In 2021, the auto industry missed out on producing 7.7 million vehicles and lost $210 billion in revenue … all because of something less than an inch in diameter.
Semiconductors (aka computer chips) conduct electricity when heated. We can find them in computers, smartphones and much more. If it uses power, it uses semiconductors.
The COVID-19 pandemic put a serious cramp in producing these tiny components, halting production of vehicles and other goods.
Now semiconductor manufacturers are dealing with the backlog of demand and increased future need.
In 2020, semiconductor company ASML reported the value of the global semiconductor market at $467 billion.
As you can see in the bar chart above, it expects that number to more than double to $940 billion by 2030. That’s how big the demand for these chips is, folks!
Today’s Power Stock is Alpha and Omega Semiconductor Ltd. (Nasdaq: AOSL).
Based in Sunnyvale, California, Alpha and Omega supplies power semiconductor products for computing, consumer electronics and more.
Its customers are in Hong Kong, China, South Korea and the United States.
AOSL scores a “Strong Bullish” 97 out of 100 on our Stock Power Ratings system, and we expect it to blow away the broader market by 3X in the next 12 months.
AOSL Semiconductor Stock: Strong Growth, Value and Momentum
Three drivers make AOSL stand out to me:
- The company released a new metal-oxide transistor that’s more efficient for power banks of all sizes, from smartphone chargers to data center power.
- In 2021, Congress passed the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act to promote researching, developing and making semiconductors in the United States.
- AOSL is a fantastic growth stock with a one-year earnings-per-share growth rate of 950% and a one-year sales growth rate of more than 41%.
From 2018 to 2020, AOSL’s sales growth was marginal, averaging just 7% year over year.
But semiconductor demand is changing that.
In 2021, the company reported total annual revenue of $656.9 million — a 41.3% increase from 2020.
And projections suggest that this is just the tip of the iceberg for sales growth.
By 2023, analysts expect AOSL to hit $821.3 million in total annual revenue —a 76% jump in revenue from 2021.
In the last year, AOSL stock gained 67%, reaching its 52-week high at the end of 2021.
It pared back those gains by 34% due to the pullback in the tech sector at the beginning of 2022.
However, we see the stock fighting resistance and trading above its 50-day simple moving average (the green line in the chart above).
Alpha and Omega Semiconductor Ltd. stock scores a 97 overall — it’s in the top 3% of all stocks we rate.
That also means we’re “Strong Bullish” on the stock and expect it to crush the broader market by at least three times in the next 12 months.
The stock rates in the top 2% of all stocks we rate in growth and the top 4% in momentum — illustrating the “maximum momentum” my team and I love to see in stocks.
Couple that with strong value metrics that show AOSL’s price-to ratios are much lower than its peers, and AOSL has room to run.
Stay Tuned: Commercial Real Estate Giant
Remember: We publish Stock Power Daily five days a week to give you access to the top companies that our proprietary Stock Power Ratings identify!
Stay tuned for the next issue, where I’ll share all the details on a “must buy” commercial real estate company!
Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He is a certified Capital Markets & Securities Analyst with the Corporate Finance Institute and a contributor to Seeking Alpha. Prior to joining Money & Markets, he was a journalist and editor for 25 years, covering college sports, business and politics.