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Here's Why Onto Innovation (ONTO) is a Solid Pick for Investors

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Shares of Onto Innovation Inc. (ONTO - Free Report) have soared 117.1% in the past year against 44.2% decline of the industry. The stock currently sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of B.

Zacks Investment Research
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This Wilmington, MA-based company delivered a trailing four-quarter earnings surprise of 15.5%, on average. The Zacks Consensus Estimate for its current-year earnings has been revised 11.6% upward over the past 30 days.

Growth Drivers

Onto Innovation engages in the manufacture and support of process control tools that performs macro defect inspection and metrology, lithography systems and process control analytical software. It is poised to benefit from strong customer demand for its solutions across the semiconductor value chain while improving its operational efficiency.

Onto Innovation reported impressive second-quarter 2021 results with record revenues driven by solid order trends. It anticipates the growth momentum to continue in the second half of the year on multiple secular drivers. Its revenues are expected to gain from expansions and node transitions in logic and memory as well as the rapidly growing investments in packaging and radio frequency process technology.

The company is witnessing robust demand for both front-end and back-end products. Increased adoption of optical metrology solutions and strength in high-performance computing and specialty devices, particularly in 5G smartphones, and baseband radio frequency are tailwinds. It is progressing well to bring new solutions into markets to further expand its growth opportunities.

A solid product portfolio and an expanding customer base are its key long-term growth drivers. Healthy traction in 5G, increased adoption of optical metrology solutions and advanced packaging markets aid the company. It invests in research and development to provide differentiated products and services, which adds value to its manufacturing processes.

The company estimates new customers for planar films, inspection of image sensors and the increasingly critical ramp of panel level packaging to add more than $350 million to its served markets in 2022. The market expansions reflect Onto Innovation’s technical strength and close collaboration with its customers. We believe that the stock has more upside left.

Other Key Choices

Some other top-ranked stocks that investors may consider are Clearfield, Inc. (CLFD - Free Report) , Juniper Networks, Inc. (JNPR - Free Report) and Qualcomm, Inc. (QCOM - Free Report) . While Clearfield flaunts a Zacks Rank #1, Juniper and Qualcomm carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Clearfield delivered a trailing four-quarter earnings surprise of 49%, on average.

Juniper pulled off a trailing four-quarter earnings surprise of 7.5%, on average.

Qualcomm delivered a trailing four-quarter earnings surprise of 13.5%, on average.

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