It’s usually difficult to find a stock at a bargain
price when growth is involved but not always. ON
Semiconductor (ON), a manufacturer of semiconductor
components for power management and imaging, surprisingly offers growth and
value.
The
company posted explosive revenue growth during the first half of the year, yet
it’s priced at 10 times forward earnings, and the growth is not expected to vanish
during the next few years. Double-digit top-line growth is in the cards.
Regarding the bottom line, analysts expect earnings to grow 27% during the next
five years.
Regarding
further growth, it might not be as explosive, but the company is going to
witness healthy growth. The global automotive semiconductor market is set to
grow at CAGR of 6.4% from 2017 to 2022, according to
Lucintel. The automotive application of the imaging sensor market is expected
to grow at a CAGR of 15.91% from
2015 to 2020. Advanced driving assistance systems and security awareness are
driving the growth of the imaging sensors market. Regarding power management,
TechNavio predicts the
market will grow 7% p.a. until 2020.
Overall,
ON Semiconductor is set to benefit from the growth of power management and
image sensors. End markets like automotive will fuel this growth. Low
double-digit growth is in the cards for the company amid its strong presence in
the imaging semiconductor market. Further, integration synergies of the
Fairchild acquisition are kicking in as operating expenses grew at a slower
rate than revenue growth.
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