Taiwanese LED chip manufacturer SemiLEDS Corp. (NASDAQ:LEDS) had a bull run on the stock market this week, and investors across the board are taking note.
Despite the sharp rise in value after shares rose as much as 246.8 percent, there's still opportunity for growth—especially over the next 12 months.
What happened to SemiLEDS (LEDS) stock?
While the S&P 500 dropped this week, SemiLEDS stock took a different path. From market open on May 3 to mid-morning on May 7, the stock is up 143.63 percent. YTD, the stock has risen 173.1 percent, with the 12-month trailing returns an even more impressive 331.5 percent.
Why the boost in the sell-off May? It mostly has to do with SemiLEDS earnings. Revenues for the company's second fiscal quarter reached $1.2 million—much higher than the previous quarter's $719,000.
Stock forecast shows a bright future for SemiLEDS (LEDS)
Despite recent gains, SemiLEDS stock has seen immense lifetime volatility. The current value is the highest the stock has been in nine years, but shares were once trading as high as $295 per share. On May 7, the rally is a sharp contrast from the early days of LEDS stock.
Even with this volatility in mind, a CNN analyst reports a 12-month target price of $30, which is up more than 230 percent. There's plenty of room for LEDS stock to grow over the next year.
The current chip shortage extends to LED chips as well, which puts this Taiwanese company central to the sector's recovery. SemiLEDS works with lighting products, but they also function in ultraviolet light applications. UV-C lighting has been shown to kill viral bacteria like the SARS-CoV-2 virus that causes COVID-19. That's yet another reason why the spotlight will likely remain on SemiLEDS stock.
Is SemiLEDS (LEDS) stock a good investment?
SemiLEDS is undoubtedly volatile, and the increasing short interest is a force to be reckoned with (MarketBeat reports a 24.5 percent increase in short interest month-over-month). Despite that, including SemiLEDS in a tech portfolio could potentially contribute to returns over the next 12 months in particular. While not necessarily a long-term hold (longer than one year), a brief SemiLEDS position holds potential in the eyes of investment analysts.
On Stocktwits, investors are showing a positive rate of interest for LEDS stock. Sentiment is fluctuating, but a large portion of users are getting in on the dip. SemiLEDS stock is down 8.03 percent since market open on May 7, which could contribute a solid buy-in opportunity for interested investors.
The short-term impacts of this rally will be evident by the market open on May 10, when investors will be able to determine their next moves. Many are considering holding off on the dip purchase until next week.