The explosion of artificial intelligence has made it quite difficult to find high-growth stocks trading at fair value. Chip stocks provide an excellent example of this truth, but it’s widely applicable to all things tech and high growth currently.
Investors are willing to pay more than double the industry average for a dollar of Nvidia’s (NASDAQ:NVDA) growth right now. That’s after a pull back that has seen share prices fall from $134 to $112.
That phenomenon isn’t solely true of the semiconductor sector. The “Magnificent Seven” and many other shares adjacent to artificial intelligence are similarly high priced.
That said, there are high growth opportunities available to investors that trade at fair prices. Many of them have fallen back to the fairly priced range after their respective sectors suffered setbacks. That sets up a scenario for investors to take advantage of one of few opportunities to get growth at a reasonable price.
ON Semiconductor (ON)
ON Semiconductor (NASDAQ:ON) stock currently trades for just over $67. That’s slightly below the $69 price it should trade at based on earnings-per-share forecasts for this year and price to earnings projections. In other words, it is fairly priced.
Yet the analysts responsible for rating ON Semiconductor — or “onsemi” — have given it a consensus price of $86. The company is highly connected to the electric vehicle sector. That fact explains its relative value at the moment: EV stocks have fallen out of favor as sales slump and pricing competition makes the sector less attractive.
Take the opportunity because onsemi has been selected to power Volkswagen’s (OTCMKTS:VWAGY) next-generation EVs. The company will provide the chips that power the power sub assembly. A power sub assembly is a series of interconnected components that collectively manage and distribute power in a vehicle.
The win is further proof that onsemi is a real leader in the EV chip space and current share prices make it a good time to buy.
First Solar (FSLR)
First Solar (NASDAQ:FSLR) stock trades for $213 currently, although analysts believe it is worth closer to $276. Based on earnings and P/E projections, it should trade precisely where it is.
It’s a very interesting trade because First Solar is subject to so many dynamic catalysts at the moment. It is at the center of political narratives. Roughly 80% of the company’s net income in 2023 was attributable to Inflation Reduction Act (IRA) subsidies. That truth sent the shares tumbling following the debate between Biden and Trump which greatly improved Trump’s chances of reelection. However, some believe First Solar isn’t exposed to large risks, even if Trump is reelected. Many GOP controlled districts have accepted IRA subsidies thus far.
The company could also benefit from a Trump presidency as he would likely put additional pressure on Chinese solar imports.
It all suggests that the recent reaction to First Solar was likely an overreaction.
Jabil (JBL)
Jabil (NYSE:JBL) is a manufacturing services firm serving the electronics sector. The stock that represents the company is underappreciated but simultaneously offers high growth to investors.
Shares currently trade for $99 which is well below the consensus target price and the low target as well. That price is appropriate based on forward earnings and P/E ratio forecasts, however. All of which suggests that Jabil is an opportunity for investors to pick up its high growth shares at a fair price currently.
Yet Jabil represents something of a paradox because revenues are falling in 2024. Yet the company also expects earnings to grow by 40% this year. Earnings are then expected to grow by 25% in 2025. That suggests Jabil is a high-growth stock trading at a fair price right now and presents an opportunity overall.
Jabil also includes a modest dividend yielding 0.3% currently. It’s arguably a fit for income investors as well.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
