5N Plus (TSX:VNP) is a Montreal-based company that produces and sells semiconductors in North America, Europe, and Asia. Shares of 5N Plus have soared 49% month-over-month as of close on November 21. This stock is now up 21% in the year-to-date period. Is 5N Plus overvalued, or should you look to ride the wave? Let’s jump in.
Investors should seek exposure to the burgeoning semiconductor industry. Fortune Business Insights estimated that the global semiconductor market was worth US$527 billion in 2021. The report projects that the market will grow to $1.38 trillion in 2029. That would represent a CAGR of 12% over the forecast period.
This company released its third quarter fiscal 2022 earnings on November 1. 5N Plus delivered total revenues of $66.4 million – up 31% from $50.8 million in Q3 FY2021. Meanwhile, it posted adjusted EBITDA of $9.1 million compared to $5.5 million in the previous year. 5N Plus marked strong growth in both major segments in the face of high inflation. That was powered by a favourable product mix.
Looking ahead, 5N Plus projects that it will be able to deliver double-digit growth rates in the years ahead. It is well-positioned to benefit from strong growth in the renewable energy and space sectors.
Shares of 5N Plus currently possess a Relative Strength Index (RSI) of 75, which puts this stock in technically overbought territory. Despite that, it is still in favourable value levels compared to its industry peers. Moreover, investors cannot ignore its fantastic earnings growth trajectory.
