LEDS - Is SemiLEDS a Winning Semiconductor Stock?

SemiLEDs (LEDS) develops and makes LED chips in the metal alloy vertical. This production is accomplished with the use of LEDS' proprietary and patented MvpLED tech. LEDS also makes LED components.

LEDS' products are used for lighting purposes in homes, businesses, industrial centers, and even on the streets you walk at night. The company's customers are located throughout North America, Europe, Taiwan, and China. LEDS is headquartered right here in the land of the free and the home of the brave, conducting operations in Boise, Idaho.

On the surface, it appears that LEDS has a solid value offering that will likely be in demand across posterity. However, those who dig deep into LEDS might not be that exuberant about the company's future. Let's take a look at whether LEDS is worthy of an investment as of the spring of 2021.

LEDS Points of Note

LEDS is currently trading at $8.82. The stock's 52-week high is $13.44. LEDS' 52-week low is $1.93. LEDS' beta is a reasonable 1.54, meaning the stock may not fluctuate nearly as much as other comparably volatile stocks when the market fluctuates.

LEDS was a penny stock in prior months, all the way up until February of this year, when it jumped above $5. Profit takers subsequently sent the stock sliding back down to penny stock status. However, LEDS came right back to life in May, jumping from $3 to more than $10. LEDS investors proceeded to take profit off the table once again, sending LEDS down to $8 and change.

Take a look at the LEDS newswire, and you will find the stock's considerable jump is not the result of an announcement or any other specific event. However, it must be noted there are widespread chip shortages that have the potential to extend into 2022 or even longer, meaning chips are increasing in value. The low chip supply combined with spiking demand due to consumers' record savings rate and the reopening of the economy sets the stage for chipmakers like LEDS to rake in cash.

Another potential explanation for LEDS' rapid upward movement earlier this month is the uptick in LEDS-related posts made to the many social media platforms across the web. Take a look at the most active social media platforms and search for LEDS, and you will find a recent spike in interest in this semiconductor stock. 

However, potential LEDS investors should understand that a rapid spike resulting from social media hype is typically based on speculation, much of which might be based on unfounded rumors. The rush to LEDS without any noteworthy news events does not justify making either a short-term or long-term investment in the stock.

The Analysts' Take on LEDS

Analysts are bullish on LEDS, establishing a target price of $30, representing a potential jump of 277%. However, it must be noted this price target was set by one analyst.

LEDS in the Context of the POWR Ratings

LEDS has an overall grade of D, which translates into a Sell rating in our POWR Rating system. The stock has an F grade in the Quality component and Ds in the Growth and Stability components. Investors who would like to find out how LEDS fares in the remaining components such as Sentiment, Momentum, and Value can find out by clicking here.

Out of the 98 publicly traded companies in the Semiconductor and Wireless Chip industry, LEDS is ranked 87th. Investors who would like to find the top stocks in this industry can do so by clicking here.

Is LEDS a Winner?

LEDS is not a winning semiconductor stock. It simply does not make sense to invest your hard-earned money in a stock with a Sell rating in the POWR Ratings. In fact, LEDS does not have a single POWR Rating component grade above C. Intelligent investors who truly value their money should steer clear of LEDS for the time being.

LEDS shares fell $0.42 (-4.76%) in after-hours trading Tuesday. Year-to-date, LEDS has gained 146.37%, versus a 11.15% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.

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