A resistance level has emerged in the chart of ON Semiconductor Inc. (ON). Once again the stock is approaching this level and a breakout could occur.
ON spun off from Motorola in 1999 and has since become a leading supplier of chips into automotive and industrial markets, with products in analog, discrete, power management, and image sensing.
The company is benefiting from an improving macroeconomic environment, especially in the automotive end market. The growth in demand for image sensors and advanced driver-assistance systems bodes well for the company. Plus, the need for silicon carbide and silicon power products needed by electric vehicles should also aid growth.
ON had $1.1 billion in cash as of the end of the most recent quarter, compared with only $532 million in short-term debt, indicating a strong balance sheet. The firm is also in a strong growth position as earnings were up 11.3% over the past year. EPS is forecasted to soar 230% in the current quarter.
The stock is trading at a high multiple with a trailing P/E of 69.82. ON has shown bullish momentum over the near and long-term leading to a Momentum Grade of B in our POWR Ratings system.
Take a look at the 1-year chart of ON below with added notations:
Chart of ON provided by TradingView
Since last year’s March low, ON has been on a nonstop trend higher. However, the most recent couple of months have seen the stock struggle to get through the $42 resistance mark (red).
A solid close above that $42 area should lead to much higher prices for ON. A possible long position on the stock would be on a breakout above that level with a protective stop placed under it.
Want to Discover More Great Trades?
I have explored virtually every flavor of technical analysis and chart pattern known to mankind. The sad fact is that the vast majority of them don’t work at all.
That is why I recently put together this special report to help investors focus on the only 5 chart patterns that matter…the ones that lead to the most timely and profitable stock trades. Click below to get your copy now!
Have a good trading day!
Christian Tharp, CMT
ON shares rose $1.10 (+2.64%) in premarket trading Thursday. Year-to-date, ON has gained 30.89%, versus a 6.87% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp
I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|ON||Get Rating||Get Rating||Get Rating|