this year through Oct. 8, almost double the return of the benchmark S&P 500 Index’s SPX, +0.61%[5] 17.2% gain. (All returns in this article assume dividends are reinvested.)
Now look at the 12-month chart:
FactSet
You can see how the fourth quarter of 2018 punished stocks, which rebounded at the beginning of 2019. The semiconductors have outperformed the broader market by a mile, and analysts are expecting a tepid 2019 to give way to a resumption of “normal” sales growth, at least for most of the semiconductor group, in 2020.
Before getting to those numbers, check out these longer-term charts that emphasize how well investors who can tolerate the elevated volatility for the semiconductor group have been rewarded.
Three years:
FactSet
Five years:...