Aixtron AG (ADR) (NASDAQ:AIXG)

CAPS Rating: 3 out of 5

The Company is a provider of deposition equipment to the semiconductor industry.

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Player Avatar Jeffrey2012 (< 20) Submitted: 7/14/2011 9:50:06 PM : Underperform Start Price: $27.93 AIXG Score: +101.95

This is a great company since they along with VECO are the main suppliers for LED equipment production. However, they are going to face headwinds that will most certain affect earnings going forward.

First of all, China's market is becoming more saturated with equipment due to the surge in orders because of fears of local government subsidies for the led equipment.

Second, China is trying to steer investment dollars towards domestic offerings so that their hard earned money doesn't go to either German or American companies. This will most certainly be a major negative as well going forward.

Third, even if the first 2 factors don't pan out, then you have to consider valuations. Fellow VECO is way cheaper with a rock solid balance sheet and yet has for some reason not advanced as rapidly as AIXG. I think given the prospects, VECO is a better deal in an overall crummy investment environment. Especially when you consider that AIXG is trading at a 2x premium to VECO.

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