Stock Trade of the Week: Entegris (ENTG)

Entegris, Inc. (ENTG) develops, manufactures, and supplies products to the semiconductor industry and other high-tech industries. Those products include microcontamination control products, specialty chemicals, and advanced materials handling solutions. The company sells its products worldwide from its headquarters in Billerica, Massachusetts. Entegris was founded in 1966.

The fundamentals for Entegris show strong earnings growth with an average rate of 26% annually for the last three years. The latest quarterly report showed EPS growth of 68% and analysts expect EPS growth of 31% for all of 2018.

Sales have grown at an annual rate of 10% over the last three years and by 16% in the last quarter.

The company sports a return on equity of 21.8%, a profit margin of 19.8%, and an operating margin of 20.15%.

The company is expected to report earnings on July 26 with analysts expecting earnings per share of $0.46 on revenue of $378.2 million.

Entegris has beaten earnings estimates in each of the last four quarters by an average of $0.05.

The sentiment ahead of the report is rather neutral with a short interest ratio of 3.64 and six out of nine analysts rating the stock as a “buy” and three rating it as a “hold”.

Entegris has been trending higher since early 2016. The stock has formed a trend channel that has dictated the trend over the last two years. The stock just hit the lower rail of the channel a few weeks ago and then rallied back. The stock’s 52-week moving average is just below that lower rail of the channel and that gives the stock two layers of support. The 10-week RSI recently dipped below the 50 level and it the last few years anytime that happened marked a good buying opportunity.

Suggested strategy: Buy ENTG with a maximum entry price of $36.50. I would set a target of at least $48 over the next 12 months (for a potential return of 35%-plus from current prices). I would suggest a stop loss at the $31 level.

— Rick Pendergraft

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