Some investors seek value. Others crave growth…
I want both.
Today, I’ll share with you one of my favorite sectors that I’ve invested in for years… for good reason. It’s seeing huge amounts of institutional buying right now, which sets the stage for a big year.
I’m talking about semiconductors.
I believe these stocks provide a perfect mix of growth and value for a portfolio. But even more important, the Big Money is hot for the group right now.
Before we dig into the data—and my favorite way to get some exposure to this trend—here’s a quick refresher on the sector…
Semiconductors are a multi-year growth play
Semiconductors power everything for the technology age. A couple decades ago, they were limited to the computer market. But today, they’re critical components in our phones, cars, TVs, smartwatches… even our household appliances.
As the world grows more and more dependent on technology, demand for semiconductors will steadily increase. That’s why I see the sector as a multi-year—possibly even a multi-decade—opportunity.
As a bonus, many top-quality semiconductor companies pay dividends. Even better, the best ones consistently raise their dividend year-after-year. That’s probably why Big Money is targeting these stocks right now.
In a zero-yield environment, investors can’t make a decent return from traditional income plays like bonds. Instead, they have to turn to stocks—especially established companies that pay dividends.
That’s why semiconductors are a perfect play for the current environment. It’s a massive sector that includes dozens of smaller, fast-growing names, as well as established giants like Broadcom (AVGO) and Taiwan Semiconductor (TSM).
In short, I see the sector as a long-term “hot spot” for investors looking for growth potential and growing dividends.
But, don’t take my word for it. Big Money has been scooping up these stocks like crazy…
The biggest buying in years
If you’ve read my commentary before, you know I’m constantly looking for the highest-quality stocks in the market. I find them by following the Big Money.
And over the past few months, big institutions have followed the script I laid out in September. Back then, I said they’d be sellers before the election… and become buyers after the election. And that’s exactly what happened.
We’ve seen wicked buying in stocks since November. Just last month, I wrote how stocks were in a “momentum mania.”
For a growth investor like myself, this is my type of market. With interest rates stuck near zero for the next couple years, institutional investors have to allocate some of their money to stocks.
This kind of massive bull market has one simple effect… It turbo-charges growth stocks.
In short, there’s a lot of institutional buying right now. And my Big Money data lets us dig inside all of that buying to see where the inflow is going.
Over the weekend, I did a study on semis. I know they’ve been performing well, since I own many of them. In fact, the semiconductor sector ETF (SMH) is up 16% already in 2021. But this performance doesn’t give us the full story.
To get a clear picture of just how strong the buying in semiconductors has been in 2021, I compared it to the previous four years of data. The study looked at all the Big Money buys that happened January 1–February 19.
Looking at a year by itself, it doesn’t tell you much.
But five years of data provides some critical context for the recent buying…
As you can see, semiconductor buying just broke out to a multi-year high. It’s well above levels from 2017—when SMH soared more than 38% for the year (including dividends).
That, to me, suggests higher prices could be ahead.
The bottom line is this: The semiconductor space is an attractive target for both its growth and dividends. I expect Big Money to continue flowing into the sector throughout 2021 and beyond.
The easiest way to get exposure to the space is by buying the VanEck Vectors Semiconductor ETF (SMH) that I mentioned above. The fund owns 25 different semiconductor stocks, including all the best dividend payers.
Lastly, if you’re looking for my top-rated stocks on my radar, you’ll get your chance soon. In the coming weeks we’ll be launching Curzio Research’s latest newsletter, The Big Money Report.
Be on the lookout for it!
Editor’s note:
ETFs are a great way to increase your exposure to a growth sector with less risk… but as Luke highlights, you still need to know what and when to buy.
The Dollar Stock Club members receive a fully-vetted stock pick almost every week—including ETFs—from Frank Curzio’s Rolodex of insiders.
At $4 per month, this is a no-brainer product for investors. Several names are up double- and even triple-digits—including one boasting a nearly 1,000% gain since August… and still going.
