German Chip-Gear Maker Aixtron Continues To Impress
By DONALD H. GOLD, INVESTOR'S BUSINESS DAILY
Posted 03/04/2011 06:45 PM ET
When German chipmaker Aixtron (AIXG) released its fourth-quarter results on Tuesday, the company showed again that it's among the best companies in one of the market's leading industry groups.
Aixtron makes deposition systems, a key process in the making of the chips that power electronic and opto-electronic applications. This includes LEDs, the display technology featured in many of the best-selling flat-screen televisions sold today.
Aixtron had not made it easy for you to build a position in its stock. It broke out from a cup-with-handle base in December.
This pattern was actually a base within a base, and thus easy to miss.
The cup ran just 29% deep, but sat within a larger, deeper cup that started in April. This bigger pattern ran 42% deep, making it not just ugly, but also flawed.
And if you had caught this hidden base, it would have led you nowhere. Aixtron rose 9%, then slid to 32.31, 9% below the 35.36 buy point. The 8% sell rule would have assured you'd be stopped out.
The only way to have participated in Aixtron's rise to 44.96, its Feb. 10 peak, was to have bought the rebound from the 10-week moving average.
In any event, here we are. Aixtron now may be building an easier buying range.
The stock fell 5% on Friday, breaking a six-day winning streak. Those gains, three of them in above-average trade, made for a convincing rebound from the 10-week moving average line.
The Semiconductor-Equipment group ranks seventh out of the 197 industries tracked by IBD, as of Friday's edition.
That group has been in the top 10 for five of the past six weeks.
It's been a consistent contributor of leaders, including ASML Holding (ASML), KLA Tencor (KLAC) and Lam Research (LRCX).
Even in this solid group, Aixtron leads by EPS Rating with a best-possible 99. With 2010's books finally closed, Aixtron improved its year-over-year EPS 262%.
After two poor reports in Q1 and Q2 of 2009, Aixtron's quarterly results have been dazzling. EPS gains have maintained a triple-digit pace for five straight periods, sales growth for three straight quarters. After-tax margin in Q3 jumped to 27%, the company's highest reading in years.
That's how the company looked as of Tuesday Morning, when it released its Q4 report.
What did it show? Another blowout quarter.
Earnings soared 116%, Aixtron's sixth triple-digit gain and an easy breeze past estimates. Sales surged 78%, the company's weakest such showing in four quarters.
After-tax margin rose to 27%, Aixtron's best in years.
In a March 2 research note, Andrew Huang of Sterne Agee said, "We are sticking with the buy rating based on our expectations that fundamentals hold in 2011 and our view that valuation is still attractive."
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