Leading Chip equipment maker ASML Holding is having a bad year, relatively speaking. For years it's put up strong profit and sales growth numbers. 2022 was an outlier year amid the bear market. However, Wall Street sees a return to outstanding growth in 2023, and on Wednesday the Relative Strength (RS) Rating for ASML stock climbed to 91. That puts it in the top 9% of all stocks in terms of price performance over the past 52 weeks.
Over 100 years of market research shows that the best stocks often have an 80 or higher RS Rating at the beginning of a new run.
ASML Stock Prepping For Fresh Climb?
Earnings for the Dutch chip equipment maker rose from $6.90 in 2019 to $10.36 in 2020 and $16.30 in 2021. For 2022 the consensus forecast, according to MarketSmith, is a drop to $14.29. However, ASML is projected to come roaring back to put up an estimated $19.14 EPS next year. That may be why investors are climbing aboard ASML stock.
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ASML stock has climbed more than 5% past a 401.25 entry in a second-stage double bottom, meaning it's now out of a proper buy zone. Look for the stock to offer a new chance to pick up shares like a three-weeks tight or pullback to the 50-day or 10-week moving average.
Sales Growth Projection For This Quarter
ASML Holding reported a 15% dip in EPS to $4.20 last quarter, down from 24% growth the prior stanza. Sales were down 7% in its latest quarter to $5.66 billion, vs. 19% growth the prior quarter. On Oct. 19, ASML said it expected revenue of $5.96 to $6.45 billion for the current quarter. That would be nearly equal to its sales the same quarter last year.
ASML makes photolithography systems that enable chipmakers to print patterns onto silicon disks that are cut up into semiconductor chips. It's the only company that currently offers a technology called extreme ultraviolet lithography (EUV) photolithography used to make the most advanced chips.
ASML stock earns the No. 7 rank among its peers in the Electronics-Semiconductor Equipment industry group. Axcelis Technologies, Advanced Energy Industries and KLA are among the top 5 highly rated stocks within the group. The group itself ranks a lofty No. 20 on IBD's list of 197 industry groups.
When looking for the best stocks to buy and watch, one factor to watch closely is relative price strength. The proprietary IBD Relative Strength Rating identifies market leadership by using a 1 (worst) to 99 (best) score that shows how a stock's price performance over the trailing 52 weeks matches up against all other stocks in our database.
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