ACLS Stock: Axcelsis Deserves A Price Target of $33

motek 1The ACLS stock article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Summary

  • Axcelsis Technologies, Inc. is an under-the-radar important player in the $415.1 billion semiconductor industry.
  • Axcelsis supplies ion implanters and other processing equipment to semiconductor products manufacturers. This niche role helped Axcelsis achieved a 11.45% 5-year revenue CAGR.
  • The stock of Axcelsis has 3-month price return of +34.87%. I’m still endorsing it as a buy. My 1-year price target for this stock is $33.
  • Axcelsis has been profitable for the last five years. Its total cash is $174.7 million. This is much higher than Axcelsis’ total debt of $54.1 million.
  • Monthly technical indicators and moving averages are saying ACLS is still a buy.

Going forward, I am going to investigate and write more about stocks that are not rarely covered by analysts and financial bloggers. It is my lifetime objective to help investors find under-the-radar stocks that could become multi-bagger if they enough propaganda. Axcelsis Technologies, Inc. (ACLS) is an under-the-radar investing opportunity that got a high Quant Rating endorsement from Seeking Alpha. ACLS is getting coverage at Seeking Alpha anymore. However, the AI of Seeking Alpha’s quantitative rating algorithm is still very bullish on Axcelsis’ stock.

(Source: Seeking Alpha Premium)

This Very Bullish quant grade from Seeking Alpha is in spite of ACLS’ massive +74.49% 1-year price return. ACLS significantly outperformed the Semiconductor sector’s average 1-year price return of 2.37%. There’s an ongoing pandemic and yet ACLS also touts a 3-month price return of +34.87%. Momentum stock traders obviously believes that ACLS has more upside potential. Seeking Alpha gave ACLS a Momentum Grade of B-.

(Source: Seeking Alpha Premium)

My fearless forecast is that ACLS deserves a 1-year price target of $33. This is notably higher than the average $28.50 1-year PT at TipRanks. This low average because only 4 Wall Street analysts gave their price targets for Axcelsis Technologies. I repeat, ACLS is a very under-the-radar stock that is not getting enough analysis. This stock could get higher price target median numbers if only more analysts and financial bloggers covers it.

(Source: TipRanks)

My PT of $33 is not too audacious. The world’s semiconductor factories are now back in full operations. There is still no vaccine or universal cure for COVID-19 but governments around the world are allowing factories get back to full production capacities since May. Politicians cannot afford to let the global economy go in to depression just because of a pandemic.

Going forward, ACLS can fly higher as more semiconductor fabs starts doing 24/7 operations. These factories have to be more aggressive in their fabrication rates to make up for the lost two months (when China shut down factories last February/March).

ACLS is currently trading at 23.64x forward GAAP Price/Earnings valuation. My takeaway is that the unique role of Axcelsis in the general semiconductor fabrication supply chain should give it forward GAAP P/E of at least 28x. If we guestimate that ACLS can wrap up its FY 2020 with an annual EPS of $1.2, my $33 one-year PT for this stock is feasible. Multiply $1.2 by 28 and you get $33.6.

My $1.2 EPS estimate is also reasonable. Axcelsis produced annual EPS greater than $1.2 in 2017 and in 2018.

(Source: MacroTrends)

ACLS is a buy because for its been profitable for the last five years. My fearless forecast is that it can remain profitable for the next 10 years. It is always best to invest on companies that are consistently profitable. Consistent profitability has resulted in Axcelsis having a healthy balance sheet. This company’s total debt is only $54.1 million while its total cash position is $174.7 million. Axcelsis’ TTM levered free cash flow is $35.9 million.

Why Axcelsis Has A Rosy Future

The optimism of Seeking Alpha’s Quant Rating AI is because Axcelsis plays a unique role in the $415.1 billion semiconductor industry. Axcelsis supplies ion implanters and other equipment that helps semiconductor manufacturers become more efficient in their fabrication processes. Gartner predicted that the semiconductor business will contract this year due to COVID-19.

Contrary to Gartner’s weaker forecast for the semiconductor industry, Axcelsis reported a +30% year-over-year growth in its Q1 2020 revenue. Q1 2020’s net income also grew from $6.03 million to $11.22 million. ACLS is a buy because Axcelsis appears to be pandemic-resistant. Axcelsis was able to post high double-digit growth rates for its revenue and net income despite of the global COVID-19 pandemic. Axcelsis is a niche supplier to semiconductor manufacturers. Its products are still being sold even if semiconductor factories got temporarily shuttered while China battled COVID-19 in February/March.

This feat is understandable. Axcelsis is unique because of its ion source technology. The screenshot below is clear explanation why Axcelsis has a rosy future. Its Purion platform-based ion implanters help semiconductor products fabs increase their yield/output.

(Source: Axcelis)

Axcelsis is a buy because it is a profitable niche player in the growing $451.1 billion/year semiconductor industry. Fortune Business Insights expects the semiconductor industry to keep on growing until it is worth $730.29 billion business by 2026. The monthly technical indicators and moving averages also points to ACLS as a strong buy.

As you can see, ACLS’ simple and exponential moving averages are trending it as a strong momentum buy. The 14-day RSOI of Axcelsis’ stock is less than 60. ACLS is still very far from crossing Overbought territory.

(Source: Investing.com)

My buy recommendation for ACLS is also strongly influenced by its very bullish 1-year market trend forecast from I Know First. The stock picking AI of I Know First gave ACLS a 1-year forecast score of 209.45. More importantly, this forecast has a high predictability score of 0.78.

Past I Know First ACLS Stock Forecast Success

I Know First gave bullish ACLS stock forecast in the past. On March 15, 2020, the I Know First algorithm issued a bullish 3-month ACLS stock forecast with a signal of 1.39 and a predictability of 0.60, the algorithm successfully forecasted the movement of the ACLS stock.  After 3 months, ACLS shares rose by 30.68% in line with the I Know First algorithm’s forecast. See chart below.

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