There's something in the Aehr. Semiconductor testing company Aehr Test Systems is flashing a potential buy signal after announcing an order for its test machines from a major U.S. semiconductor supplier.
Aehr stock is setting up the right side of a bullish chart pattern on the news, with shares showing a 32-day cup-with-handle base. Aehr stock has surged 148% year-to-date, according to stock data from Investor's Business Daily.
On the stock market today, Aehr stock climbed 4.4% as it bounces off its 50-day moving average and clears a trendline. That's an actionable buying opportunity, based on IBD trading guidelines. Shares are how about 7% below the traditional handle pivot of 53.05.
Buy The Pullback, Not The Pivot
Today's strong price move comes after a pullback in lighter volume. This trade setup could be preferable for a volatile, high beta stock like Aehr compared to waiting for a breakout above the handle pivot point. A bounce off of the 50-day line provides traders with a clear line in the sand to exit if the stock's upside momentum fades.
Aehr stock currently has a beta of 2.48, meaning it tends to swing more than double that of the S&P 500.
Aehr Test Systems specializes in machines for testing silicon wafers as they are being manufactured into microchips. The tests ensure wafers meet a microchip manufacturer's standards for temperature, longevity, reliability and quality, and help manufacturers make earlier decisions of whether to keep or discard silicon before the chips are fully-built, keeping down costs.
EVs Power Optimism For Aehr Stock
In a press release announcing the order Monday, the company describes its unnamed client as a "U.S.-based multibillion-dollar semiconductor supplier serving several markets including automotive, computing, consumer, energy, industrial and medical."
The company says the order is for a machine called the FOX-NP. That machine tests full wafers as well as individual pieces called singulated dies, among other capabilities.
Aehr says the test equipment will ship by the end of this year. It expects the client to move to its multi-wafer test systems for high-volume production as the client scales up production capacity.
Aehr says the customer produces chips for electric vehicles, but also sees opportunity in industrial, solar, and other power applications.
Aehr stock ranks third in IBD's semiconductor equipment group, according to MarketSmith. It holds an IBD Composite Rating of 94, according to IBD Stock Checkup.
