5 Best Cyclical Stocks for Inflation

3. KLA Corporation (NASDAQ:KLAC)

Number of Hedge Fund Holders: 52

KLA Corporation (NASDAQ:KLAC) is a California-based Semiconductor Equipment & Materials company that provides process control and yield management systems to semiconductor and nanotechnology companies. Our database shows that 52 hedge funds had stakes in the company in the first quarter of 2022. Alkeon Capital Management held the highest stake. Moreover, the second most significant shareholder, D E Shaw, increased its holding in the company by a staggering 481% in the same quarter.

Despite the downward trend in the semiconductor market, KLA Corporation (NASDAQ:KLAC) remains on our list due to its free cash flow returns, high profitability in the semiconductor equipment industry, and a strong balance sheet with healthy fiscal reports. The FQ3 2022 reports of the company recorded a 27% YoY revenue growth to $2.29 billion compared to the $2.20 billion estimates. Furthermore, KLA Corporation (NASDAQ:KLAC)’s revenue has grown at a compound annual growth rate of 12% since 2012. The company also surpassed its EPS estimates of $4.82 by 6.33%.

Vltava Fund discussed KLA Corporation (NASDAQ:KLAC) in its first-quarter 2022 investor letter. Here is what the fund said:

“We then used the money freed up to, among other things, open three new positions. The stock price declines during the Russian invasion brought a lot of good prices to the market. Out of all the possibilities we considered, we picked the stock of KLA Corporation (KLAC).

KLA Corporation develops leading-edge equipment and services that enable innovation throughout the electronics industry. It specialises in process management and control in semiconductor manufacturing and the related nanoelectronics industries. During manufacturing processes, products must be inspected for defects and correct critical dimensions in order to identify and eliminate possible sources of problems. As customers continue to enforce Moore’s Law, smaller chips must meet more precise specifications, which in turn increases the need for advanced inspection and diagnostic tools. This is a key step within the entire manufacturing process and one in which the company has built a very strong, and in places dominant, global position. We have been watching and waiting for an opportunity to acquire this stock for some time already, and this year’s drop in its price finally prompted us to buy.”