Alpha & Omega Semiconductor is the IBD Stock Of The Day as the chipmaker approaches a buy point following its recent beat-and-raise earnings report. AOSL stock is showing strength in a tumultuous market.
Alpha & Omega makes power-management semiconductors. Its chips are used in computers, consumer electronics, home appliances and other devices.
On Feb. 7, the Sunnyvale, Calif.-based company reported better-than-expected results for its fiscal second quarter ended Dec. 31. It earned an adjusted $1.20 a share, up 85% year over year, on sales of $193.3 million, up 22%.
Alpha & Omega also guided higher for the current quarter. For its fiscal third quarter ending March 31, Alpha & Omega predicted revenue of $194 million, up 15% year over year. Analysts covering AOSL stock had been looking for sales of $184.4 million in the period.
AOSL Stock In Cup-With-Handle Base
AOSL stock has formed a cup-with-handle base with a buy point of 59.48, according to IBD MarketSmith charts. However, with the market in correction, investors need to be cautious. IBD recommends building stock watchlists during downturns to prepare for the market's eventual recovery. Check out IBD's The Big Picture column for the current market direction.
On the stock market today, Alpha & Omega stock added 0.7% to 53.77.
AOSL stock notched a record high of 64 on Jan. 4 before the stock market correction.
In a positive sign, the relative strength line for AOSL stock is near recent highs as the stock outperforms the S&P 500 index.
AOSL stock ranks first out of 30 stocks in IBD's fabless chipmaker industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 98 out of 99. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
AOSL stock also is on the IBD 50 and Global Leaders stock lists.
On the company's earnings call with analysts, Chief Executive Mike Chang said most of Alpha & Omega's revenue now is coming from "Tier 1" customers. "We have crossed the chasm as an established company and are now a leading global power semiconductor supplier," he said.
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