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Axcelis Technologies, Inc. (ACLS) produces ion implantation systems, including high and medium current implanters, and high energy implanters, as well as dry strip equipment, thermal processing systems, and cleaning and curing systems used in the fabrication of semiconductor chips.

I think ACLS is an interesting pick and I’ve added it to my watchlist. I am bullish on the Semiconductor industry for 2006 and expect gains across the board for equipment manufacturers and material suppliers to semiconductor fabricators. ACLS jumped up on February 9th, 2006, when the company reported a smaller 4th Quarter 2005 loss than expected. The company reported a net loss of .01 a share, while analysts were expecting a net loss of 0.3 a share.

It looks to me like shares of ACLS swing quite rapidly. When news of the smaller than expected loss was posted in February, ACLS jumped up from low $6’s to $8. I am guessing what we are looking at is profit taking from investors who are worried about a sustained recovery in the semiconductor industry.

If you compare ACLS to AMAT -- Applied Materials, Inc. -- which supplies some of the same equipment to the semiconductor industry, you will see that shares have similarly dropped in February and March trading.

Looking at the overall improvement in utilization rates from Semiconductor fabricators, I believe ACLS faces a robust market for the company’s products in 2006. I believe in the short run you may see ACLS drop before rebounding. I will keep ACLS on my watchlist and may purchase shares in the company if the stock trades under $5 again without any news released by the company.

ACLS 1-yr chart:

Source: Semi Equipment Manufacturer Axcelis Technologies Faces Robust Market (ACLS)