AOSL - Alpha And Omega Semiconductor: Worth A Speculative Shot At This Level Despite The Risk

2024-04-21 14:46:39 ET

Summary

• The stock hit new lows by falling below a major support level that held for a whole year, but this could be an opportunity worth exploring.
• AOSL is confronted with a drop in earnings and the stock has suffered accordingly, but there is reason to believe improvement is on the way.
• The drop in the stock price has arguably made AOSL undervalued, especially if the quarterly results get better soon.
• Long AOSL is not without risk and a payoff is not guaranteed, but it is a bet worth taking into consideration.

Alpha and Omega Semiconductor (AOSL), a supplier of power semiconductors, has fallen below a price level that had provided support to the stock for about a whole year. The stock bounced each time whenever it reached this level, but that is not what happened this week. The price action is bearish for several reasons, but long AOSL may still be worth taking into consideration as a speculative, yet calculated play. Why will be covered next.

Why betting on AOSL is risky at this time

A previous article from last January rated AOSL a hold. The article did so even though the stock was in the midst of a strong rally for several reasons. For starters, a bellwether for the analog industry had made a number of less than encouraging statements about the strength of the analog market, which did not bode well for AOSL, especially not with an earnings report coming up. All this and more was reason for the article to conclude there was a need for caution....

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