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April 7, 2021

Top 3 Hardware Stocks to Buy Despite Shortages

Top 3 Hardware Stocks to Buy Despite Shortages

Disclaimer: This is a collaborative post. Fundraising Radio is not providing any financial advice or encouraging you to purchase any particular stocks. This content should be used for educational purposes only and we highly recommend you conducting further research on this subject and consulting your financial advisor before making any decision. We'd also like to note that the views expressed in this blog post do not represent those of Fundraising Radio or any of its affiliates.  

There is a global shortage of hardware. The Seattle Times reports that computer chips are in short supply, severely limiting the production of desktops and laptops, video game consoles, and even cars. This shortage, according to the report, is mainly due to a buying surge in electronics last year, which has made it difficult for hardware companies to keep up. The problem has trickled down to the smartphone industry, with Samsung Electronics Co Ltd, the world’s largest smartphone manufacturer, reeling from a shortage of Qualcomm’s application processors.

This global shortage is likely to spook some tech investors — enough to keep them from buying hardware stocks in the meantime. But while this situation is worrisome, there are still a few hardware stocks worth buying. Here are three of them:

Broadcom (AVGO)

The rollout of 5G has been a boon for makers of semiconductors, which are a vital component in making 5G-capable devices, like the iPhone 12 and the Samsung A52. This means buying stocks from semiconductor manufacturer Broadcom is a good idea, since compound annual growth revenue (CAGR) from radio frequency (RF) semiconductor stocks are projected to reach 14% in the next two years.

The California-based Broadcom, originally founded as Avago Technologies in 1961, is uniquely positioned to benefit from this growth. Analyst Vivek Arya highlights the company’s “solid content gains” as the main chip vendor of Apple’s latest line of 5G-enabled devices. And with Broadcom being the leading manufacturer of RF semiconductors today, its stock figures will rise in value moving forward.

Altium Ltd (ALU)

Like semiconductors, printed circuit boards (PCB) are in high demand nowadays, with Business Insider detailing how the adoption of PCBs in connected vehicles is accelerating their demand. In fact, the PCB market’s CAGR is forecast to be 4.12% from 2020−2025, even with production constrained by the pandemic. This means buying stocks from Altium would be a great investment, as it is one of the leading PCB design platforms in the world.

Altium was founded in 1985 as Protel PCB, before rebranding in 2001 following improvements to its PCB design solutions. Now, Altium is pioneering cutting-edge design software via Altium Designer, an advanced, ultra-powerful PCB designer that can handle the challenging PCB designs of today. With this advancement, expect Altium to be a major player in PCB-making, and raise its stock value in the process.

Logitech (LOGI)

Demand for desktops and laptops rose as the pandemic ushered in the stay-at-home paradigm. Naturally, demand for hardware accessories such as keyboards, speakers, and gaming devices increased as well. One of the biggest beneficiaries of this increased demand has been Logitech, with its sales in 2020 totaling $2.98 billion — up from $2.79 billion in 2019 and nearly a 50% improvement from the company’s sales in 2016.

Logitech's sustained growth is the main reason why its stocks are worth investing in. Founded in 1981 in Switzerland, Logitech has become one of the world's leading makers of hardware accessories, with headquarters in Lausanne, Switzerland, and Newark, California. This standing is reflected in Logitech's historical earnings per share (EPS) of 24.3% and its projected EPS of 96.5% — nearly double the industry average of 55.5%. So, expect Logitech stocks to continue trending up even as shortages in hardware parts continue this year.

Hardware industry executives and analysts believe that this global shortage of hardware will continue until the end of 2021. Even so, tech investors should consider buying Broadcom, Altium, or Logitech stocks, as these are likely to hold steady or even rise in value in the coming months.

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