Stock Market

This Semiconductor Stock Sees Earnings Soar, With Further Growth To Come


Semiconductor stocks have seen strong demand recently as the global economy has shown resiliency in the face of inflation and rising rates.


IBD’s chip designers industry group has been hot, ranked No. 15 out of 197 industries. The group’s top-ranked stock, Impinj (PI), is in focus, boasting impressive growth that is only set to continue.

Impinj — headquartered in Seattle — makes radio-frequency devices and software, primarily tiny tracking chips used in inventory management.

While investors often overlook Impinj due to its mundane business description and awkward-sounding name, long-term shareholders have certainly been rewarded. Shares are up an astounding 865% over the past five years.

Growth is the company’s story, and it is not slowing down. Impinj reported strong fourth-quarter earnings last month, with 41 cents EPS and revenue of $75.1 million. Those numbers beat analyst estimates. After growing EPS from 25 cents in 2020 to 96 cents in 2021, fourth-quarter numbers saw 2022 full-year EPS soar to $1.56.

Hot Earnings Growth Set To Continue

As the global economy weakens, most companies are projecting softening earnings. This could not be further from the case with Impinj. EPS is projected to increase further to $1.56 and $2.06 in 2023 and 2024, respectively.

Strong growth comes as Impinj has found that its chips can be used creatively in the retail setting — such as loss-prevention and anti-counterfeiting. That has caught the interest of some big names, including Walmart (WMT).

Future growth depends on the expectation that retail demand for Impinj’s chips continues to climb. According to CFO Cary Baker, there is certainly room to do so, with chip providers currently reaching only 25% of the retail apparel market.

Impinj boasts IBD’s top Composite Rating of 99. Shares appear to be forming another base and are still trading near the 129.12 entry of a Jan. 18 breakout. The stock is finding support at its 10-week moving average and has a bullish Relative Strength Rating of 98.


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