In the 37-year history of the Nasdaq-100 index, it has shown resilience, bouncing back after downturns, and this trend suggests a positive trajectory for 2024. Considering this historical pattern, semiconductor stock Axcelis Technologies (NASDAQ: ACLS) emerges as a compelling buy, presenting an excellent growth story and currently trading at an attractive valuation.
Key Points:
- Axcelis’s Strategic Positioning:
- Axcelis specializes in providing ion implantation equipment to leading chip manufacturers, a critical component in chip fabrication.
- The company benefits from the growing demand for chips in key sectors such as electric vehicles and artificial intelligence (AI).
- Robust Demand and Order Backlog:
- Axcelis experienced strong demand in 2023, particularly from silicon-carbide power device producers in the electric vehicle industry.
- The company boasts a substantial order backlog, reaching $1.2 billion, equivalent to more than 12 months’ worth of revenue, providing stability and growth potential.
- Revenue Growth and Market Resilience:
- Despite the industry’s slowdown, Axcelis achieved a 25.4% year-over-year increase, generating $820.3 million in revenue for the first three quarters of 2023.
- The company’s focus on long-term capital expenditures planning by its customers contributes to its resilience in challenging market conditions.
- Record-Breaking Financial Performance:
- Axcelis is on track to set a record-high $1.1 billion in revenue for the full year, showcasing impressive financial performance.
- With earnings per share expected to reach $7.27, the company remains highly profitable.
- Attractive Valuation and Growth Potential:
- Trading at a price-to-earnings (P/E) ratio of approximately 19, Axcelis presents a 32% discount compared to the Nasdaq-100 index’s P/E ratio of 28.
- Despite not manufacturing chips, Axcelis is poised to benefit from the AI tailwind, indicating future growth potential.
Investment Outlook:
- Axcelis Technologies emerges as a potential winner in 2024, with a combination of strong financials, robust demand, and an attractive valuation.
- The company’s ability to thrive in tough economic conditions and its positive outlook make it a noteworthy investment opportunity.
