Semiconductor equipment vendor Aehr Test Systems is the IBD Stock Of The Day as it nears a buy point ahead of its fiscal first-quarter earnings report. Aehr stock has formed a cup-with-handle base.
The Fremont, Calif.-based company hasn't set a date yet for its fiscal Q1 earnings release, but it is likely to be in early October.
Aehr stock rocketed 18.2% on July 14 in response to the company's fiscal fourth-quarter report. It notched a record high of 54.10 on Aug. 1 before pulling back in the recent consolidation.
The company forecast accelerating sales and earnings growth thanks to strong demand for test gear for silicon carbide, or SiC, semiconductors used in electric vehicles and EV charging infrastructure.
Aehr also is seeing growth in equipment for testing silicon photonics devices used in data and telecommunications infrastructure.
Electric Vehicles Fueling Growth
Aehr makes semiconductor test and reliability qualification equipment. Its recent growth has come from systems for test and burn-in of SiC power chips, mostly for electric vehicles. Burn-in is a stress test of a component to detect problems.
"Aehr Test provides complete production solutions for improving quality, reliability, and yield of semiconductors such as silicon carbide devices used in electric vehicles and charging infrastructure, silicon photonics devices used in data centers and 5G infrastructure, and also for new applications such as optical input/output (I/O) and co-packaged optics devices that are on the horizon," Chief Executive Gayn Erickson said in a recent news release.
Aehr Stock On IBD Tech Leaders List
On the stock market today, Aehr stock rose 3.7% to close at 48.46. It has formed a fifth-stage, cup-with-handle base with a buy point of 53.05, according to IBD MarketSmith charts.
However, late-stage bases can be risky and are more prone to failure, according to IBD trading guidelines. Case in point: Aehr triggered the round-trip sell rule on Aug. 17 when it erased the entirety of a 33% gain past a 40.69 buy point from a fourth-stage cup base.
Aehr Test Systems ranks third out of 27 stocks in IBD's semiconductor equipment industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 96 out of 99.
IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
Also, Aehr stock has an IBD Relative Strength Rating of 98 out of 99. That puts it in the top 2% of stocks for performance over the past 12 months.
Further, Aehr stock is on the IBD Tech Leaders list.
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