Chip equipment maker KLA (KLAC) is a gauge for the semiconductor sector, and it's looking healthy again. KLA reported rising earnings growth every quarter for the past year. Additionally, KLA stock boasts strong and rising ratings including a near-best 97 EPS Rating out of a best-possible 99.

Semiconductors are the most precious commodity in today's market. They run everything from defense and aerospace systems to cars, smartphones and home devices ranging from toasters to sound systems. Chipmakers like Nvidia (NVDA) and Broadcom (AVGO) use KLA's equipment to test their AI chips and provide quality control.

KLA Stock Strength Rating Improves. Will It Continue?

Regarding fundamentals, the company has posted five quarters of accelerating earnings growth. Revenue growth has also increased during the same period.

KLA reversed from a 4% drop in EPS in the March 2024-ended quarter to a 22% rise the following quarter, 28% and then a 33% earnings gain last quarter to $8.20 per share. Revenue growth has followed a similar trajectory, going from a 3% dip a year ago to 9%, 19% and 24% growth last quarter to $3.08 billion.

On Thursday the Relative Strength Rating for KLA stock rose to a higher percentile, climbing from 67 to 72. The upgraded RS Rating shows that KLA outperformed more than 70% of all stocks, regardless of industry, over the past year. The best-performing stocks typically have an RS Rating north of 80 as they begin their biggest price moves. See if KLA can continue to rebound and clear that threshold.

The Milpitas, Calif.-based company's other ratings really shine. It boasts a near-based 97 EPS Rating out of a best-possible 99. Additionally, KLA carries a 93 Composite Rating. The Composite score combines five separate proprietary ratings into one. The best growth stocks have a Composite Rating of 90 or better. It also sports a B- Accumulation/Distribution Rating, showing that funds are fairly eager buyers of its stock.

Can You Really Time The Stock Market?

Climbing Toward Last Year's All-Time High

KLA stock, a watchlist candidate, is building a consolidation with an 896.32 entry. See if the stock can clear the breakout price in volume at least 40% higher than normal. The long consolidation started on July 11 last year when KLA stock revved to a record high 896.32. During the consolidation it dropped to a 602.40 low in mid-November, then began rising.

KLA closed just above 699 Thursday, down hard for the day amid current market consolidation, but up 16% from its November low.

The chip gear maker holds the No. 3 rank among its peers in the 27-stock Electronics-Semiconductor Equipment industry group. Nova (NVMI) is the No. 1-ranked stock in the group. The group itself has a weak 152 rank of the 197 industry groups that IBD tracks.

IBD's proprietary RS Rating identifies market leadership by using a 1 (worst) to 99 (best) score that identifies how a stock's price action over the trailing 52 weeks matched up against all other stocks.

This article was created automatically with Stats Perform's Wordsmith software using data and article templates supplied by Investor's Business Daily. An IBD journalist may have edited the article.

Please follow James DeTar on Twitter @JimDeTar

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