2 Radio Frequency Stocks to Watch in a Challenging Industry

Industry Overview - The Zacks Semiconductors - Radio Frequency industry is facing challenges due to reduced capital spending by telecom carriers, rising commodity prices, persistent inflation, and global macroeconomic uncertainties [1] - Despite these challenges, companies like RF Industries and Akoustis Technologies are benefiting from increased spending on 5G deployment and the growth of IoT, ADAS, and AR/VR devices [1] Key Trends - Accelerated 5G deployment is a significant driver for the industry, with a forecast of 600 million WiFi hotspots globally by 2023, enhancing demand for RF power amplifiers and related products [3] - Innovation in IoT, wearables, and autonomous vehicles is expanding the market for RF semiconductor products beyond smartphones, with advancements in semiconductor manufacturing processes expected to bolster industry prospects [4] - The electric vehicle market is projected to grow fourfold by 2027, benefiting industry players through increased product inclusion [5] Challenges - Supply chain constraints and rising commodity costs, exacerbated by geopolitical tensions such as the Russia-Ukraine war, are hindering industry growth [5] - The industry is currently ranked 227 in the Zacks Industry Rank, placing it in the bottom 9% of over 250 Zacks industries, indicating bearish near-term prospects [6][7] Performance Metrics - The industry has underperformed the S&P 500 and its sector over the past year, declining 0.1% compared to the S&P 500's growth of 27.1% and the sector's return of 42.1% [8] - The forward 12-month price-to-earnings (P/E) ratio for the industry is 18.56X, lower than the S&P 500's 21.58X and the sector's 28.51X, with historical trading ranges between 8.17X and 23.62X [9] Company Insights - RF Industries, with a Zacks Rank of 2 (Buy), is experiencing growth due to a strong product portfolio and anticipated recovery in telecom capital expenditure, with shares gaining 9.2% year-to-date [10] - Akoustis Technologies, ranked 3 (Hold), has seen a significant decline of 85.2% year-to-date due to sluggish demand and the closure of a major customer program, although demand for WiFi 7 technology is expected to improve prospects [12]