For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in KLA (KLAC) ten years ago? It may not have been easy to hold on to KLAC for all that time, but if you did, how much would your investment be worth today?
KLA's Business In-Depth
With that in mind, let's take a look at KLA's main business drivers.
San Jose, CA-based KLA Corporation is an original equipment manufacturer (OEM) of process diagnostics and control (PDC) equipment and yield management solutions required for the fabrication of semiconductor integrated circuits (ICs) or chips. The company has a comprehensive portfolio of products addressing each major PDC subsegment—photomask (reticle) inspection, wafer inspection/defect review and metrology.
Reticle production is vital to the semiconductor device formation process. Reticles are used to control the precise deposition of materials onto the wafer, which ultimately change its chemical characteristics, imparting specific functionalities to the ICs thus created. Inspection and metrology tools measure the quality of the reticles, helping to improve reticle production yields. As a result of the broader applicability of semiconductors, shrinking form factors and increasing functionalities of individual chips, reticle design and production are growing in importance. Intel and Taiwan Semiconductor were the largest customers in the last three years, accounting for more than 10% of total sales in each year.
KLA’s two main product lines are defect inspection and metrology. The company’s defect inspection tools have very broad application in chip, wafer, reticle, storage, compound semiconductor and MEMS manufacturing. Metrology tools are used to gather critical dimension measurements of the wafer and process dimensions such as film thickness, lithography overlay and surface profiling. The company’s metrology products are used in chip, wafer, reticle and solar device manufacturing. KLA also offers other products and services.
In addition to new tools, KLA also offers a comprehensive portfolio of refurbished tools that upgrade and improve yields of existing equipment under the KT-Certified program. Refurbished tools are currently sold to IC, reticle, substrate, MEMS and data storage manufacturers.
Although KLA is a major player in each of its served markets, it faces competition from other large equipment suppliers such as Applied Materials and Hitachi High-Technologies Corporation.
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in KLA ten years ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in June 2011 would be worth $8,006.15, or a 700.62% gain, as of June 15, 2021, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
In comparison, the S&P 500 gained 230.40% and the price of gold went up 17.16% over the same time frame.
Looking ahead, analysts are expecting more upside for KLAC.
KLA is driven by a strong process control market, revenue diversification and customer acceptance of key products. Moreover, growing Foundry and Logic investments remain major positives. Additionally, enhanced wafer cleanliness and geometry specifications in the bare wafer market are driving demand for the company’s wafer products. Also, the strengthening memory market is a tailwind. Furthermore, high exposure to 5G infrastructure and the smartphone market is another positive. Markedly, transition to advanced nodes and the insertion of EUV lithography are expected to drive growth in the near future. Notably, the stock has outperformed the industry on a year-to-date basis. However, the impacts of COVID-19 pandemic remain concerns. Further, sluggishness across PCB, Display and component inspection remains an overhang for the company.
The stock is up 9.23% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 6 higher, for fiscal 2021. The consensus estimate has moved up as well.
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