Stock of the Week

Brooks Automation (BRKS) provides automation and cryogenic solutions for various applications and markets.

It operates in two segments, Brooks Semiconductor Solutions Group and Brooks Life Science Systems.

The company’s products include atmospheric and vacuum robots, robotic modules, and tool automation systems.

Brooks is headquartered in Chelmsford, Massachusetts and was founded in 1978.

Brooks has seen tremendous growth in recent years with an average annual EPS growth of 51% over the last three years.

The EPS was up 62% in the most recent quarter and the company will release earnings again on January 30. The company’s sales have also been growing.

The sales growth rate has been 15% over the last three years. Brooks sports a return on equity of 17.5%, a profit margin of 15.9% and an operating margin of 11%.

Brooks doesn’t have a tremendous following in terms of analysts. There are only six covering the stock right now and three have it rated as a “buy” and three have it rated as a “hold”. This leaves room for additional coverage of the stock as well as upgrades.

We see on the chart that the stock moved up sharply from mid-2016 through mid-2017 before it had a slight pullback. The stock bounced back from the pullback and jumped over 60% from the end of June through the end of October. The stock pulled back again in November, but found support at its 52-week moving average. The stock has already jumped over 30% from the low in November, but I think the stock still has room to move higher.

Suggested strategy: Buy BRKS with a maximum entry price of $30.00. I would set a target of at least $37 in the next six months (for a return of 27% from current prices). I would also set a stop-loss at $24. Keep an eye on how the stock behaves at the $34 level as there could be some resistance there.

— Rick Pendergraft

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