October 2023 Aehr Test Systems (AEHR) and Noble Double Oak Bourbon Picks

Aehr Test Systems (AEHR)

Oct 2023

Author: Allan Maule

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Website: www.aehr.com

CEO: Gayn Erickson

Founder: Rhea J. Posedel

Market Cap at Time of Article: $1.31B

Current Analyst Recommendations:

On a scale where 1 is a "strong buy," and 5 is a "sell," the analyst consensus on AEHR is currently at 1. No shock that the DubyaDubya team agrees AEHR is a strong buy! With a current price of $45.40 and an average price target of $60, now is a great time to take a position with this stock.

Quarterly Revenue Growth Year-Over-Year: 27.8% The Dubya Dubya team would love to see a higher number here for such a small cap stock, but this growth is strong and bodes well for the future of this company.

Insiders: With 11.3% insider ownership, the Dubya Dubya team would love to see this number higher—but we’ve recommended companies with lower insider numbers, so this shouldn’t be seen as a dealbreaker.

Why talk about AEHR to all your friends and family?

Aehr Test Systems creates and sells machines for the stress testing and reliability screening of semiconductors. These machines include wafer contact test systems, die carriers, test fixtures and… there’s a good chance your eyes are beginning to glaze over with these tech details. The truth is, unless you’re an electrical engineer, the word “semiconductor” probably doesn’t mean much to you beyond “something for computers.” So let’s break down the science a bit for us normies.

Semiconductors are the brains behind a huge variety of modern technology, ranging from medical devices to AI to cars to smartphones. Semiconductors enable the flow of electricity to be controlled so your electronics 1) work and 2) don’t melt. Test systems like those made by AEHR are important to making sure 1 and 2 are true before the products relying on the semiconductors get sold to you. This is especially key for products like EVs where reliability and safety are absolutely crucial. Given how common semiconductors are and how vital it is that they work properly, the testing products like AEHR makes have become essential—which explains why their business is excelling and growing.

What makes Aehr Test Systems (AEHR) worth your hard-earned money for the next decade or more?

Let’s talk about the business of AEHR. This company’s testing machines can test an entire batch of chips at once, which leads to significantly less waste and improved costs. AEHR products also excel by being more affordable and compact, so they take up less physical space. So as demand for semiconductors explodes from AI and EV adoption, AEHR’s leading status as a test systems manufacturer puts it in a great position for sustained growth.

Speaking of growth, time to dive into some numbers. AEHR has been profitable for some time, with profit numbers of $3.7M and $4.1M in recent quarters. Smaller than many companies to be sure, but if you look at the margins things get more impressive. Look at Q1 2023 with gross margins of 42% and the most recent quarter (Q3 2023) with margins of 52%. This company combines industry leadership, strong recurring revenue numbers, and rapid margin and net income growth—making it a strong buy in our book.

How is this company disruptive?

AEHR makes the industry-leading solution for testing silicon carbide (SiC) semiconductors. SiC takes the good qualities of silicon and adds capabilities that are especially helpful for power electronics like EVs: faster charging, improved efficiency, sleeker designs, and longer lifespans. These qualities also make SiC important for use cases like AI, which everyone is rightfully obsessed over. As experts predict the SiC market will quadruple in a few years (growing chip sales to reach $7.1 billion in 2026), AEHR is well-positioned to lead and grow for years to come.

Conclusion:

AEHR makes technology that, while not easy for the layperson to understand, is nonetheless crucial to our lives and work. They have proven leadership, an excellent business model, and strong growth numbers—adding up to an easy recommendation by the DubyaDubya team.

Whiskey Pairing: Noble Oak Double Oak Bourbon
Retail: $35 Proof: 90

A value to taste you want

We love to hunt for solid value in stocks like we like to hunt for solid value in bourbon. Noble Oak delivers with their Double Oak Bourbon offering. It has a ton of depth due to the sherry casks and overall mash build. It’s a very approachable bourbon that can be shared with friends or people who don’t often drink bourbon. It won’t sting as much with a 90 proof but also means it won’t be as warm either. The finish is medium and will have you coming back often, so be careful because this one goes down fast. This bourbon is an incredible value, and we highly recommend you pick it up.

Tasting Notes:

Nose: Cinnamon sugar, nutmeg, vanilla, and baking spice round out the nose.

Palate: It’s lightweight and will have you thinking vanilla with red lollipop flavor. Going back for more, you will find maple sugar oatmeal and heavy cinnamon.

Finish: The finish doesn’t last long, but you will pick up the sherry barrel it was aged in.

Score – 4/5