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American Semiconductor (AMSC) Up 79.3% YTD: Should You Buy the Stock?
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American Superconductor (AMSC - Free Report) has shown impressive resilience and growth so far this year, with its stock price climbing 79.3% year to date. This stellar performance underscores investors' confidence in the company's strong fundamentals.
AMSC's gain has outpaced the industry, the Zacks Computer & Technology sector and the S&P 500 index’s rise of 7.5%, 22.7% and 17.9% over the same period.
The company is riding on its strong positioning in alternative energy. The solid uptake of its grid interconnection solutions, licensed wind energy designs and electrical systems is a major positive.
AMSC is recognized as the world's principal supplier of high-temperature superconductor cables, and on the back of this, it enjoys solid momentum in the semiconductor industry, which is a plus.
Year-to-Date Price Performance
Image Source: Zacks Investment Research
Given its impressive gains, the question arises of how AMSC is positioned to sustain this growth in the future.
Portfolio Strength: A Key Catalyst
American Superconductor, which is a leading system provider of megawatt-scale power resiliency solutions, enables a new generation of compact, high-power electrical products, including power cables, grid-level surge protectors, motors, generators, and advanced transportation and defense systems.
Its strong power grid, wind and marine solutions are constantly expanding its addressable market. These solutions help AMSC to cater to the growing demand for renewable energy, materials for the electrification of transportation (particularly for electric vehicles), semiconductors and electrification of the naval fleet.
The company’s power grid products such as D-VAR Systems, actiVAR Systems, armorVAR Systems, transformers and DC rectifiers, D-VAR VVO and REG Systems, which are designed to increase the power grid’s capacity, resiliency, reliability, security and efficiency, are driving its momentum among various power grid operators worldwide.
AMSC is experiencing strong momentum in the wind power market, which is booming on the back of the rising demand for clean energy, owing to its Electrical Control Systems and Wind Turbine Designs, which enable manufacturers to field highly competitive wind turbines.
With these wind turbine solutions, the company competes well with incumbents like GE Vernova (GEV - Free Report) , Siemens, Dominion Energy (D - Free Report) , General Electric and Nordex.
American Superconductor also enjoys a strong foothold in the marine market, thanks to the rising defense spending and the growing number of navy fleets. Its Ship Protection, Onboard Power Delivery, Propulsion and Power Generation systems are designed to address the challenges associated with power capacity, efficiency, and space and weight limitations that are being faced by navy fleets worldwide.
American Semiconductor recently acquired NWL to expand its product portfolio and market reach. Headquartered in New Jersey, NWL is a private company engaged in providing power supplies to military and industrial clients.
Solid Customer Momentum Drives Growth
The company’s strong product offerings are helping it secure high-value deals and boosting shipments, which, in turn, are driving its business growth.
In first-quarter fiscal 2024, the company generated revenues of $40.3 million, which increased 33.2% year over year. This was primarily driven by growing shipments of new energy power systems and electrical control system shipments.
Strong deal wins are expected to continue driving the company’s growth in the days ahead.
American Semiconductor recently announced a record $75-million order of ship protection systems from the RoyalCanadian Navy. The company’s strong relationship with the U.S. Navy is also noteworthy.
In the wind market, AMSC received its third follow-on order of more than $12 million from its wind customer, InoxWinds.
It is also winning Energy Power Systems orders in utilities, industrials, renewables, semiconductor and mining markets.
AMSC’s Rising Estimates: A Positive
American Semiconductor’s strong portfolio and solid customer momentum are expected to benefit its near and long-term prospects.
The Zacks Consensus Estimate for second-quarter fiscal 2024 revenues is pegged at $50.05 million, which indicates year-over-year growth of 47.2%.
The consensus mark for earnings is pegged at 4 cents per share. The figure has moved north from the break-even point over the past 30 days.
The Zacks Consensus Estimate for fiscal 2024 revenues stands at $206.2 million, indicating year-over-year growth of 41.6%.
The consensus mark for earnings is pegged at 31 cents per share, implying a significant jump from the 2 cents reported in fiscal 2023. The estimate has been revised 210% upward over the past 30 days.
Image Source: Zacks Investment Research
AMSC is Overvalued
The Value Score of F suggests a stretched valuation for American Semiconductor at this moment.
The AMSC stock is trading at a premium with a forward 12-month Price/Sales of 3.55X compared with the industry’s 2.65X.
Image Source: Zacks Investment Research
While this might be perceived as a risk, the premium is justified due to the company's strong financial performance and substantial growth prospects in wind, marine and power grid markets.
Conclusion
Strong momentum across semiconductor, renewable, mining and metals, and military end-markets, coupled with innovative product offerings, strategic partnerships and rising deal wins, are expected to continue shaping its growth trajectory. The company’s rising estimates further support the case for continued upward momentum.
These factors make AMSC a compelling buy for investors looking to capitalize on the growing demand for renewable energy. Given these factors, it is an opportune time to invest in American Semiconductor, which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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American Semiconductor (AMSC) Up 79.3% YTD: Should You Buy the Stock?
