Propelling the global push for efficient energy and a sustainable future, semiconductor leader Wolfspeed taps silicon carbide and gallium nitride to power innovations in electric vehicles, renewable energy, defense and 5G technologies. Given high demand in those industries, it's natural that strong sales growth has WOLF stock charging up a potential breakout.
Founded in 1987 and formerly known as Cree, Wolfspeed has earned a spot on the IBD Leaderboard watchlist. Along with medical and energy stocks like Vertex Pharmaceuticals and Cheniere Energy, Wolfspeed has been among the better-performing tech stocks in this bear market.
While not unscathed in this volatile environment, Wolfspeed's relative strength line has climbed sharply off the lows it hit in June and is now within reach of a new high.
Wolfspeed Eyes Big Turnaround With New Silicon Carbide Facility
Headquartered in North Carolina, Wolfspeed chose its home turf to build the world's largest silicon carbide materials facility. The new plant will be located in Chatham County, near its existing Durham Materials factory.
The company expects its multibillion-dollar investment to power more than a 10-fold increase in capacity, compared to its current Durham campus. As part of Wolfspeed's long-term growth strategy, it will accelerate the adoption of silicon carbide semiconductors across a wide range of end-markets, unlocking a new era of energy efficiency.
The manufacturer expects to complete phase one of the construction in 2024 at a cost of roughly $1.3 billion. Additional capacity will be added between 2024 and the end of the decade.
While Wolfspeed currently has a mediocre 58 EPS Rating in Stock Checkup, expansion plans and earnings estimates may have it perfectly positioned for a turnaround.
Consensus estimates call for fiscal 2023 earnings, ending in June, of 16 cents per share. Wall Street sees the bottom line surging to $1.76 in FY 2024.
Sales growth has also been on the rise. Over the last six quarters, revenue gains have ranged from 21% to a 57% spike in the latest quarter.
WOLF Stock Finds Support Ahead Of Buy Point
The WOLF stock chart shows a mix of volatility and impressive power. It continues to work on a long and deep cup with handle. Three promising signals have emerged within the roller coaster-type action.
First, WOLF stock gapped up nearly 32% on Aug. 18 after reporting earnings. Volume came in 729% above average. And, in a show of resilience following that spike, Wolfspeed has managed to hold the bulk of price gains.
Second, note how the stock's 50-day moving average has trended higher, retaking its longer-term 200-day line.
Finally, while not out of the woods yet, Wolfspeed has so far held support at its 50-day line. Look for WOLF stock to hold that line and continue to rise toward the 125.38 buy point.
The market indexes remain in a correction, warning investors looking to buy stocks they face elevated risk. If Wolfspeed manages to leap into a buy zone, a legitimate breakout day should generate at least 40% above-average volume.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
