Investing in a diversified portfolio of stocks is often the best way to secure consistently positive returns over the long term. But in some years, certain sectors of the market heavily outperform.

For instance, the broad S&P 500 stock market index is up roughly 27% so far in 2021, but it has been crushed by the iShares Semiconductor ETF (SOXX 0.61%), which has gained about 42% over the same timeframe. The semiconductor industry has benefited from surging demand with constrained supply because of the pandemic, sending prices and profit margins soaring.

According to analysts at Wall Street firm Rosenblatt Securities, two semiconductor stocks in particular still have significant upside potential going forward, and they could supercharge your portfolio in 2022. 

A digital image of a semiconductor network with a car imprinted in the center.

Image source: Getty Images.

1. Cohu: Implied upside of 71%

Cohu (COHU 1.01%) isn't a typical semiconductor company. It doesn't make any advanced computer chips itself, but rather supplies critical testing and handling equipment that are essential to the manufacturing process. As such, its customer base is made up of some of the largest chip makers in the world.

Since the pandemic triggered production shutdowns across the globe in 2020 and parts of 2021, semiconductor manufacturers have battled significant demand backlogs. To alleviate them, they're expanding capacity, and that's driving demand for Cohu's equipment, especially its Neon inspection platform. Neon is specifically designed to handle some of the smallest chips in the industry, which are used in automotive applications to power digital features and sensors in new vehicles.

The automotive segment is now Cohu's largest, making up 20% of total revenue, as the industry has been crippled by chip shortages that have limited supply and spurred a rapid rise in car prices

These tailwinds have driven significant growth for Cohu. The company's last full-year profit came in 2017, and it has since invested in growing its business, but it's on track to deliver $3.01 in earnings per share for 2021. That places the stock at a price-to-earnings multiple of 12, which is 63% cheaper than its peers as represented by the iShares Semiconductor ETF, which trades at a multiple of 33.

Revenue growth is also set to exceed 39% this year compared to 2020. Simply put, Cohu is a silent achiever that might not be getting enough credit, but Rosenblatt Securities' $65 share price target means the stock could rise by 71% from current levels. 

A computer chip manufacturing worker soldering a semiconductor.

Image source: Getty Images.

2. Micron Technology: Implied upside of 74%

Micron Technology (MU -1.58%) produces state-of-the-art memory and storage chips with a focus on data centers, but it's also developing semiconductors for emerging technologies like the 5G network, and for electric vehicles. 

As more companies migrate their operations online, they're creating increasing amounts of data as a consequence. This added data requires advanced infrastructure to store and manage, especially for companies that rely on their customers consuming data as a business model. For example, social media giant Meta Platforms, formerly known as Facebook, operates 18 data centers globally, spanning almost 40 million square feet of server warehousing.

While companies like Meta can afford to own and maintain their own locations, smaller firms often outsource their data center needs. As this accessibility has improved, demand has grown. By the end of 2021, it's estimated that global data center infrastructure spending will hit $200 billion for the year -- a significant opportunity for semiconductor companies like Micron.

With the pandemic creating a supply shortage, Micron has experienced a boost to its profits. In fiscal 2020, it delivered $2.37 in earnings per share, more than doubling to $5.14 in fiscal 2021, and analysts expect the company to generate $8.93 per share in the current fiscal 2022 year. That's a huge compound annual growth rate of 94%. 

But it could get even better for Micron investors. As the 5G network rolls out globally, mobile devices will need more processing power and memory compared to previous 4G- and 3G-enabled products. This falls under the company's mobile segment, which grew by a convincing 25% in the recent fiscal 2022 first quarter.

Like Cohu, Micron stock trades at a discount to the iShares Semiconductor ETF. Based on projected fiscal 2022 earnings of $8.93 and a share price of $94, Micron's stock trades at a forward price-to-earnings multiple of 10, so it would have to more than triple to reach a comparable 33 multiple.

That makes Rosenblatt Securities' $165 price target look conservative, but still, the 74% gain from here is enough to supercharge your portfolio in the new year.