It's hard to look beyond Nvidia (Nasdaq: NVDA) these days, but it's important to remember that there are also plenty of other great semiconductor (chip) stocks out there. VanEck Semiconductor ETF (Nasdaq:SMH) enables investors to learn about both Nvidia and other attractive opportunities in the semiconductor space.
I'm bullish on SMH based on its strong portfolio from the top Semiconductor stocks, which is performing well and has great long-term growth potential, as well as an impressive track record of generating strong returns for its holders. We did SMH has you covered previously; He has performed well since then and still looks like a compelling long-term prospect.
What is the SMH ETF strategy?
SMH is the largest semiconductor ETF. According to sponsor VanEck, SMH invests in the “US-listed MVIS Semiconductor 25 Index (MVSMHTR), which aims to track the overall performance of companies involved in semiconductor production and equipment.”
VanEck highlights the fact that these are highly liquid stocks, industry leaders, and companies with global scale.
A portfolio of compelling semiconductor stocks
SMH owns 26 stocks, with its top 10 stocks making up 76.2% of the fund. Below, you'll find an overview Top 10 Collectibles at SMH Using the TipRanks Collectibles tool.
Although the fund is not particularly diversified, it gives investors significant exposure to Nvidia (which has a significant weighting of 24.6%) and other major semiconductor stocks, including Taiwan Semiconductor.New York Stock Exchange: TSM), Broadcom (Nasdaq:AFGO), Qualcomm (Nasdaq: Qcom) and more.
If it weren't for Nvidia's 209.6% gain over the past year, we likely would be hearing more about Broadcom and its 111.8% gain. But the semiconductor and software infrastructure giant is now knocking on the door to becoming one of the world's top ten companies and deserving a lot of attention of its own. The stock is a long-term winner and has delivered an impressive total return of 3,168% over the past decade.
it's also Undervalued dividend growth stocks which has increased its dividend for 13 consecutive years and has increased these dividends at an impressive CAGR of 17.5% over the past five years. Additionally, like Nvidia, Broadcom has its own stock split.
The company recently announced that it will implement… 10-for-1 stock split, which will be broadcast on July 12. While a stock split doesn't necessarily make a material difference, it can lead to significant interest and momentum in a stock, as we saw recently with Nvidia. They can also make stocks more accessible to small investors and retail investors.
In addition to Broadcom, Taiwan Semiconductor is one of several attractive chip stocks among SMH's top holdings.
Taiwan Semiconductor Corporation is the largest and most advanced chip manufacturer in the world. Leading semiconductor companies like the aforementioned Nvidia, Broadcom, Qualcomm and others go to Taiwan Semiconductor Corporation to manufacture the advanced chips it designs and develops. This makes Taiwan Semiconductor an attractive pick-and-roll play within the semiconductor space. The $786.1 billion company has seen its shares rise 75.2% over the past year and has reached… New all-time high.
Then Qualcomm, whose shares have risen 93.8% over the past year, has made a name for itself, as the company develops cutting-edge semiconductors for everything from smartphones to cars and Internet of Things devices.
Top 10 Additional Holdings, ASML (Nasdaq: ASML) and Lam's research (Nasdaq:LRCX), are among the few companies in the world that provide high-tech tools and equipment used in the semiconductor manufacturing process, making them important parts of the wide-moat semiconductor value chain (competitive advantages).
The one thing Broadcom, Taiwan Semiconductor and Qualcomm have in common is that they all feature “Perfect 10” smart notches. the Smart score It is a proprietary quantitative scoring system for stocks created by TipRanks. It gives stocks a score from 1 to 10 based on eight key market factors. A score of 8 or higher equates to a superior performance rating. Seven of SMH's top 10 holdings have Outperformance Equivalent SMART Scores of 8 or higher.
Additionally, SMH boasts an ETF Outperformance Equivalent Smart Score of 8.
Exciting, long-lasting performance
SMH has a strong portfolio of highly rated semiconductor stocks, and has also generated excellent returns for its long-term holders, giving it a track record that is hard to beat.
As of May 31, SMH had generated an enviable three-year annualized return of 25.5%. This excellent return easily beats the broader market. Vanguard S&P 500 (NYSEARCA: Flight) returned 9.6% year over year over the same time frame. It even outperforms the strong performance of the technology-focused SPDR fund (NYSEARCA:XLK), which generated an annualized return of 15.9% over the same time period.
Over a longer time frame of five years, SMH generated a steep annualized return of 38.6%. This number once again easily beats the broader market and XLK (VOO returned 15.8% annually over the same time frame, while XLK returned 25.2% annually). Note that both of these returns are impressive, and SMH still beats them both by a large margin.
Even going back 10 years, SMH generated a whopping 27.8% annualized return, once again outperforming both the broader market and technology-focused XLK. VOO returned 12.7% annually over the same time frame, while XLK returned 20.3% annually.
How high is SMH's expense ratio?
SMH has a reasonable expense ratio of 0.35%, which means an investor in the fund would pay $35 on a $10,000 investment annually. These are not the lowest fees available, as many broad market index funds charge even lower fees. However, it is on par with its peers and reasonable enough for sector-specific ETFs, especially ones that perform well like SMH.
Is SMH stock a buy, according to analysts?
Turning to Wall Street, SMH has a Moderate Buy consensus rating based on 21 Buy, five Hold and zero Sell ratings assigned in the past three months. the Average stock price target SMH The price of $285.18 indicates a 7.5% upside potential from current levels.
Investor takeaways
In conclusion, I'm bullish on SMH because it provides investors with significant exposure to Nvidia stock and top semiconductor stocks like Broadcom, Taiwan Semiconductor, and others. Additionally, its tremendous returns over the past three, five, and 10 years give it an unassailable track record.