Aehr Test Systems is the IBD Stock Of The Day as the semiconductor equipment maker shows strength amid the recent stock market turmoil. Aehr stock is outperforming the broader market by a wide margin.
With an IBD Relative Strength Rating of 98, Aehr stock is in the top 2% of stocks for performance over the past 12 months.
Aehr stock has been consolidating since it hit a recent high of 19.43 on Aug. 24. It has found support at its 50-day moving average line and related 10-week line, according to IBD MarketSmith charts. That's a bullish sign, given the current stock market correction.
Aggressive investors could look for an early-entry buy point above last week's high of 17.70. But buying stocks is risky in the current market. Check out IBD's Big Picture column for the market status and whether the coast is clear to buy stocks.
In afternoon trading on the stock market today, Aehr stock fell 0.6% to 15.27 on an overall down day for stocks.
Aehr Stock Gets Lift From Earnings Report
Aehr stock notched an all-time high of 27.09 last November. But it then fell 75% from that high, bottoming out at 6.71 on July 5. However, a better-than-expected fiscal fourth-quarter earnings report on July 19 gave its shares wings.
The Fremont, Calif.-based company earned an adjusted 23 cents a share on sales of $20.3 million in the quarter ended May 31. On a year-over-year basis, Aehr's earnings rocketed 475% while sales soared 166%.
"Our strong bookings and revenue growth in fiscal 2022 were driven by the demand for our wafer-level test and burn-in solutions, particularly for wafer-level stress and stabilization of silicon carbide devices for use directly in the electric-vehicle market," Chief Executive Gayn Erickson said in a news release. "The silicon carbide market for electric vehicles and its supporting infrastructure requirements are growing at a tremendous rate."
Chipmaker Wolfspeed says the transition to silicon carbide from silicon chips is a once-in-a-generation technology shift for the semiconductor industry. It and other chipmakers are ramping production to meet demand for silicon carbide power chips for electric vehicles.
Aehr Tied For First Place In Chip Gear Group
Aehr stock is tied for first place in IBD's semiconductor equipment industry group, according to IBD Stock Checkup. It and Axcelis Technologies each have an IBD Composite Rating of 91 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.
The next catalyst for Aehr stock could be the company's fiscal first-quarter earnings report on Oct. 6.
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