WOLF - ON Semiconductor: Still Cheap As Fears Over Tesla's Demise Dissipated
2024-04-25 13:27:10 ET
Summary
- ON Semiconductor stock has underperformed the market significantly.
- Investors are pessimistic in ON, as Tesla's growth thesis fell apart.
- However, Tesla's Q1 earnings release has calmed investors' nerves, lifting buying sentiment in ON.
- I explain why the significant pessimism in ON is overstated.
- With ON still attractively valued, long-term investors should consider capitalizing aggressively.
onsemi Stock Underperformed The Market
ON Semiconductor's ( ON ) stock has underperformed the S&P 500 ( SP500 ) significantly since my previous ON bullish update in early February 2024. I cautioned that growth could disappoint in 2024 and highlighted that buying sentiment could remain weak. Despite that, I assessed it as a buy-on-weakness opportunity as investors reassessed their optimism on the secular growth drivers from EVs and renewable energy. Given the sharp deceleration and poor operating and stock performance of EV leader ( TSLA ) in 2024, it is unreasonable to expect onsemi to escape unscathed from the massive growth normalization. Tesla's recent Q1 earnings release underscored the severity of the growth slowdown, as the stock of leading legacy automakers like General Motors ( GM ), Toyota ( TM ), and Ford ( F ) have experienced a resurgence in buying momentum....
ON Semiconductor: Still Cheap As Fears Over Tesla's Demise Dissipated