DIOD

Diodes is a discrete and analog semiconductor maker emerging from a sharp cyclical downturn. FY2025 revenue grew 13.0% to $1.48B and net income rose 50.2% to $66.1M, but both remain far below the FY2022 peak ($2.00B revenue, $331M net income) — this is an early-cycle recovery, not a return to prior earnings power. Tellingly, operating income actually fell 29.7% to $35.5M (a depressed 2.4% operating margin), while reported net income rose on below-the-line/tax items; the gross margin of 31.2% is well off the levels the company earned at the top of the cycle.

The balance sheet is a genuine strength and the reason to be patient rather than negative. Liabilities are just 0.27x equity, long-term debt is negligible at $25.7M, cash grew 19.0% to $367M, and the company kept investing through the trough — R&D up 21.0% to $162M — while still buying back $33.8M of stock. Operating cash flow rebounded 80.4% to $216M, comfortably funding the $78.4M capex. This is a financially unbreakable franchise positioned to lever the next upcycle.