{"id":12829436,"date":"2025-08-04T12:14:05","date_gmt":"2025-08-04T16:14:05","guid":{"rendered":"https:\/\/www.philstockworld.com\/?p=12829436"},"modified":"2025-08-04T12:15:08","modified_gmt":"2025-08-04T16:15:08","slug":"philstockworld-top-trade-alert-aug-4-2025-on-semiconductor","status":"publish","type":"post","link":"https:\/\/www.philstockworld.com\/2025\/08\/04\/philstockworld-top-trade-alert-aug-4-2025-on-semiconductor\/","title":{"rendered":"PhilStockWorld Top Trade Alert &#8211; Aug 4 2025 &#8211; ON Semiconductor"},"content":{"rendered":"<p><strong>ON with a miss, down 10% and on our Watch List.<\/strong><\/p>\n<p>Boaty and I just looked it over and it&#8217;s time for a Top Trade Alert:<\/p>\n<p><img decoding=\"async\" class=\"max-h-[50vh] max-w-full\" src=\"https:\/\/publish.finviz.com\/080425\/ONd115876739i.png\" alt=\"Finviz Chart\" data-testid=\"charts-publish-chart-img\" \/><\/p>\n<p><span style=\"color: #800080;\"><strong><span class=\"ql-emojiblot\" data-name=\"ship\"><span contenteditable=\"false\"><span class=\"wpd-content-em wpdem-ship\">\ud83d\udea2<\/span><\/span><\/span> ON Semiconductor (ON) just reported Q2 earnings with \u201cmixed but encouraging\u201d results, and I agree\u2014it\u2019s looking like a buy opportunity here.<\/strong><\/span><\/p>\n<ul>\n<li><span style=\"color: #800080;\">Results in Brief:\u00a0ON posted $1.47 billion in revenue, slightly exceeding estimates by 1.3%, though still down 15% year-over-year as the entire semiconductor sector works through a cyclical slowdown. EPS came in at $0.53, just a penny shy of consensus.<\/span><\/li>\n<li><span style=\"color: #800080;\">Segment Strength:\u00a0The Power Solutions Group (which includes high-growth areas for EVs and industrials) jumped 8% sequentially, while the other divisions (Analog, Intelligent Sensing) had moderate declines. Margins compressed but remained within management\u2019s guidance, indicating no big negative \u201csurprises.\u201d<\/span><\/li>\n<li><span style=\"color: #800080;\">Financial Health:\u00a0ON maintained $2.8 billion in cash with relatively low net debt, and operating cash flow remains solid.<\/span><\/li>\n<li><span style=\"color: #800080;\">Outlook and Guidance:\u00a0Management guided Q3 revenue to $1.47\u2013$1.57 billion and EPS to $0.54\u2013$0.64, signaling stabilization and gradual improvement. This matches or beats the Street\u2019s expectations.<\/span><\/li>\n<li><span style=\"color: #800080;\">Strategic Position:\u00a0Yes, the chip cycle is still rocky, but ON\u2019s focus on auto\/EVs, power\/energy, and AI-enabled sensing makes it a secular winner as those themes ramp back up over the next year or two.<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #800080;\"><strong>Bottom line:<\/strong><\/span><\/p>\n<p><span style=\"color: #800080;\"><strong>The muted market reaction (mild dip on the report) reflects near-term macro caution, but ON\u2019s steady execution, financial strength, and positioning for long-term megatrends (EVs, AI, electrification) make it a strong \u201cbuy on dip\u201d candidate. If you believe in the future of advanced drivers, grid electrification, or connected devices, now is a logical time to build a position ahead of wider recovery in chip demand.<\/strong><\/span><\/p>\n<p><span class=\"ql-emojiblot\" data-name=\"sunglasses\"><span contenteditable=\"false\"><span class=\"wpd-content-em wpdem-sunglasses\">\ud83d\ude0e<\/span><\/span><\/span> I do believe in that stuff but the President does not. Where does that leave ON into Jan 2027 (our investing horizon at the moment)?