It’s here again. No, it’s not Groundhog Day, it’s another day that our Green Zone rating system is “strong bullish” on a semiconductor stock.
If you have been reading Money and Markets recently—and you should be— you know that we have been recommending all kinds of semiconductor stocks… and for good reason.
Seemingly everything, maybe even our brains, are made using semiconductors…oh, and there is a shortage of the darn things. What a surprise. Is it just me or are you noticing there seems to be a shortage of everything these days?
Semiconductor businesses have poured stacks of cash into ramping up production, so that is cause for celebration if you are a semiconductor investor. And if you aren’t one of those know-it-all investors, here is your chance to get in on the action.
According to our Green Zone rating, we are “strong bullish” on Onto Innovation Inc. (ONTO)
Onto Innovation provides process control and inspection systems used in the production of semiconductors.
Demand for Onto Innovation’s products is booming. In its most recent Q# earnings, Onto beat estimates with EPS rising to 98 cents vs. analysts estimates of 92 cents. The company reported quarterly revenue of $200.6 million, which is a 59% increase from the same period last year, according to Investor Business Daily.
Analysts are expecting a strong fourth quarter for Onto as well. According to Zacks, Q4 earnings are projected to be $1.10 per share, and revenue forecasts call are between $210 million and $ 220 million. That would be a large increase from last year’s Q4 total of $155.1 million.
Oh, and over the past eight quarters, Onto has between analysts’ estimates of EPS…every…single…time!
Chew on that nugget for a minute.
Semiconductor shortages continue to disrupt the production plans of many prominent companies, including General Motors, which recently announced they would not be offering the heated seat option in many of their 2022 models to preserve their supply of semiconductors for more critical components.
In addition to the now-infamous supply bottlenecks, closures of Chinese ports that have affected worldwide maritime transportation, and lack of workers to transport the chips, natural disasters have also played a key role in the shortages.
Last year, there was a fire at a major supplier in Japan, brutal winter storms in Texas—home of Intel— and a drought in Taiwan. Semiconductor chips require copious amounts of water during production, and each of these disasters became a limiting factor.
Semiconductor companies have made significant investments in new manufacturing plants to keep up with demand, which has left investors with opportunities to profit.
There are higher profit margins across the industry as companies continue to operate at maximum capacity and can raise prices.
With increased production comes investment opportunities, and that is why you should consider purchasing shares of Onto Innovations Inc.