We came across a bullish thesis on ACM Research, Inc. (NASDAQ:ACMR) on Make Money, Make Time’s Substack by Oliver | MMMT Wealth. In this article, we will summarize the bulls’ thesis on ACMR. ACM Research, Inc. (NASDAQ:ACMR)'s share was trading at $15.38 as of Dec 24^th. ACMR’s trailing and forward P/E were 11.56 and 8.55 respectively according to Yahoo Finance.

A one of a kind semiconductor process equipment machine with various parts and components.

ACMR is a key player in the semiconductor industry, specializing in wet processing equipment that addresses critical cleaning challenges during wafer fabrication, thereby improving yields for leading chipmakers like TSM, Samsung, Intel, and SK Hynix. The company boasts impressive revenue growth of 40.05% and a strong gross profit margin of 47.80%. Despite its robust fundamentals, ACMR trades at a steep discount compared to peers, with an EV/Sales (NTM) of 1.2x and EV/EBITDA (NTM) of 5.4x, underscoring its relative undervaluation.

The company’s heavy reliance on China, which accounts for more than 50% of its revenue, is a notable risk. However, management’s proactive efforts to diversify and reduce this dependency below 50% are steps toward mitigating geopolitical and operational concerns and enhancing confidence for long-term investors. While ACMR’s free cash flow per share (LTM) is currently negative at $1.33, its valuation metrics and growth trajectory make it an attractive opportunity in the semiconductor equipment space. Although it is unclear how ACMR compares to competitors like Lam Research or Screen in terms of technology and market share, its significantly lower valuation provides a compelling risk/reward profile. ACMR represents an intriguing investment, offering substantial growth potential at an attractive price.

ACM Research, Inc. (NASDAQ:ACMR) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held ACMR at the end of the third quarter which was 25 in the previous quarter. While we acknowledge the risk and potential of ACMR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ACMR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.