ACLS Stock: The Innovative Solutions Provider for the Chip Industry

Chip Stocks
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Axcelis Stock to Benefit from Rising Connectivity Trend  

Today’s stock represents the strategy that we use to pick promising growth stocks. These are the stocks of companies that are dominating players in their field and are well positioned to benefit from a rising technology trend. The trend in focus is the rise of the connected world, and investors stand to reap above-average returns in this small-cap growth stock that would gain from this development.

The case in point being Axcelis Technologies Inc (NASDAQ:ACLS), which is a leading player globally in technology development and the manufacture of systems and services for the semiconductor industry. It has a unique “Purion” platform, which is one of the most innovative ion implant products available today. Ion implantation is a vital step in the semiconductor chip manufacturing process.

Semiconductor chips are used in a rapidly and continuously evolving range of consumer and industrial products like mobiles devices, automobiles, controllers and sensors for the Internet of Things (IoT), and data storage servers.

Axcelis offers a complete line of implanters for all application requirements in the semiconductor market. As per company estimates, Axcelis is continuously gaining market share in an almost $1.0 billion ion implant systems market. And the continuous rise of ACLS stock is evidence of that.   

The company just announced its fourth-quarter results, which are a further proof that its strategy and execution are going strong. It reported revenue of $116.4 million as compared to $104.5 million for the third quarter of 2017, an increase of over 11%. Adjusted operating profit increased by 22% over the third quarter. For the full year 2017, the company reported revenue of $410.6 million as compared to $267.0 million in 2016. (Source: “Axcelis Announces Financial Results for Fourth Quarter and Full Year 2017,” Axcelis, February 6, 2018.)

This was a strong quarter for the company that posted its highest revenue level in 10 years. Axcelis also issued optimistic guidance as it said that the industry will continue to grow in the coming days. Moreover, the future prospects remain bright with new technologies ramping in the memory market. This bodes well for ACLS stock in the future.

The demand for chips continues to rise with the rise of the Internet of Things, data storage, and data analytics. This has led to increasing popularity of Axcelis’s Purion technology, which has gained a strong foothold in its customer base. The chip equipment maker expects things to get better going ahead.

Axcelis CEO Mary Puma said, “We are very pleased with our 2017 results and expect continued market strength and growth in 2018,” she added further, “Regaining market share leadership in ion implantation remains our primary objective. With Purion now a tool of record at 7 of the top 10 semiconductor CAPEX spenders, we have confidence we can achieve this.” (Source: Ibid.)

Last month, the company had announced that it had received new orders for the full Purion product family from several leading chip manufacturers worldwide. These systems will support capacity additions for memory, image sensors, power devices etc. It also included the first Purion orders from a domestic China customer.

The improving performance and optimism has led to Axcelis stock posting phenomenal returns. The stock has gained over 350% in the last five years and more than 45% over the last one year.

ACLS stock chart

Chart courtesy of StockCharts.com

The company is focused on its goals to capitalize on the strength of its Purion platform and the semiconductor equipment market. It plans to increase revenue from new Chinese memory projects as well as re-enter the Japanese market. Moreover, it shall be looking to penetrate new markets with its new technologies, which shall help ACLS stock in continuing with its upwards momentum. 

Analyst Take 

Axcelis Technologies builds equipment used in the fabrication of semiconductor chips and sells to leading chip manufacturers around the world. The growing strength in the semiconductor market continues to provide a lot of opportunities to Axcelis. The company has established Purion across a broader customer base and things appear to be getting better. With market share growth as the main objective going forward, Axcelis stock seems to be on an uptrend.

Innovative solutions like Purion are driving significant revenue growth for the company, and exploring new markets shall further boost ACLS stock in the future. Investors should consider the stock as the “connected world” drives more demand for chips in automotive, industrial, and many other applications.