Our first idea is a software company who beat EPS estimates by $0.12 in the last quarter. Our sale recommendation is a company whose earnings forecasts are dimming.
Buy: Onto Innovation Inc. (ONTO)
From Upside
Onto Innovation is being upgraded to Best Buy. The company’s systems and software are used for defect inspection and to control the manufacturing of advanced semiconductors. Major customers include Samsung Semiconductor and Taiwan Semiconductor—tech giants seeking ways to shrink chip designs, accelerate product development, and improve performance.
Onto earns solid Quadrix® scores, including an 86 Overall and 93 in Performance. For 2021, the consensus calls for per-share earnings of $3.56 and implies 85% growth—an achievable target based on recent operating momentum and strong industry trends. For 2022, the consensus implies 13% growth to $4.04, putting the forward P/E at a reasonable 19. Onto is a top pick for 12-month gains.
Richard J. Moroney, CFA, Upside, upsidestocks.com, 800-233-5922, October 2021
Sell: Brady Corporation (BRC)
Updated from WSBD 843, July 8, 2021
Brady was downgraded to Sell. The stock’s Overall score has slumped to 50, hurt by weakness in Momentum (32) and Earnings Estimates (21). Brady has been under pressure in recent months, and analysts have trimmed estimates for three of the next four quarters. Brady should be sold.
Richard J. Moroney, CFA, Upside, upsidestocks.com, 800-233-5922, October 2021