One Semiconductor Equipment Stock to Avoid
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Company | Aixtron (NAS: AIXG) |
|---|---|
Submitted By: | |
Member Rating: | 57.90 |
Submitted On: | 7/14/2010 |
Stock Price At Underperform Recommendation: | $28.68 |
Targacept Profile
Star Rating | *** |
|---|---|
Headquarters | Herzogenrath, Germany |
Industry | LEDs |
Market Cap | $2.88 billion |
Industry Peers | Agilent (NYS: A) Applied Materials (NAS: AMAT) Cree (NAS: CREE) |
Sources: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and Motley Fool CAPS.
This Week's Pitch:
This is a great company since they along with [Veeco Instruments (NAS: VECO) ] are the main suppliers for LED equipment production. However, they are going to face headwinds that will most certain affect earnings going forward.
First of all, China's market is becoming more saturated with equipment due to the surge in orders because of fears of local government subsidies for the led equipment.
Second, China is trying to steer investment dollars toward domestic offerings so that their hard earned money doesn't go to either German or American companies. This will most certainly be a major negative as well going forward.
Third, even if the first 2 factors don't pan out, then you have to consider valuations. Fellow [Veeco] is way cheaper with a rock solid balance sheet and yet has for some reason not advanced as rapidly as [Aixtron]. I think given the prospects, [Veeco] is a better deal in an overall crummy investment environment. Especially when you consider that [Aixtron]is trading at a 2x premium to [Veeco].
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At the time thisarticle was published The Motley Fool is investors writing for investors.Dan Dzombakdid not have a position in any of the companies mentioned in this article. Pitches must be compelling, made in the past 30 days, and be at least 400 words.The Motley Fool owns shares of Applied Materials. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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