As semiconductor equipment companies ASML, Lam Research, Entegris, Axcelis Technologies and KLA flash new breakouts, Aehr Test Systems etches a move of its own. Boosted by the boom in electric vehicles, AEHR stock has burned in a spot on the IBD Breakout Stocks Index alongside ASML, LRCX, ENTG and KLAC.
The chip-equipment group ranks a strong No. 10 out of the 197 groups IBD tracks. Further displaying the strength of the semiconductor sector, Nvidia and Broadcom lead the fabless chip group to a nearly just-as-strong No. 14 ranking.
Headquartered in Silicon Valley, Aehr provides test systems for semiconductor devices. The small cap, with a market capitalization of just under $1 billion, operates across four fields — Automotive, Mobile, Silicon Photonics, and Memory and Logic.
Aehr boasts a significant competitive product advantage to address the very large silicon carbide opportunity driven by the increased adoption of electric vehicles. Alongside Li AutoLI and Allegro MicroSystemsALGM. Aehr made the list of the five best EV stocks and EV-related plays to watch.
But demand for Aehr's services extends beyond just EVs. The company stands poised to benefit from the market for silicon photonics devices for data center and 5G infrastructure, and 2D and 3D sensors for mobile and wearable devices. Aehr also sees a new high-volume application for data storage on the horizon.
The outlook for EVs and data storage has Wall Street pushing AEHR stock toward a buy point.
Aehr EPS Estimates Charge Past Peers
ASML, ACLS and AEHR stock all earn the highest-possible 99 Composite Rating. All six of the chip-equipment makers on this stock screen earn impressive ratings of 95 or higher in IBD Stock Checkup.
ASML, which posted a 181% spike in earnings last quarter, scores a trifecta with placement on the IBD 50, IBD Big Cap 20 and IBD Sector Leaders. KLAC stock joins the advanced lithography leader on the IBD Big Cap 20.
But Aehr stands out in terms of earnings estimates for the current and next fiscal year. On March 30, Aehr reported fiscal Q3 performance. The company posted earnings of 16 cents per share, a 45% year-over-year increase. Revenue grew 13% to 17.2 million.
Wall Street forecasts an EPS gain of 51% this year, followed by a jump to 77% in the next fiscal year.
Showing Aehr is efficiently run, the company sports an A SMR Rating, which tracks sales growth, profit margins and return on equity. Aehr also boasts a 0% debt-to-equity ratio.
| Company | Symbol | Comp Rating | EPS % Chg Last Qtr | EPS Est Cur Qtr % | EPS Est Cur Yr % | EPS Est Next Yr % | EPS Rating | RS Rating | SMR Rating | A/D Rating |
|---|---|---|---|---|---|---|---|---|---|---|
| Aehr Test Systems | AEHR | 99 | 45 | -7 | 37 | 77 | 78 | 99 | A | B |
| ASML | ASML | 99 | 181 | 36 | 32 | 20 | 95 | 93 | A | B |
| Axcelis Technologies | ACLS | 99 | 17 | 15 | 20 | 17 | 96 | 99 | A | A- |
| KLA | KLAC | 97 | 7 | -16 | 18 | -20 | 95 | 93 | A | A |
| Entegris | ENTG | 97 | -39 | -43 | -33 | 46 | 70 | 92 | B | A |
| Lam Research | LRCX | 95 | -6 | -42 | 0 | -23 | 88 | 95 | A | A |
AEHR Stock Joins ASML, Nvidia In Rise Of Chip Sector Stocks
As its 21-day exponential moving average moves back above the 50-day line, AEHR stock is revving up a 40.79 buy point in a first-stage cup. It's a first-stage chart pattern because the stock undercut the low in its prior formation to reset the base count.
While AEHR currently trades 19% below the conventional buy point, see if the stock forms a handle to set up a lower entry.
As industry peers ASML, KLAC, LRCX and ENTG look to build on recent breakouts, Nvidia stock continues to add to its massive one-day spike on earnings last Thursday. Nvidia reached the $1 trillion market-cap club Tuesday. Apple and Microsoft have already earned seats at the $2 trillion table, while Alphabet and Amazon.com have established themselves at the $1 trillion level.
While nowhere near Apple, Microsoft and Nvidia levels, Aehr joins the ranks of leading small-cap stocks to watch. See if the rise of EVs and demand for data storage juice AEHR stock into a new buy zone.
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Follow Matthew Galgani on Twitter at @IBD_MGalgani.
