This week’s Stock of the Week creates crucial components for a wide variety of sectors and is well-positioned for continued growth.

After an Acquisition

ON Semiconductor Company (ON) is in a strong position for growth after completing its $2.4 billion acquisition of Fairchild Semiconductor last September.

The Fairchild acquisition will help ON become a much more diversified chip supplier. Fairchild had specialized in power-management semiconductors since 1957, making components used in the automotive industry, in smartphones and for industrial uses. ON has been especially strong in low-voltage semiconductors, while Fairchild has serviced higher voltage applications, so the combination creates a greater balance.

The combined company, which will have an estaimted $5.3 billion in revenue this year, makes power-and-data-management semiconductors for the automotive industry, which represents 31% of revenue…industrial uses, 26%…communications, 19%…computer makers, 10%…and the consumer market, 15%.

ON will benefit as more companies are starting to invest in information-technology infrastructure rather than  hire additional personnel.

Fiscal year: December. Earnings per share: 2018 est./$1.59…2017 est./$1.30…2016/$0.91.

Brian Peery is portfolio manager of the $1 billion Hennessy Cornerstone Mid Cap 30 Fund (HFMDX), Novato, California. HennessyFunds.com

Related Articles