ON Semi (ON) with a large inside purchase of 17,000 shares by a Director on 9/9 for $769,420. This is the first insider purchase in the name in at least four years. ON shares also broke out to fresh highs last week and have been strong since the Analyst Day. ON has also seen a lot of bullish options positioning including 10,000 January 2023 $40/$50 call spreads on 7/12 now firmly ITM and opening sales in January 2023 puts.

ON has an extensive portfolio of sensors, power management, connectivity, custom and SoC, analog, logic, timing and discrete devices. In 2020 revenues were distributed across end-markets of Automotive at 32%, Industrial at 25%, Communications at 20%, Consumer at 11% and Computing at 12%. ON currently has a market cap of $20B and trades 17.1X Earnings, 3.4X Sales and 22X FCF with revenues seen growing 25% in 2021 and EPS +190% before slowing to 5.5%/10.9% growth in 2022.

ON spoke on its early August earnings call regarding trends noting “The demand environment continues to be robust across all end markets. For the second quarter, we posted record revenue for the automotive and industrial end markets. In addition to the company’s broad-based strength in these markets, we are benefiting from the strong traction of our power and sensing products. The strong demand that we have seen over the last few quarters continued to outpace our ability to supply certain products, especially those manufactured by our foundry partners. Based on current booking trends and macroeconomic outlook, we expect that the demand will continue to outpace supply through the first half of next year. Our engagement with leading global OEMs and Tier 1s continues to expand, and I’m very bullish on our potential in the growing vehicle electrification market over the next few years. In addition to the industry-leading performance of our FETs, the key source of our differentiation is our expertise in packaging, which is critical for improving heat dissipation, increasing power output in a smaller footprint than our closest competitor and reducing the weight and cost of a power module. The efficiency of our module allows our customers to make no trade-offs between the cost of battery and the range of the vehicle. They get both.”

At its August Analyst Day ON Semi highlighted that power efficiency in the Semiconductor industry is the new frontier due to trends towards sustainability. Intelligent Power is seen growing at a 6% CAGR through 2025 and Intelligent Sensing seen growing at a 10% CAGR with a $64B and $10B TAM respectively. ON is focused on the opportunities in Auto & Industrial, seen growing to 75% of its revenues from 60% in 2021. ON is also a margin expansion play with a target of 45% gross margins in 2024 from 38.6% in 2021 as it also targets $2B in annual FCF.