<\/p>\n<p><img decoding=\"async\" class=\"max-h-[50vh] max-w-full\" src=\"https:\/\/publish.finviz.com\/080425\/ONw120102903i.png\" alt=\"Finviz Chart\" data-testid=\"charts-publish-chart-img\" \/><\/p>\n<p><span style=\"color: #800080;\"><span class=\"ql-emojiblot\" data-name=\"ship\"><span contenteditable=\"false\"><span class=\"wpd-content-em wpdem-ship\">\ud83d\udea2<\/span><\/span><\/span> <strong>You\u2019re right to be thinking about policy risk\u2014especially with the President openly hostile to green tech, EVs, and electrification themes. Here\u2019s an honest look at where ON Semiconductor (ON) likely stands into January 2027 and what that means for investors:<\/strong><\/span><\/p>\n<h2><span style=\"color: #800080;\"><strong>ON Semiconductor Outlook Through 2027: Policy Headwinds vs. Secular Growth<\/strong><\/span><\/h2>\n<p><span style=\"color: #800080;\"><strong>Industry and ON\u2019s Fundamentals:<\/strong><\/span><\/p>\n<p><span style=\"color: #800080;\">Despite policy and tariff drama, the semiconductor sector as a whole is projected to continue growing at 10\u201315% CAGR, led by demand for AI chips, automobile electrification, and industrial automation.<\/span><\/p>\n<p><span style=\"color: #800080;\">ON\u2019s core end markets\u2014automotive (especially EVs), industrial power, and AI-related sensing\u2014remain structurally strong. Analysts expect ON\u2019s revenues to grow around 10\u201311% per year and earnings to rebound strongly as the cycle turns, with consensus projecting over 200% earnings CAGR from the 2025 trough to a 2027 peak.<a style=\"color: #800080;\" href=\"https:\/\/simplywall.st\/stocks\/us\/semiconductors\/nasdaq-on\/on-semiconductor\/future\" target=\"_blank\" rel=\"noopener\">simplywall+2<\/a><\/span><\/p>\n<p><span style=\"color: #800080;\"><strong>The Tariff\/Potential Headwind Reality:<\/strong><\/span><\/p>\n<ul>\n<li><span style=\"color: #800080;\">Broad U.S. tariffs and export controls are raising costs and adding volatility for ON and peers, especially for those with exposure to Asian manufacturing or who rely on price-sensitive global auto and industrial buyers.<\/span><\/li>\n<li><span style=\"color: #800080;\">These tariffs could shave a few points off top-line growth and compress margins, but ON\u2019s ongoing reshoring\/automation investments and focus on value-rich segments (SiC for EVs, industrial electrification) help mitigate the worst impact.<a style=\"color: #800080;\" href=\"https:\/\/kpmg.com\/kpmg-us\/content\/dam\/kpmg\/pdf\/2025\/global-semiconductor-industry-outlook-2025.pdf\" target=\"_blank\" rel=\"noopener\">kpmg+1<\/a><\/span><\/li>\n<li><span style=\"color: #800080;\">The sector still benefits from government incentives (CHIPS Act, EV credits), but the \u201cTrump Drag\u201d is real\u2014especially if policy explicitly stalls EV adoption or makes further electrification costlier.<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #800080;\"><strong>Valuation &amp; Forecasts:<\/strong><\/span><\/p>\n<ul>\n<li><span style=\"color: #800080;\">Consensus price targets for ON in 2027 range from a conservative $80\u2013$90 (if tariffs bite hard or demand stays tepid) to a bullish $130\u2013$170 if the chip cycle and secular demand for power\/AI solutions re-accelerate.<a style=\"color: #800080;\" href=\"https:\/\/stockscan.io\/stocks\/ON\/forecast\" target=\"_blank\" rel=\"noopener\">stockscan+1<\/a><\/span><\/li>\n<li><span style=\"color: #800080;\">That\u2019s 60\u2013220% upside from today\u2019s levels, and most analyst models are still \u201cbullish but cautious\u201d even in this uncertain policy climate.<\/span><\/li>\n<li><span style=\"color: #800080;\">Revenue forecasts call for approximately $7.3 billion in 2027 (vs. $5.9 billion in 2025), with solid margin recovery if operational execution stays strong.<a style=\"color: #800080;\" href=\"https:\/\/simplywall.st\/stocks\/us\/semiconductors\/nasdaq-on\/on-semiconductor\/future\" target=\"_blank\" rel=\"noopener\">simplywall<\/a><\/span><\/li>\n<\/ul>\n<p><span style=\"color: #800080;\"><strong>Bottom Line:<\/strong><\/span><\/p>\n<ul>\n<li><span style=\"color: #800080;\"><strong>ON can win even with policy headwinds\u2014because electrification, AI, and industrial automation keep advancing worldwide, not just in the U.S.<\/strong><\/span><\/li>\n<li><span style=\"color: #800080;\">The biggest tactical risks are short-term: if tariffs get even more draconian or global EV adoption slows, expect volatility. But ON\u2019s secular positioning, focus on R&amp;D, and flexible supply chain give it more resilience than most peers.