Goldman Sachs upgraded KLA Tencor (KLAC) and Teradyne (TER) to its recommended list from market outperformer, and added ATMI (ATMI) to the recommendeded list from market performer.
Goldman also upgraded Novellus Systems (NVLS) to market outperformer from market performer.
Applied Materials (AMAT) remains on the recommended list as its "single best idea".
Analyst James Covello says stocks have historically risen in conjunction with quarter over quarter order increases. Now he believes orders are likely to rise for the next several quarters. He thinks the market will price in the majority of the upside in the first few quarters of these of improving fundamentals, and says the maximum stock upside will likely be less than in previous cycles, which underscores the risk to not owning these stocks.