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Zacks Investment Ideas feature highlights: ACM Research

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For Immediate Release

Chicago, IL – March 25, 2024 – Today, Zacks Investment Ideas feature highlights ACM Research (ACMR - Free Report) .

This Underfollowed Top Stock Is Integral to the A.I. Boom

Although it may seem like Artificial Intelligence stocks are all that's being talked about these days, the hype is indeed real. AI technology will probably be as significant to the stock market and economy as the internet has been, and the market has been telling us this in bold font.

Just look at this popular basket of AI-adjacent stocks and see how significant the market outperformance has been in the last seven months. Even the lowest performing stock has nearly doubled the returns of the broad market over that time.

I will say some of these stocks have had their valuations pumped up significantly, possibly limiting the near-term upside. Thus, I have been looking for some off-the-beaten-path AI opportunities.

By utilizing the Zacks Rank, I have identified one such stock that I think may offer a huge opportunity over the next few months and years. It is a small cap stock that plays a particularly niche role in the semiconductor industry and is anticipating exceptional growth in the coming years.

Read ahead and learn about ACM Research.

ACM Research

ACM Research is a leading provider of single-wafer wet cleaning equipment, offering innovative solutions for semiconductor manufacturing processes. Founded in 1998, the company specializes in developing, manufacturing, and selling advanced cleaning equipment designed to meet the stringent requirements of the semiconductor industry.

ACM's technology enables precise and efficient cleaning of individual silicon wafers, essential for ensuring high-quality semiconductor production.

ACM Research also plays a crucial role in the AI industry through its cutting-edge wet cleaning equipment. As AI hardware demands increasingly sophisticated semiconductor components, the need for precise and reliable wafer cleaning solutions becomes paramount. ACM's technology ensures the cleanliness and integrity of semiconductor wafers, contributing to the manufacturing of AI chips with optimal performance and efficiency.

By providing essential equipment for semiconductor fabrication, ACM Research indirectly supports the development and advancement of AI technologies, enabling the deployment of powerful AI systems across various applications and industries.

However, because this is a little-known company, its influence on the industry is easily overlooked, and thus creates a fantastic opportunity for discerning investors.

Not only does ACMR have this under-the-radar status, but it also enjoys a Zacks Rank #1 (Strong Buy) rating, impressive growth forecasts, a reasonable valuation, and a compelling technical trading setup.

Sales and Earnings

Earnings estimates have rocketed higher over the last month as analysts realize the tailwind AI will provide ACMR's business. ACM Research also sits in the Top 1% of the Zacks Industry Rank (1 out of 252) and is the only name in the Semiconductor Equipment – Material Services industry.

Sales at ACM Research have been rising at an exponential pace over the last five years going from just under $100 million annually to more than $550 million in the trailing 12 months. That pace of growth is expected to continue as well with current forecasts expecting 25% YoY growth this year and 26% next year.

Valuation

At this point in time, ACM Research is trading near its five-year low in terms of earnings multiples. Today, it is valued at 18.5x TTM earnings, which is well below the industry average and its five-year median.

Because ACMR has flown under the radar since the start of the AI boom, its valuation hasn't been jacked up nearly as much as the other AI adjacent stocks. Thus, investors buying now are getting a low industry valuation, with multi-year tailwinds at their backs.

Technical Setup

Finally, ACM Research stock just broke out from a powerful technical trading setup. After building out a descending bull flag for the last few weeks, price blasted through resistance, and look ready to push to new YTD highs.

Bottom Line

For investors looking to add exposure to the Artificial Intelligence theme, while also focusing on a quality, small cap company, ACM Research may very well be your next portfolio addition. Furthermore, it offers the advantage of being little followed and also critical to the industry so you know the business has staying power.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.


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