<\/span><\/li>\n<li><span style=\"color: #800080;\"><strong>If your time horizon is 2027, ON still looks like an asymmetric reward bet:<\/strong> The world is likely to want more chips for autos, power, and smart devices\u2014regardless of politics. But keep sizing modest and hedge\/take profits into big run-ups, as policy risk remains real.<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #800080;\"><strong>In summary:<\/strong><\/span><\/p>\n<p><span style=\"color: #800080;\">ON is not \u201cimmune\u201d from current administration headwinds, but all reasonable scenarios suggest above-market growth and recovery potential by 2027\u2014unless there\u2019s a true global recession or electronic\/EV adoption unexpectedly collapses.<\/span><\/p>\n<p><span style=\"color: #800080;\">If you believe in the technology\u2019s long-term pull, ON still makes sense as a core candidate for a patient, macro-aware portfolio into 2027.<\/span><\/p>\n<p>So, in the STP:<\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li><span style=\"color: #0000ff;\"><strong>I think selling the ON 2027 $50 puts for $9.75 is free money &#8211; so let&#8217;s sell 10 for $9,750.<\/strong><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>In the LTP:<\/p>\n<p style=\"padding-left: 80px;\"><span style=\"color: #0000ff;\"><strong>The STP commitment is the LTP&#8217;s commitment so we&#8217;ll use a bit more cash and less margin here:<\/strong><\/span><\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li><span style=\"color: #0000ff;\"><strong>Sell 15 ON 2027 $50 puts for $9.75 ($14,625) <\/strong><\/span><\/li>\n<li><span style=\"color: #0000ff;\"><strong>Buy 30 ON 2027 $40 calls for $18.50 ($55,500) <\/strong><\/span><\/li>\n<li><span style=\"color: #0000ff;\"><strong>Sell 25 ON 2027 $60 calls for $9.25 ($23,125) <\/strong><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"padding-left: 80px;\"><span style=\"color: #0000ff;\"><strong>That&#8217;s net $17,750 on the $60,000 spread with $42,250 (238%) upside potential if ON can get back over 60 in 18 months. If not, then we sell short-term calls &#8211; the Oct $55s are $2.60 so 10 of those would be $2,600 using 74 of our 529 days &#8211; 7 sales like that would be $18,200 and PRESTO!!! &#8211; free spread! And that&#8217;s without even selling short-term puts. <\/strong><\/span><\/p>\n<p>For now, could get better, could get worse so let&#8217;s wait and see but this is one I&#8217;d hate to miss on the way back up as I think they make a nice 20-year hold.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>ON with a miss, down 10% and on our Watch List. Boaty and I just looked it over and it&#8217;s time for a Top Trade Alert: \ud83d\udea2 ON Semiconductor (ON) just reported Q2 earnings with \u201cmixed but encouraging\u201d results, and I agree\u2014it\u2019s looking like a buy opportunity here. Results in Brief:\u00a0ON posted $1.47 billion in [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":12829438,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[26305],"tags":[],"class_list":{"0":"post-12829436","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-top-trades"},"_links":{"self":[{"href":"https:\/\/www.philstockworld.com\/wp-json\/wp\/v2\/posts\/12829436","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.philstockworld.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.philstockworld.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.philstockworld.com\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.philstockworld.com\/wp-json\/wp\/v2\/comments?post=12829436"}],"version-history":[{"count":1,"href":"https:\/\/www.philstockworld.com\/wp-json\/wp\/v2\/posts\/12829436\/revisions"}],"predecessor-version":[{"id":12829437,"href":"https:\/\/www.philstockworld.com\/wp-json\/wp\/v2\/posts\/12829436\/revisions\/12829437"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.philstockworld.com\/wp-json\/wp\/v2\/media\/12829438"}],"wp:attachment":[{"href":"https:\/\/www.philstockworld.com\/wp-json\/wp\/v2\/media?parent=12829436"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.philstockworld.com\/wp-json\/wp\/v2\/categories?post=12829436"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.philstockworld.com\/wp-json\/wp\/v2\/tags?post=12829436"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}