Motley Fool: Chip company’s slump is a buying opportunity

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Thanks in large part to the pandemic, the world is experiencing a shortage of semiconductor chips, which are used in everything from smartphones to cars....

An employee handles a silicon wafer during the chips fabrication process at the Institute of Microelectronics of Barcelona in Bellaterra near Barcelona.Thanks in large part to the pandemic, the world is experiencing a shortage of semiconductor chips, which are used in everything from smartphones to cars. Demand for chips is high, but shares of Singapore-based Kulicke & Soffa Industries are down — recently by nearly 22% from their 52-week high — presenting an opportunity for investors.

With a recent price-to-earnings ratio in the single digits, well below its five-year average of 37, Kulicke & Soffa’s stock is appealingly priced. Its dividend, which was hiked by 21% last year, recently yielded 1.1%. And management is also rewarding shareholders by buying back $800 million worth of shares. Long-term investors should take a closer look.I’ve heard it’s good to invest regularly in stocks. But some stocks I’m thinking of buying are down by 35% to 65% now.

Focus on funds with the word “income” in their names. They’re likely to invest primarily in stocks that pay dividends and/or bonds that pay interest. Note that other kinds of funds can offer income, too, if they hold certain stocks or bonds. We recommend stock index funds for many investors, and they generate income, too.

 

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