We recently published a list of 10 Best Economic Recovery Stocks to Buy. In this article, we are going to take a look at where Monolithic Power Systems, Inc. (NASDAQ:MPWR) stands against other best economic recovery stocks to buy.
Economic cycles, as defined by economists, alternate between periods of growth, peak, recession, and recovery, depending on the stage that a country’s economy is at. In particular, the term “economic recovery” describes the period that follows a recession and is characterized by improving employment, increased business activity and investment, rising consumer confidence, and accelerating GDP growth. Recoveries usually start after governments enact fiscal and monetary policies to stimulate investment and spending – the primary stimulative instrument in the US has been the FED funds rate. When an economic recovery kicks in, the sectors that tend to outperform are the cyclical ones – consumer discretionary, industrial, financial, and technology – driven by both a recovery in the previously depressed valuations as well as by broad acceleration in growth.
Another important consideration for investors is that the stock market and the economy do not move in sync; the former tends to be a forward-looking animal, meaning that stock prices tend to rise in anticipation of an economic recovery, while the actual economic conditions may still be depressed and reflect low GDP growth, high unemployment and sluggish private spending. Consequently, the key takeaway for readers is that investments in economic recovery stocks shall be made during peak uncertainty and pain, at or near a market bottom when everyone is fearful and reluctant to buy. As the legendary Warren Buffet has put it,
“Be fearful when others are greedy and be greedy when others are fearful.”
The US economy and stock market are the most developed in the world and often reflect textbook examples of economic cycles. The previous unofficial recession in the US occurred in 2022, when the GDP growth posted 2 quarters of negative growth amid a sharp increase in interest rates to combat rising inflation. The stock market moved in sync with the economy during that year. The following year, 2023, resembled a slow recovery fueled by the emergence of the AI megatrend as well as strong public spending on infrastructure and other large projects. Calendar 2024 and early 2025 resembled an economic peak, as growth moderated and private spending became weaker. In such moments, even the slightest economic headwind and/or uncertainty can trigger a recession and a broad market meltdown. That’s exactly what happened with the new Trump 2.0 administration, which brought plenty of uncertainty related to tariffs and sharp cuts in the public sector.
While most investors are currently concerned about declining stock prices (the main US stock market benchmark is down over 11% at the time of this write-up since its February peak), the smart money is already looking for signals of a potential recovery. Atlanta Fed projects that the US economy posted negative real GDP growth in Q1 2025, estimated at -2.4%; given the uncertainty and tariff threats persisting in April as well, chances are that Q2 2025 will be in negative territory as well, which would mark an official recession. The problem is that the stock market already prices in such a scenario, which makes it difficult to exploit or hedge against. The only plausible move at the moment is to look for economic recovery stocks in an attempt to time the market bottom. We believe there are solid reasons to believe that the stock market bottomed out in early April and that things will only improve going forward.
The most important signal in favor of a potential economic recovery ahead is that Trump’s tariffs proliferate as a short-term negotiation tool only, which seems to work well in relation to most trading partners. On April 9, Trump announced a 90-day pause in new tariffs for 75 countries until negotiations to discuss potential solutions are arranged. Here’s how Kevin Breuninger, a CNBC journalist, commented the following on the recent developments:
The White House is clarifying that Trump’s announcement of a 90-day tariff “pause” means that the “tariff level will be brought down to a universal 10% tariff” during that time, while “negotiations are ongoing.” That respite does not apply to China, which will see U.S. tariffs on its goods rise to 125%.
We see this announcement as a sign that chances are high that the US will reach a positive agreement with the 75 countries mentioned. While the situation with China is still intense, things could deescalate if other countries reach agreements with the US and set the stage for China as well. In this context, if the tariffs saga is successfully navigated, the main headwind for the economy will dissipate, potentially triggering a broad economic recovery that would push stock prices higher. With that being said, we may currently be at an opportune moment to pick the best economic recovery stocks.
Is Monolithic Power Systems, Inc. (MPWR) the Best Economic Recovery Stock to Buy?
An engineer examining a DC to DC integrated circuit board, looking for any flaws.
Our Methodology
We used a screener to identify stocks with at least a 20% revenue compounded annual growth rate (CAGR) in the last 5 years. Then, we selected the top 10 stocks with the largest estimated average analysts’ upside and included them in the article in ascending order. For each stock, we also include the number of hedge funds that own the stock as of Q4 2024. The stocks are ranked according to the upside potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Monolithic Power Systems, Inc. (NASDAQ:MPWR) is a fabless semiconductor company designing high-performance and energy-efficient analog and mixed-signal integrated circuits (ICs) used in cloud computing, telecommunications, automotive, industrial, and consumer electronics. The company’s product portfolio is centered around DC-to-DC converters, AC-to-DC solutions, motor drivers, battery management systems, and sensors. MPWR’s presence across multiple high-growth and cyclical industries positions it to benefit from increased demand during economic recoveries.
Monolithic Power Systems, Inc. (NASDAQ:MPWR) achieved its 13th consecutive year of growth in 2024, posting full year revenue of $2.2 billion, representing a 21% increase from 2023. The company demonstrated strong performance in Q4 2024 with record quarterly revenue of $621.7 million, which was 37% higher than Q4 2023. This performance reflected the strength of their diversified market strategy, consistent execution, continued innovation, and strong customer focus.
Monolithic Power Systems, Inc. (NASDAQ:MPWR) is transforming from being a chip-only semiconductor supplier to a full-service silicon-based solutions provider, with several new product developments, including silicon carbide inverters, automotive audio products, and high-accuracy converters. The company also continues to invest in new technology, expand into new markets, and diversify its end market applications and global supply chain to capture future growth opportunities and maintain supply chain stability. With exposure to primarily cyclical end markets and 79.51% average upside estimated by analysts, MPWR ranks 3rd on our list of best economic recovery stocks to consider.
Overall, MPWR ranks 3rd on our list of best economic recovery stocks to buy. While we acknowledge the potential of MPWR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than MPWR but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
