Posted by on July 30, 2017 9:42 AM
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Categories: Stocks To Watch

Aehr Test Systems stock has formed a positive divergence between large players volume and the price chart. Large players are accumulating the stock as it has pulled back over the last few days. Before we get to the chart, let’s look at what Aehr does and why this stock could have explosive growth going forward.

Aehr Test Systems Company Profile

Aehr Test was incorporated in the state of California on May 25, 1977 and completed its initial public offering on June 11, 1997. The Company’s common stock trades on the NASDAQ Capital Market under the symbol AEHR.

Aehr Test is a global semiconductor manufacturer. The Company has sales and service operations in the United States, Japan, Germany and Taiwan, and has established a network of distributors and sales representatives in certain key parts of the world. Its corporate headquarters are located in Fremont, California.

Aehr Test Systems is a worldwide supplier of systems for burning-in and testing memory and logic integrated circuits and has an installed base of more than 2,500 systems worldwide. Aehr Test has developed and introduced several innovative products, including the ABTS, FOXTM and MAX systems and the DiePak® carrier. The ABTS system is Aehr Test’s newest system for packaged part test during burn-in for both low-power and high-power logic as well as all common types of memory devices. The FOX system is a full wafer contact test and burn-in system. The MAX system can effectively burn-in and functionally test complex devices, such as digital signal processors, microprocessors, microcontrollers and systems-on-a-chip. The DiePak carrier is a reusable, temporary package that enables IC manufacturers to perform cost-effective final test and burn-in of bare die.

Aehr Test Systems News

On July 12, 2017, Aehr Test Systems announced that it received a follow-on order exceeding $3.8 million for multiple ABTS test and burn-in systems from a leading multi-national manufacturer of advanced logic integrated circuits (ICs) for automotive, embedded processing, digital signal processing and analog applications. The order also includes down payments to lock in delivery dates. The ABTS systems are planned to ship by the end of calendar year 2017.

Mark Allison, Vice President of Sales, said, “We are pleased to receive another follow-on order from this customer, who continues to run at full capacity in their burn-in and test areas. Our ABTS Systems, with their individual temperature control capability for high-power devices, are a key part of this customer’s quality and reliability program for their expanding line of automotive products, and are helping companies that supply devices into the automotive sensor, mobile communications, IC, and Internet of Things markets meet the higher quality and reliability needs of these markets. The ABTS system capabilities, along with our superior customer support, have more than met the expectations of this customer. This has led to a mutually beneficial business relationship resulting in our largest installed base of ABTS systems.”

Aehr appears to be benefiting from the rapid growth in automotive sensor technologies. This includes Advanced Driver Assistance Systems (ADAS) such as collision avoidance systems using LIDAR (Light Detection and Ranging), RADAR or other sensing technologies. Autonomous vehicles use collision avoidance systems to detect obstacles and to navigate safely through dangerous environments. Reliability of the devices in these systems is especially critical for autonomous driving applications so that means manufacturers of ICs in the automotive industry really need the testing services of companies like Aehr Test Systems. This means Aehr Test Systems stock could soar on explosive demand growth for its critical systems testing hardware and software.

Aehr Test Systems Stock

Aehr Test Systems stock looks like a good setup on a Symmetrical Triangle pattern. The Effective Volume study shows large players volume is rapidly rising. The Twiggs Money Flow confirms the stock is under accumulation. We also had a bullish Pocket Pivot signal on Friday, July 28, 2017.

Prices have been consolidating lately and there is a resistance zone just above the current price starting at 4.06. Right above this resistance zone may be a good entry point. There is a support zone below the current price at 4.04, a stop order could be placed below this zone.

Aehr Test Systems stock was found using my GST Positive Divergence screener as talked about here.

Aehr Test Systems Review
  • Profitability (Return On Assets, Return On Equity, and Profit Margin)
  • Valuation (P/E, Forward P/E, PEG, Book Value, Price to Book Ratio)
  • Growth (EPS and Revenue)
  • Health (Current Ratio, Quick Ratio, Debt to Equity, Altman-Z Score)
1.5

Summary

Profitability

The profitability ratios for AEHR are negative, so there is not much use analyzing them. AEHR's Return On Asserts of -43.66% is worse than the rest of the industry. The industry average Return On Assets is 6.22%. 89% of the industry peers have a better Return On Assets. AEHR has a Profit Margin of -29.95%. This is below the industry average of 101.03%. 99% of the industry peers outperform AEHR.

Valuation

The low PEG Ratio, which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company. AEHR reported negative earnings for the last year, which makes the Price/Earnings Ratio negative. With a Forward Price/Earnings Ratio of 405.00, AEHR is expensive.

Growth

The Earnings Per Share is expected to grow by 1501.72% on average over the next 2 years. This is a very strong growth. Measured over the past 5 years, AEHR shows a decrease in Earnings Per Share. The EPS has been decreasing by -8.16% on average per year. AEHR shows a small growth in Revenue. Measured over the last 5 years, the Revenue has been growing by 4.36% yearly.

Health

AEHR has a Current Ratio of 2.37. This indicates that AEHR is financially healthy and has no problem in meeting its short term obligations. With a Debt to Equity ratio of -8.28, AEHR is one of the better performing companies in its industry. It outperforms 98% of its industry peers. When comparing the Current Ratio of AEHR to the average industry Current Ratio of 3.07, AEHR is less able to pay its short term obligations than its industry peers. AEHR has a Quick Ratio of 2.37. This is a bad value and indicates that AEHR is not financially healthy enough and could expect problems in meeting its short term obligations. When comparing the Quick Ratio of AEHR to the average industry Current Ratio of 1.97, AEHR is less able to pay its short term obligations than its industry peers. 98% of its industry peers have a better Quick Ratio. Based on the Altman-Z score of -2.21, AEHR is in the distress zone and has some risk of bankruptcy. When comparing the Altman-Z score of AEHR to the average industry Altman-Z score of 4.09, AEHR is less financially healthy than its industry peers. 89% of its industry peers have a better Altman-Z score.

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Lance Jepsen

For ethical purposes, I try not to hold any position in any stock I profile on GuerillaStockTrading.com unless specifically stated in the article. Owner of GuerillaStockTrading.com. Seasoned entrepreneur, investor, and writer. I love God, family, country, stock trading, economics, and helping people learn how to trade.
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