I was looking over our sentiment stock screener and ran a scan to find the stocks most liked by analysts. I sorted the list to find those with the highest percent as buys and noticed a curious name - ON Semiconductor Corp (ONNN). This struck me as odd because this is a stock that trades for just $3 and is hitting a new annual low.

According to Zacks, a full 13 of 14 analysts (93 percent) currently rank the stock with a "buy" rating. This wildly overt optimism is surprising when you look at the chart below.

Since mid-August alone, the stock has dropped from 10 to 3. After looking at the numbers I thought that perhaps this might be a situation where analysts had recently jumped aboard. In other words, maybe the 70% drop had brought out some value players. But I don't think that is the case. Three months ago, 93 percent of the ratings were buys. Analysts have been in the bull camp for that entire plunge.

I think this is valuable information to know. A phrase I have used a number of times recently is "trapped bulls" and I think it applies here. Analysts have been bullish throughout the decline and my concern is that they will be looking to sell into rallies. As it stands now the stock is showing a short-term oversold reading which could make it a bounce a candidate. However, the potential overhang of supply could impede a meaningful rally and keep a ceiling on the stock for the near term.

Chart Courtesy of Thomson Financial