IBD 50 Stocks To Watch: Chip Leader Breaks Out Past Early Entry

Tuesday’s IBD 50 Stocks To Watch pick — chip leader Lattice Semiconductor (LSCC) — is one of the top stocks to buy and watch, as it breaks out above an early buy point. LSCC shares rose almost 1% midday Wednesday.


Stocks To Buy And Watch: Lattice Semiconductor

The Hillsboro, Ore., designer of programmable gate arrays focuses on four key markets: data centers, computing, automotive and industrial. Its logic chips are winning new designs due to exceptional qualities of small size, low power, reliability and ease of use.

The company on Halloween reported strong third-quarter results, earning 48 cents per share on sales of $172.5 million. Lattice said it expected fourth-quarter revenue of $170 million to $180 million, topping estimates. The company also authorized a stock buyback for an additional $150 million through the end of 2023.

“Top-line growth was driven by our strategic segments of industrial and automotive, as well as communications and computing,” CEO Jim Anderson said in the press release. “We are pleased with the continued growth in our existing products and very excited about the expansion of our product portfolio.”

Lattice will present at Credit Suisse’s 26th Annual Technology Conference on Nov. 29.

Lattice’s IBD Stock Ratings

This stock to buy and watch shows a perfect 99 Earnings Per Share Rating and a SMR Rating of A, according to IBD Stock Checkup. Lattice boasts an average 30% sales growth over the last three quarters. In 2021, the company posted a 30% pretax margin and a 38% return on equity; both are strong figures.

With a muscular 96 out of 99 IBD Composite Rating, Lattice is the No. 1-ranked stock in the semiconductor designers industry group.

Lattice is on the IBD Leaderboard watchlist. Elsewhere in the fabless industry group, Impinj (PI) became a new IBD Leaderboard stock Wednesday. Per Leaderboard commentary, PI stock is running past a 119.79 buy point in a narrow consolidation that’s not long enough to qualify as either a flat base or another type of pattern. PI joined Leaderboard as a quarter-size stake.

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Lattice stock is trying to break out past an additional handle entry at 70.25. With the stock still nearly 20% off its 52-week high, interested investors could take a smaller-than-normal position to account for the overhead supply.

Be on the lookout for an additional entry if the stock is able to continue up the right side of its long consolidation that spans back to November 2021.

Earlier this month, the stock broke out past a cup base’s 65.52 buy point. Shares are now out of buy range from that buy point.

The relative strength line hit a recent high Wednesday, confirming the chip stock as a market leader. A strong RS line during and after a breakout move is a key technical indicator of strength.

Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on top stocks to buy and watch and the stock market.


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