Fatter Orders for Chip-Equipment Makers
The semiconductor equipment book-to-bill ratio, which compares orders to sales over the last three months, continued its rise in February. The preliminary three-month moving average rose to 0.87 in February, from 0.81 in January and the low point of 0.44 in April, 2001. When the ratio is above 1.0, orders exceed sales, and the latter is likely to trend higher in the near term. The opposite holds true when the ratio is below 1.0.
Orders, or bookings, rose 10.3%, after a 2.7% rise in January and a 6.7% rise in December. S&P sees many signs of improvement in the semiconductor end-markets, including higher dynamic random-access memory (DRAM) prices, increased wafer output, and high capacity utilization for leading-edge chip technologies.
Although chip-equipment stocks have run up recently, S&P analyst Richard Tortoriello says he continues to look for value. His favorite stocks in the group are Brooks Automation (BRKS ), Kulicke & Soffa (KLIC ), and FEI (FEIC ), which are all rated 5 STARS (buy).