Prime Minister Justin Trudeau will ensure that Canada plays a vital role in North America and become a reliable semiconductor supplier to the global economy. He wants Canadians to be part of the semiconductor ecosystem but admits the role still needs to be determined.
Meanwhile, the federal government announced it would spend $240 million to help Canada expand its presence in photonics and semiconductor manufacturing. Regarding investment prospects in the semiconductor space, the choices are scant.
The TSX Venture Exchange has promising names, except that microcap stocks are volatile. However, on the Toronto Stock Exchange, you can take positions and own the safest semiconductor chip stocks in March 2023.
Celestica (TSX:CLS) and 5N Plus (TSX:VNP) have visible growth potential and could deliver outsized gains over time. As of this writing, the value stocks outperform the broader market.
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Record revenue growth
Celestica caters to innovative companies and the world’s best brands. The $2.12 billion company provides high-reliability design, manufacturing, and supply chain solutions across various industries.
Also, as the world’s leading Wafer Fabrication Equipment (WFE) supplier, it delivers the most comprehensive vertical solutions for the top semiconductor WFE manufacturers. At $17.02 per share, the year-to-date gain is 11.53%, while the trailing one-year return is +14.84%. The total return of this tech stock in three years is +204.47%.
Last year, Celestica’s annual revenue exceeded US$7 billion for the first time since 2011 with 29% year-over-year revenue growth. In the fourth quarter (Q4) of 2022, revenue and net earnings rose 35% and 33%, respectively, to US$2 billion and US$42.4 million versus Q4 2021. For 2023, management projects total revenue to hit US$7.5 billion, or 3.4% higher than in 2022.
Its president and chief executive officer (CEO) Rob Mionis said, “Our ability to successfully execute on our long-term strategy has allowed us to win in markets where we see opportunity for long-term, profitable growth.” The core business segments, Advanced Technology Solutions (ATS) and Hardware Platform Solutions (HPS), posted record annual revenues, too.
Viable global supplier
5N Plus produces specialty semiconductors and performance materials and focuses on value-added end markets and client partnerships. The $312.7 million company secured strategic arrangements in high-growth sectors, despite inflationary and energy-related cost pressures last year.
The total revenue in 2022 increased 25.8% to US$264.22 million versus 2021. However, 5N Plus incurred a net loss of US$22.99 million compared to a net income of US$3.11 million in the previous year. Still, its president and CEO Gervais Jacques said the company is well positioned for the future.
Besides China, 5N Plus is the only viable global supplier of ultra-high purity semiconductor compounds used in a wide range of critical technologies. The company will also capitalize on the unprecedented demand for terrestrial renewable energy and space solar power applications.
Performance-wise, the basic materials stock is up 21.65% year to date but trades at an absurdly low price of $3.54 per share.
Trilateral semiconductor forum
The first-ever semiconductor forum between the U.S., Canada, and Mexico is being organized and could happen anytime soon. Justin Trudeau said a North American semiconductor industry would prevent overreliance on Asia. Expect Celestica and 5N Plus to be at the front and centre in helping the region achieve its objectives.
