ON Semiconductor (Onsemi)

If you’re a high school student looking for the top stocks to buy now and aiming to win your Stock Market Game, ON Semiconductor (Onsemi) is a stock you should keep on your radar. This chipmaker, known for its growing presence in the AI and electric vehicle (EV) industries, has taken a hit recently but could be poised for a strong rebound—making it a potential winner for a short-term, high-risk, high-reward strategy that could give you the edge in your classroom competition.

Onsemi has faced a rough year, with shares falling 7% due to a slowdown in automotive chip sales. Many automakers had over-ordered chips post-pandemic and are now working through that excess inventory. But this dip in sales also means there’s room for the stock to bounce back once demand picks up again. As analyst Jack Egan from Charter Equity puts it, “Onsemi is well-positioned for a strong recovery as auto demand stabilizes, making it a top stock for momentum traders.”

Momentum trading is a popular strategy for winning the Stock Market Game. It involves buying stocks that are on the rise and capitalizing on short-term market trends. In the case of Onsemi, the stock is trading at around 17 times forward earnings, which is lower than competitors like Texas Instruments and Analog Devices, who trade at multiples of 29 to 34 times earnings. This gives Onsemi a lot of upside potential once the market turns around. “At this price point, Onsemi is a bargain,” says Blayne Curtis of Jefferies. “It’s an opportunity for those looking to ride a stock back up as demand recovers.”

But here’s an important lesson: while high-risk, high-reward strategies like momentum trading might help you win your stock market game, they’re not ideal for long-term investing. In short-term trading (like the game), you’re looking for quick gains by capitalizing on market events, such as Onsemi’s recent deal to supply silicon-carbide chips to Volkswagen, the world’s second-largest automaker. This deal is a huge win for Onsemi, as silicon carbide chips are vital for electric vehicles (EVs), a rapidly growing market.

Long-term investing, on the other hand, is about building financial wealth over time by managing risk. To do this, you should focus on diversification. Diversification means spreading your investments across different companies or industries to reduce risk. For example, investing in an S&P 500 index fund is a common long-term strategy. This fund includes 500 of the biggest companies in the U.S., so your money isn’t tied to just one stock, like Onsemi. If one company doesn’t perform well, the rest of the portfolio helps balance things out.

That’s why it’s crucial to understand the difference between short-term trading and long-term investing. If you’re competing in the Stock Market Game, it makes sense to take more risks, like investing in Onsemi, because you’re playing to win in the short term. As Blayne Curtis notes, “Onsemi’s strength in AI and EV markets, along with its strong position in the silicon-carbide space, makes it an exciting pick for anyone looking to capitalize on short-term growth.”

However, if you’re thinking about your financial future, a diversified, long-term portfolio is the smarter route. While Onsemi could offer short-term gains, a balanced mix of investments, like an S&P 500 index fund, will help you build wealth and achieve long-term financial goals.

So, if you want to crush the competition in your Stock Market Game, consider adding Onsemi to your portfolio. Its recent downturn and potential for growth in the AI and EV sectors make it a top stock for those looking to use a high-risk, high-reward strategy. But remember, while these strategies are fun and exciting in the game, for real-life investing, you should diversify and think long-term for sustainable financial success.