As the US market indexes hit a new high, several companies have enjoyed similar share price movements.
These companies have surpassed the US$100 billion milestone recently, landing themselves a significant milestone in their corporate history.
Let’s dig deeper into these companies to determine if they have further room to grow.
Analog Devices (NASDAQ: ADI)
Analog Devices is a leading Integrated Device Manufacturer (IDM) in the semiconductor industry, designing and manufacturing chips for a variety of solutions.
The company manufactures over 75,000 different types of chips for a diverse range of sectors including healthcare, consumer, and defence, to list a few.
Currently, Analog Devices has a current market capitalisation of US$120.7 billion.
The IDM firm broke past the US$100 billion barrier in early April and has seen its market capitalisation rise further despite a downbeat financial performance in the second quarter of the fiscal year 2024 (2Q FY2024) ending 4 May 2024.
For 2Q FY2024, Analog Devices’s revenue declined by 33.8% year on year to US$2.2 billion.
Likewise, net profit plunged by 69.1% year on year to US$302.2 million.
While this may sound alarming to investors, Analog Devices had flagged out these challenges during its last annual meeting.
The company cited an inventory glut caused by macroeconomic headwinds which is expected to persist through the first half of 2024.
Analog Device’s 2Q FY2024 performance was in line with the company’s expectations.
Most importantly, the company now believes that it has hit a cyclical bottom and provided more optimistic guidance for the remainder of FY2024.
Despite the challenging quarter, Analog Device generated a positive free cash flow of US$620 million.
A dividend of US$0.92 a share was also declared, up 7% from the previous year’s US$0.86.
This is in line with the company’s long-term mission to return all of its free cash flow to investors.
With the impending recovery and a committed corporate mission, Analog Devices remains a company worthy of your attention.
KLA Corporation (NASDAQ: KLAC)
KLA is an industry-leading equipment and solutions manufacturer for semiconductor-related technologies.
The company’s innovations are crucial for the creation of many technologies we use, such as smart devices and robotics.
Without KLA’s tools, most of these devices will not exist.
Most notably, the company dominates the market in two key wafer fabrication processes: Process Control and Optical Inspection.
Process control involves understanding and improving the quality of semiconductor equipment used during manufacturing.
Optical inspection is a critical process aimed at detecting and identifying defects throughout the various production stages.
Research firm Gartner estimated that KLA commands an impressive 57% of the total market share for process control, four times more than its nearest competitor.
Likewise, the company holds a 55% market share in optical inspection.
With its dominant position in semiconductor manufacturing processes, KLA boasts a market capitalisation of US$116.8 billion.
The company achieved a market capitalisation of US$100 billion in the middle of May 2024 and has seen its market value climb steadily higher since then.
For the third quarter of FY2024 (3Q FY2024) ending 31 March 2024, KLA delivered a set of modest earnings.
Revenue decreased by 3.0% year on year, from US$2.43 billion to US$2.36 billion.
Net profit witnessed a bigger fall of 13.8% year on year to US$601.5 million.
Despite these reductions in its top and bottom lines, the performance met KLA’s guidance for 3Q FY2024.
Free cash flow of US$838.2 million was also generated during this quarter.
Like Analog Devices, KLA also believes that this current quarter represents the bottom for the company.
With a history of strong free cash flow conversion and free cash flow margins through various cyclical phases, KLA remains a compelling option within the semiconductor field to consider.
Free cash flow conversion for 3Q FY2024 stood at 117%.
The company also declared a quarterly dividend of US$1.45 a share, marking the 14th consecutive year of dividend increases.
Boston Scientific Corporation (NYSE: BSX)
Boston Scientific Corporation (BSC) is a biomedical manufacturer dedicated to innovating and engineering less-invasive medical devices commonly used in surgical procedures.
The company specialises in manufacturing solutions for a wide range of medical conditions, including endoscopy for gut health and cardiac rhythm management for cardiac health.
With a market capitalisation of US$114.9 billion, BSC first reached the US$100 billion mark in late April after delivering a strong set of earnings for the first quarter of 2024 (1Q 2024).
For 1Q 2024, BSC reported total sales of US$3.9 billion, a 13.8% year on year increase.
Net profit was US$495 million for the quarter, up 65% year on year.
This upbeat performance was primarily driven by a 16.5% year on year increase in the company’s cardiology segment which has generated the bulk of the revenue at 52.2%.
In terms of geography, BSC enjoyed strong sales growth in emerging markets of 22.6% year on year to US$648 million.
This geographic segment made up close to 17% of BSC’s total revenue.
However, the quarter also saw a negative free cash flow of US$15 million, driven by increased capital expenditures.
The biomedical firm is also accelerating product launches in electrophysiology for the next fiscal year, which has shown faster growth at 72% year on year.
Driven by the momentum from 1Q 2024, BSC has raised its full-year guidance from a range of 8% to 9% to between 10% to 12%.
However, unlike the other two companies, BSC currently does not pay a dividend.
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Disclosure: Aw Kai Rui does not own any of the stocks mentioned in this article.
