3 Chip Equipment Stocks to Buy for Surging Consumer Demand

A new report from UBS focuses on increased memory needs and the upswing in PC demand, and it features three top chip equipment stocks to buy. While acknowledging the competition is brutal, three world-class firms make the list of stocks to buy for growth in the fourth quarter and into 2015.

KLA-Tencor Corp. (NASDAQ: KLAC) is one of the three top chip equipment stocks to buy at UBS. The company is engaged in the design, manufacture and marketing of process control and yield management solutions for the semiconductor and related nano-electronics industries. With a portfolio of industry standard products and a team of world-class engineers and scientists, the company has created superior solutions for its customers for more than 35 years. The company reported solid quarterly numbers and guidance was also very positive.

KLA-Tencor investors are paid a 2.6% dividend. The Merrill Lynch price target for the stock is $84, and the Thomson/First Call consensus target is $76.17. Shares closed trading on Thursday at $76.36 a share.

ALSO READ: 8 Companies That Last Week Seriously Damaged Prospects for Investors

Lam Research Corp. (NASDAQ: LRCX) designs, manufactures, markets, refurbishes and services semiconductor processing equipment used in the fabrication of integrated circuits. The company offers plasma etch products that remove materials from the wafer to create the features and patterns of a device. The UBS analysts have highlighted the company and its peers as having a significant equipment opportunity from the NAND and DRAM evolution.

Lam Research investors are paid a 1% dividend. The UBS price target is $77, and the consensus target is slightly higher at $78.80. The stock closed Thursday at $76.05.

Teradyne Inc. (NYSE: TER) is another top stock to buy at UBS. The company is a leading supplier of automatic test equipment used to test semiconductors, wireless products, data storage and complex electronic systems, which serve consumer, communications, industrial and government customers. Teradyne reported third-quarter 2014 earnings that comfortably beat the consensus estimate. Poor guidance knocked the stock down, though, giving investors a better entry point.

Teradyne investors receive a 1.3% dividend. The UBS price objective is $22.50, and the consensus target is $22.04. Teradyne closed Thursday at $17.79.

ALSO READ: Top Specialty Pharmaceutical Stocks to Buy Before Earnings

With corporate capital expenditure budgets needing to be spent in the next two months, and demand increasing, there is a good chance that the fourth quarter is very solid for these top stocks to buy. Investors with aggressive growth portfolios may want to watch for pullbacks in these companies to scale in some capital.