Is It Too Late To Buy Alpha and Omega Semiconductor Limited (NASDAQ:AOSL)?
Alpha and Omega Semiconductor Limited (NASDAQ:AOSL), a semiconductor company based in United States, saw a decent share price growth in the teens level on the NasdaqGS over the last few months. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on Alpha and Omega Semiconductor’s outlook and valuation to see if the opportunity still exists. View our latest analysis for Alpha and Omega Semiconductor
Is Alpha and Omega Semiconductor still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 10% above my intrinsic value, which means if you buy Alpha and Omega Semiconductor today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $14.19, there’s only an insignificant downside when the price falls to its real value. In addition to this, it seems like Alpha and Omega Semiconductor’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from Alpha and Omega Semiconductor?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Alpha and Omega Semiconductor, at least in the near future.
What this means for you:
Are you a shareholder? Currently, AOSL appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on AOSL for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on AOSL should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Alpha and Omega Semiconductor. You can find everything you need to know about Alpha and Omega Semiconductor in the latest infographic research report. If you are no longer interested in Alpha and Omega Semiconductor, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
