By Peet Serfontein & Jalpa Bhoolia
Monolithic Power Systems (MPS) is a global company that provides high-performance, semiconductor-based power electronics solutions.
The business was formed in 1997 by CEO Michael Hsing, and the company prides itself on having deep system-level knowledge, strong semiconductor design expertise, and innovative proprietary semiconductor process and system integration technologies. These combined advantages enable MPS to provide customers with reliable, compact, monolithic solutions that offer highly energy efficient, cost-effective products.
Technically, a gap in share price presents an appealing investment opportunity (see the insert on the main chart). A gap in the price, particularly resulting from strong buying momentum, can also act as a key resistance level, signalling bullish strength. If a stock still trades below the gap, this signals a potential breakout.
Consistently positive monthly performance acts as additional bullish support for the stock. If the cyclical component of a stock's average monthly performance since 2000 highlights that only two months tend to have negative returns, this suggests a strong seasonal pattern favouring bullish momentum.
We suggest a medium capital at-risk allocation to this trade. Increase exposure for a break above $652.
| Share Information | |
|---|---|
| Share Code | MPWR |
| Industry | Semiconductors |
| Market Capital (USD) | 29.95 billion |
| One Year Total Return | -0.26% |
| Return Year-to-Date | 3.76% |
| Current Price (USD) | 613.95 |
| 52 Week High (USD) | 959.64 |
| 52 Week Low (USD) | 546.71 |
| Financial Year End | December |
| The stock has not recovered to pre-October levels - several technical indicators highlight upside potential in the price. | |
| Consensus Expectations (Bloomberg) | ||||
|---|---|---|---|---|
| FY23 | FY24E | FY25E | FY26E | |
| Headline Earnings per Share (USD) | 11.78 | 14.02 | 16.41 | 20.11 |
| Growth (%) | 19.03 | 17.05 | 22.49 | |
| Dividend Per Share (USD) | 4.00 | 4.96 | 5.39 | 5.99 |
| Growth (%) | 23.95 | 8.75 | 11.13 | |
| Forward PE (times) | 43.78 | 37.41 | 30.54 | |
| Forward Dividend Yield (%) | 0.81 | 0.88 | 0.98 | |
| Earnings growth is attractive over the forecast horizon. | ||||
Buy/Sell Rationale:
Technical Analysis:
Fundamental view:
| Share Name and Position | KMX US - Buy (Continue to hold) |
AMGN US - Buy (Continue to hold) |
TDG US - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 76.44 | 267.10 | 1 292.86 |
| Current | 85.28 | 280.30 | 1 329.48 |
| Movement | +11.6% | +4.9% | +2.8% |
|
A developing ascending triangle pattern remains of interest. Remains above its 200-day simple moving average. The start of upside price momentum is a positive.
Our profit target remains at $90 with a trailing stop-loss at $80. Exit the trade by 31 January 2025. |
The price is in a steady upward trend, which remains of interest. Price is above its 200-week SMA. Fading downside price momentum is supportive.
Our profit target remains at $300 with a trailing stop-loss at $266. Exit the trade by 26 March 2025. |
A smaller steep upward tilting inclining channel pattern remains of interest. Remains above its 200-day SMA. Fading downside price momentum is supportive.
Our profit target remains at $1 500 with a trailing stop-loss $1 255. Exit the trade by 14 February 2025. |
| Share Name and Position | DOV US - Buy (Continue to hold) |
STE US - Buy (Continue to hold) |
LHX US - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 194.48 | 217.20 | 222.86 |
| Current | 198.08 | 221.06 | 213.30 |
| Movement | +1.9% | +1.8% | -4.3% |
|
Seasonal trends in the price remains of interest. Price is above its 200-day SMA. Fading downside price momentum is a good indicator.
Our profit target remains at $214 with a trailing stop-loss at $190. Exit the trade by 9 May 2025. |
An Elliott wave forming a trough remains of interest. Trading just below its 200-day simple moving average. Fading downside price momentum supports the trade strategy.
Our profit target remains at $239 with a trailing stop-loss at $212. Exit the trade by 18 April 2025. |
A price action in a developing symmetrical triangle pattern remains of interest. The remains above its 200-week SMA. Fading downside price momentum is encouraging.
Our profit target remains at $246 with a trailing stop-loss at $213. Exit the trade by 2 April 2025. |
FNB Stockbroking and Portfolio Management (Pty) Ltd, a subsidiary of FirstRand Bank Limited, an authorised Financial Services Provider and authorised user of the JSE limited (Reg no: 1996/011732/07). This Publication note is issued by FNB Stockbroking and Portfolio Management (Pty) Ltd for the information of clients only and should not be produced in whole or part without prior permission. Although FNB Stockbroking and Portfolio Management (Pty) Ltd is an Authorised Financial Services Provider, any opinions and/or analysis contained in this Publication are for informational purposes only and should not be considered advice, including but not limited to financial, legal or tax advice, or a recommendation to invest in any security or to adopt any investment strategy. The information contained herein has been obtained from sources/persons which we believe to be reliable but is not guaranteed for correctness, completeness or otherwise and we do not assume liability for loss arising from errors in the information or that may be suffered from using or relying on the information contained herein irrespective of whether there has been any negligence by us, our affiliates or any other employees of us, and whether such losses be direct or consequential. As market and economic conditions are subject to rapid change, any comments, opinions, and analysis is rendered as of the date of publishing and may change without notice. Such changes may have a material impact on the outcome of any investment. Securities involve a degree of risk and are volatile instruments. Past performance is not indicative of future performances. Securities or financial instruments mentioned in the Publication note may not be suitable for all investors and FNB Stockbroking and Portfolio Management (Pty) Ltd has bares no responsibility whatsoever arising from or as a consequence hereof. The material is not intended as a complete analysis of every material fact regarding any share, instrument, sector, region, market, country, investment, or strategy. The recipient of this Publication must make their own investment decision and is advised to contact his relationship manager for a personal financial analysis prior to making any investment decisions. Copyright 2018 by FNB Stockbroking and Portfolio Management (Pty) Ltd.
