This article is for education purposes only, and not to be taken as advice to buy/sell. Please do your own due diligence before committing to any trade/investment.
The Fear and Greed Index by CNN read Extreme Fear last week.
Did you feel the same way when the market skidded for the past 2 weeks?
After the market has risen on Mon, the market sentiment has improved. No prize for guessing which stocks flew the highest! It’s technology stocks, of course!
What are the semiconductor stocks that are at the top of your mind?
Nvidia, Broadcom, Advanced Micro Devices, and Intel are the most common.
After scanning the market, I’d like to share this underrated semiconductor stock with you that’s helping to power the AI industry.
Are you ready?
Brief History of Semtech
Source: semtech.com
Semtech was founded in 1960 as a semiconductor company. It provided discrete semiconductors for the military and aerospace industries.
Being in the technology industry, it had to remain innovative to survive the swift changes and stay ahead of the pack. Despite challenges, the company managed to find solutions that would change the industry.
Over time, the company shifted to the support the commercial markets and diversified its products and services to become the respectable company it is today.
With creative innovations happening several times across the company’s lifespan, has this reaped financial rewards?
Business Model and Financials
Source: tradingview.com
Let’s look at 2 key metrics from the image above – total revenue (in blue) and net income (in yellow).
Did you notice that the total revenue of Semtech rose every year from 2018 onwards except in 2019?
Overall, its total revenue has increased from $627m to $909m, a remarkable 44.9% increase!
Has its net income managed to grow alongside?
Its net income was more inconsistent, growing and shrinking quite dramatically from 2018 to 2024.
One positive you can take away from its net income is that Semtech’s net income is improving after a shock $1b loss in 2023.
Are these strong enough reasons to buy its shares for a position trade?
It would be better to analyze its share price.
Technical Analysis on Semtech (NASDAQ: SMTC)
Here’s the chart of Semtech‘s shares.
Can you tell that its shares used to be in a strong downtrend (late Jan to late Apr 25) before turning into a super strong uptrend?
There’s no need to add a moving average or trendline. You can tell that this is an uptrend by comparing the number of blue (outline and solid) candles against those in red (outline and solid).
The share price is in an uptrend when there are more blue candles.
What would you want to do when a stock is in an uptrend?
You’ll want to look out for buying opportunities. And that’s what I’ll be doing here.
Without the need to plot support and resistance, I can tell whether the time to buy the shares of Semtech is ripe for a position trade.
How?
By looking at the 2 main proprietary indicators – the arrow and Trend Impulse Factor indicator.
Do you see a green arrow under the latest candle of Semtech’s shares?
This tells me that this is a fresh bullish move.
But is this bullish move likely to be sustained?
Enter the Trend Impulse Factor indicator.
When the bar of the Trend Impulse Factor indicator is dark green in color, it suggests that this bullish move is likely to be sustained. Now, let’s have a look at the color of the Trend Impulse Factor indicator’s bar.
Wow, I love what I see!
This fresh bullish move is likely to be sustained, so the time to buy its shares for a position trade is here.
Conclusion
Source: pexels.com
While the most coveted AI chips developers – Nvidia, Intel, Broadcom, and Advanced Micro Devices are hogging the headlines, this underrated semiconductor company’s stock deserves your attention.
The company’s financial health is improving after a scare in its net income in 2023.
A look at its stock chart shows a fresh uptrend that began in late April this year.
Thanks to the TradersGPS (TGPS) system, I’m able to screen the US stock market and find this stock in under a minute.
Additionally, both the arrow and Trend Impulse Factor indicators have been tested and proven. They form the TradersGPS (TGPS) system to help you decipher if a stock is ripe for a position trade. You won’t have to feel in the dark and make wild guesses.
The TGPS system tells me that the time to buy its shares for a position trade is here!
Will you be considering this underrated semiconductor stock?
What are your thoughts?
Share your thoughts with me below!
