ONTO INNOVATION INC (NYSE:ONTO) – A Strong Growth Stock with Technical Breakout Potential

ONTO INNOVATION INC (NYSE:ONTO) was identified by our screener as a strong growth stock with a promising technical setup. The company combines solid fundamental growth metrics with a technical pattern that suggests potential upside. Below, we examine why ONTO stands out.

Strong Growth Fundamentals

ONTO Innovation operates in the semiconductor equipment sector, providing metrology and inspection systems critical for advanced chip manufacturing. The company’s fundamentals reflect strong growth potential:

• Revenue Growth: Over the past year, revenue increased by 21.23%, with a three-year average growth rate of 26.41%.
• Earnings Growth: EPS grew 42.36% in the last year, with a three-year average of 36.96%.
• Profitability: High margins, including a 21.36% net profit margin, outperform 83.64% of industry peers.
• Financial Health: A 9/10 Health Rating, supported by zero debt and strong liquidity metrics.

Valuation and Industry Position

Despite strong growth, ONTO remains reasonably valued:

• P/E Ratio: At 16.87, it trades below the industry average (37.30) and the S&P 500 (26.35).
• Forward P/E: 14.48 suggests further earnings growth is expected.
• Free Cash Flow: The stock is priced attractively relative to cash flow, cheaper than 83.64% of peers.

Technical Setup

While the stock’s broader trend has been weak, recent price action shows consolidation, with a 7/10 Setup Rating indicating a potential breakout:

• Support: A key trendline support sits near $95.38, providing a floor.
• Resistance Levels: The stock faces hurdles at $101.34 and $110.81, which, if broken, could signal further upside.
• Volume: Average daily liquidity (1.53M shares) ensures tradability.

Our Strong Growth Stocks with Good Technical Setup Ratings screener lists more stocks with similar characteristics.
For a deeper dive, review the full fundamental report or technical analysis.

Disclaimer

This is not investment advice. Always conduct your own research before making investment decisions.