An article in this weeks Barron's talks about increases in capital expenditures by companies this year. That should help AEHR also. They mentioned KLAC in the article.
Companies are ramping up spending on machines, software, and other productive assets. That's good news for stocks, especially those in the energy, industrial, and technology sectors. Investors should favor Cameron International (ticker: CAM), a maker of drilling equipment; Fluor (FLR), an engineering company; NetApp (NTAP), which specializes in data storage; and KLA-Tencor (KLAC), which leads the market in test equipment for chip makers.
KLA-Tencor controls more than half of the market for semiconductor test equipment. A big research budget -- more than $450 million a year on around $3 billion in revenue -- helps it keep the lead. Test equipment can save companies money by reducing chip defects. As chip makers cram ever more circuits onto each chip, the potential for defects increases, requiring them to invest regularly in new test gear. KLA's financial results can be volatile in the short term; this is the semiconductor business, after all. Revenue in its current fiscal year, which runs through June, is projected to come in 9% below the year-earlier level if chip producers remain cautious on expansion. But they might not. JPMorgan Chase points out in a recent note to clients that chip inventories are low and that bookings have jumped since December.