American Superconductor (AMSC - Free Report) has shown impressive resilience and growth so far this year, with its stock price climbing 79.3% year to date. This stellar performance underscores investors' confidence in the company's strong fundamentals.
AMSC's gain has outpaced the industry, the Zacks Computer & Technology sector and the S&P 500 index’s rise of 7.5%, 22.7% and 17.9% over the same period.
The company is riding on its strong positioning in alternative energy. The solid uptake of its grid interconnection solutions, licensed wind energy designs and electrical systems is a major positive.
AMSC is recognized as the world's principal supplier of high-temperature superconductor cables, and on the back of this, it enjoys solid momentum in the semiconductor industry, which is a plus.
Year-to-Date Price Performance
Image Source: Zacks Investment Research
Given its impressive gains, the question arises of how AMSC is positioned to sustain this growth in the future.
Portfolio Strength: A Key Catalyst
American Superconductor, which is a leading system provider of megawatt-scale power resiliency solutions, enables a new generation of compact, high-power electrical products, including power cables, grid-level surge protectors, motors, generators, and advanced transportation and defense systems.
Its strong power grid, wind and marine solutions are constantly expanding its addressable market. These solutions help AMSC to cater to the growing demand for renewable energy, materials for the electrification of transportation (particularly for electric vehicles), semiconductors and electrification of the naval fleet.
The company’s power grid products such as D-VAR Systems, actiVAR Systems, armorVAR Systems, transformers and DC rectifiers, D-VAR VVO and REG Systems, which are designed to increase the power grid’s capacity, resiliency, reliability, security and efficiency, are driving its momentum among various power grid operators worldwide.
AMSC is experiencing strong momentum in the wind power market, which is booming on the back of the rising demand for clean energy, owing to its Electrical Control Systems and Wind Turbine Designs, which enable manufacturers to field highly competitive wind turbines.
With these wind turbine solutions, the company competes well with incumbents like GE Vernova (GEV - Free Report) , Siemens, Dominion Energy (D - Free Report) , General Electric and Nordex.
American Superconductor also enjoys a strong foothold in the marine market, thanks to the rising defense spending and the growing number of navy fleets. Its Ship Protection, Onboard Power Delivery, Propulsion and Power Generation systems are designed to address the challenges associated with power capacity, efficiency, and space and weight limitations that are being faced by navy fleets worldwide.
American Semiconductor recently acquired NWL to expand its product portfolio and market reach. Headquartered in New Jersey, NWL is a private company engaged in providing power supplies to military and industrial clients.
Solid Customer Momentum Drives Growth
The company’s strong product offerings are helping it secure high-value deals and boosting shipments, which, in turn, are driving its business growth.
In first-quarter fiscal 2024, the company generated revenues of $40.3 million, which increased 33.2% year over year. This was primarily driven by growing shipments of new energy power systems and electrical control system shipments.
Strong deal wins are expected to continue driving the company’s growth in the days ahead.
American Semiconductor recently announced a record $75-million order of ship protection systems from the RoyalCanadian Navy. The company’s strong relationship with the U.S. Navy is also noteworthy.
In the wind market, AMSC received its third follow-on order of more than $12 million from its wind customer, InoxWinds.
It is also winning Energy Power Systems orders in utilities, industrials, renewables, semiconductor and mining markets.
AMSC’s Rising Estimates: A Positive
American Semiconductor’s strong portfolio and solid customer momentum are expected to benefit its near and long-term prospects.
The Zacks Consensus Estimate for second-quarter fiscal 2024 revenues is pegged at $50.05 million, which indicates year-over-year growth of 47.2%.
The consensus mark for earnings is pegged at 4 cents per share. The figure has moved north from the break-even point over the past 30 days.
The Zacks Consensus Estimate for fiscal 2024 revenues stands at $206.2 million, indicating year-over-year growth of 41.6%.
The consensus mark for earnings is pegged at 31 cents per share, implying a significant jump from the 2 cents reported in fiscal 2023. The estimate has been revised 210% upward over the past 30 days.
Image Source: Zacks Investment Research
AMSC is Overvalued
The Value Score of F suggests a stretched valuation for American Semiconductor at this moment.
The AMSC stock is trading at a premium with a forward 12-month Price/Sales of 3.55X compared with the industry’s 2.65X.
Image Source: Zacks Investment Research
While this might be perceived as a risk, the premium is justified due to the company's strong financial performance and substantial growth prospects in wind, marine and power grid markets.
Conclusion
Strong momentum across semiconductor, renewable, mining and metals, and military end-markets, coupled with innovative product offerings, strategic partnerships and rising deal wins, are expected to continue shaping its growth trajectory. The company’s rising estimates further support the case for continued upward momentum.
These factors make AMSC a compelling buy for investors looking to capitalize on the growing demand for renewable energy. Given these factors, it is an opportune time to invest in American Semiconductor, which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.