Onsemi is the IBD Stock Of The Day as the chipmaker holds up better than most growth stocks in an unsettled market. ON stock has been consolidating for the past 21 weeks.
On the stock market today, shares rose 3.1% to 61.14. It's in a consolidation pattern with a buy point of 71.35, according to IBD MarketSmith charts. That buy point is 10 cents above its all-time high of 71.25, reached on Jan. 4, based on IBD trading principles.
In a positive sign, the relative strength line for Onsemi is carving new highs as it outperforms the S&P 500 index.
Phoenix-based Onsemi delivered a beat-and-raise earnings report on May 2. It earned an adjusted $1.22 a share on sales of $1.945 billion in the March quarter. On a year-over-year basis, Onsemi earnings soared 249% while sales climbed 31%.
Onsemi has posted five straight quarters of triple-digit percentage growth in earnings.
ON Stock Ranks First In Group
Onsemi, previously known as ON Semiconductor, makes power control and sensing chips for automotive, industrial and other applications.
Needham analyst Rajvindra Gill rates ON stock as a strong buy with a price target of 80. In a recent note to clients, he pointed to the company's improving gross profit margins and solid long-term outlook.
"In some cases, Onsemi has LTA (long-term agreement) engagements that extend beyond '23/'24," Gill said. "Moreover, customers are requesting supply based on highly credible demand and are signing off on long-term supply agreements ('24/'25), which proves the sustainability of demand, in our view."
IBD Stock Checkup ranks ON stock as first out of 30 stocks in IBD's semiconductor manufacturing industry group. It has an IBD Composite Rating of 96 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.
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