We recently compiled a list of the 12 Best S&P 500 Stocks to Invest in According to Analysts. In this article, we are going to take a look at where ON Semiconductor Corporation (NASDAQ:ON) stands against the other S&P 500 stocks.
2024 was a memorable year for the broad market index, which posted a gain of 23.31%, building on the 24.2% return in 2023. The two-year surge of over 53% is the best performance for the index since the 66% rally between 1997 and 1998.
READ ALSO: 15 Stocks ChatGPT Predicts Could Make You Wealthy in 10 Years and 10 Under-the-Radar Stocks with Massive Upside for 2025.
The stock market benefited from a resilient economy that avoided recession, declining interest rates, and waning inflation. Analysts are projecting continued growth in 2025 amid strong economic data and optimism about a business-friendly Trump administration returning to power.
The broader market rose 0.5% on January 23, going past its peak in December to a new record high. The gain added to the week-long winning momentum after data showed inflation slowing in the country more than economists had anticipated. With this rise, the index is up 4% since the start of the year.
Investor sentiment has also been bolstered with President Trump reiterating his commitment to lowering oil prices and further cutting interest rates. The 78-year-old is also taking his time over tariffs by holding them off until February. Analysts believe a less aggressive approach than some had expected has helped the market move higher. Here is what Larry Tentarelli, chief technical strategist at the Blue Chip Daily Trend Report, had to say:
“He really can’t control interest rates, but the market likes to hear that kind of stuff. So far, the market does seem to like what Trump’s policies are going to be, so we’ll just have to see if there’s some follow-through.”
A string of strong corporate earnings reports has also supported the gains in January. According to data from FactSet, earnings for companies listed on the index are on track to grow by over 12% for the fourth quarter compared to the same period in the prior year. If that happens, this would mark the best quarter for company profits since 2021.
While the overall outlook for the stock market looks encouraging, analysts are also cautious about the rally having gone too far, and a correction is in the offing this year. The threat of fierce trade wars sparked by tariffs, ongoing geopolitical conflicts, and broader inflationary pressures could also hurt the market.
Jurrien Timmer, Director of Global Macro for Fidelity Management & Research Company wrote the following in a note on December 18.
“Personally, I am bullish on stocks for 2025, though with valuations high and the bull market maturing, I don’t think investors should expect quite such spectacular returns next year as we have seen this past year. And I think there are important risks from inflation, and the market’s concentration, to be aware of.”
Methodology
For this article, we went through the list of large cap stocks on the broader market index and picked the top 12 with the highest average share price upside potential. All data is as of the close of the day on Friday, January 31, 2025. The stocks are listed in ascending order of their share price upside potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A semiconductor engineer in a state-of-the-art laboratory, analyzing advanced semiconductor products.
ON Semiconductor Corporation (NASDAQ:ON)
Average Share Price Upside Potential as of January 31: 55.58%
Market Cap: $22.29 billion
ON Semiconductor Corporation (NASDAQ:ON) is an American semiconductor supplier company that provides intelligent power and sensing solutions. Its key revenue streams include automotive, industrial, energy, and other industries.
The company’s share price plunged 22% in 2024 due to slower demand and broader macroeconomic challenges. While the short-term outlook may appear less promising, ON Semiconductor Corporation (NASDAQ:ON)’s long-term trajectory remains solid. It ended its most recent quarter (Q3 2024) with $2.8 billion in cash and short-term investments, which allow the company to make further strategic acquisitions and bolster its leadership in high-demand sectors.
In July last year, the company enhanced its intelligent sensing portfolio with the acquisition of SWIR Vision Systems, a leading provider of CQD short wavelength infrared (SWIR) technology, that allows one to see through objects and capture images that were not previously possible. ON Semiconductor Corporation (NASDAQ:ON) is optimistic that the new technology will enable the company to expand its industrial offerings into agriculture, aerospace, medical imaging, and inspection.
Analysts anticipate the company’s end markets to recover by the end of 2025, with the EV sector benefiting from regulatory pressures and subsidies. Its current forward P/E of 12.89, as of January 27, also presents an attractive entry point for investors. Wall Street analysts are bullish on ON Semiconductor Corporation (NASDAQ:ON) with a consensus Buy rating and an average share price upside potential of nearly 56%, making it one of the best large-cap stocks to invest in according to analysts.
Overall ON ranks 5th on our list of the best S&P 500 stocks to invest in according to analysts. While we acknowledge the potential of ON as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ON but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.