Buy The Dip In Small-Cap Stock Onto Innovation

Yolowire 3-Dec-2024 11:49 AM

There aren’t a lot of %Semiconductor companies that are small-cap stocks. But %OntoInnovation (NYSE:ONTO) is the exception.

At one end of the spectrum, you have chipmaker %Nvidia (NASDAQ:NVDA), which is the biggest publicly traded company in the world with a $3.40 trillion U.S. market capitalization.

At the other end is Onto Innovation, a semiconductor firm whose market cap currently sits at $8.44 billion U.S.

Formed in 2019 by the merger of Rudolph Technologies and Nanometrics Inc., Onto Innovation is a provider of process control equipment and software for the semiconductor industry.

Essentially, the company provides the equipment needed to make tiny semiconductors, processors and microchips.

As one might expect, business has been booming in recent years and so too has the company’s stock price.

Since the merger in 2019, Onto Innovation’s stock has risen 417%. However, the share price has pulled back in recent months and is only up 18% so far in 2024.

Analysts are urging investors to buy-the-dip in Onto Innovations stock, noting that the pullback since July of this year has been due to a sentiment shift related to the entire chip sector.

At the same time, analysts say that Onto Innovation has a bright future ahead of it, especially as global demand for microchips and processors accelerates.

The company recently reported strong third-quarter financial results, with record revenue of $252 million U.S. and a gross margin of 54%.

Earnings of $1.07 U.S. a share were nearly 50% higher than Wall Street consensus forecasts.

Seven Wall Street analysts who cover Onto Innovation each rate the stock a “Buy,” and the median price target on the shares of $251.67 U.S. is 47% higher than current levels.

Onto Innovation’s stock is presently trading at $170.82 U.S. per share.