As a new market uptrend takes hold, semiconductor lithography powerhouse ASML has etched a new buy point and a spot on the IBD Breakout Stocks Index. And it's not alone.
ASML stock joins fellow semiconductor equipment makers KLA and Axcelis Technologies on the index, which is tracked by the IBD Breakout Opportunities ETF.
Plus, semiconductor plays Advanced Micro Devices, ON Semiconductor and NXP Semiconductors have also carved out spots on the IBD Breakout Stocks Index.
ASML stock sports the highest-possible 99 Composite Rating in Stock Checkup. That ties it for top ranking in the semiconductor equipment group, which holds a very strong No. 9 out of the 197 industry groups that IBD tracks. ACLS, KLAC, Applied Materials, Aehr Test Systems and Lam Research share top billing with ASML.
The fabless semiconductor group, which includes AMD, ranks No. 3. The chip manufacturers group, which includes ON and NXPI, ranks No. 34.
See Who Joins ASML Stock On The IBD Breakout Stocks Index
Semiconductor Equipment Makers In Demand
ASML sports a B Accumulation/Distribution Rating, which tracks institutional buying and selling over the last 13 weeks. With the exception of ACLS stock, all of its peers sport a B or better rating, pointing to demand for semiconductor equipment makers.
Each company on this list also earns an A SMR Rating. Tracking sales growth, profit margins and return on equity, an A SMR Rating shows the firms are efficiently and profitably run.
| Company | Symbol | Comp Rating | EPS Rating | RS Rating | Ind Group RS | SMR Rating | A/D Rating |
|---|---|---|---|---|---|---|---|
| Axcelis Technologies | ACLS | 99 | 97 | 99 | A+ | A | C |
| Lam Research | LRCX | 99 | 95 | 90 | A+ | A | B+ |
| KLA | KLAC | 99 | 98 | 86 | A+ | A | B |
| Applied Materials | AMAT | 99 | 84 | 92 | A+ | A | B |
| Aehr Test Systems | AEHR | 99 | 75 | 99 | A+ | A | B |
| ASML | ASML | 99 | 78 | 93 | A+ | A | B |
Next-Gen Chip Firms Nvidia, TSM Rely On ASML
Headquartered in the Netherlands, ASML produces the world's most-advanced lithography machines, an essential component in chip manufacturing. It is the only provider of extreme ultraviolet (EUV) lithography machines, which enable the increasingly complex chips the world relies on. ASML's EUV technology is indispensable for industry giants like Taiwan Semiconductor, Intel and Nvidia.
Founded in 1984, ASML provides chipmakers the hardware, software and services needed to mass produce patterns on silicon through lithography. It has offices across Europe, Asia and the United States, employing more than 39,000 people.
ASML stock earns a spot on the IBD Big Cap 20, alongside AMAT, KLAC, LRCX and fabless chip stocks Broadcom, Mobileye and Monolithic Power Systems.
Rebounding Profits
After a few quarters of mixed earnings performance, Wall Street forecasts solid growth ahead for ASML. When the company reports on April 19, consensus analyst estimates call for an EPS increase of 135%. For the full year, analysts expect 32% earnings growth and a 24% gain in 2024.
Sales grew 21% year over year to $6.9 billion in Q4, compared to a 7% Q3 slowdown to $5.7 billion.
Showing solid institutional support, 30 funds with an A+ or A rating own shares in ASML stock.
ASML Stock And Semiconductor Peers Set Up
With its relative strength line already at hitting a new high, ASML is closing in on a 698.69 buy point in a first-stage cup base. Building a strong rebound off October lows, the new entry comes after the stock found support at and climbed above its 10-week moving average.
Meanwhile, industry peers AMAT, LRCX and KLAC continue their own setups as ACLS maintains its impressive run.
IBD Breakout Opportunities ETF
The IBD Breakout Opportunities ETF from Innovator Capital Management tracks the IBD Breakout Stocks Index. As with other index ETFs, this fund allows you to invest in the entire index in addition to, or rather than, buying individual stocks. Learn more here about the ETF and Innovator funds.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
