It appears they have achieved critical mass. The customer community considers them a supplier for the long term, and one who offers the best product. Might we dream that in a few years they might eclipse amat's status as th e market share leader?
Funny, I wrote that post while listening to the conf call and puma actually actually said she thinks they have the potential to be the market share leader within a few years. Keep an eye out for a possible buyout. Lam maybe.
Although their business performance is obviously the most important thing, since they did that sale of their hq I have wondered if it would cut into their profits since now they have to pay rent on their bldg which they didn't have to before. Not that that would necessarily make it a bad decision, because it probably makes sense for them to have their assets in cash for purposes more closely related to the business rather than just to own a building. At any rate, if the rent increased their expenses at all (which I could probably figure out by looking at the quarterly financials if I had the gumption), it obviously didn't have a big impact since their good business performance led them to a profitable quarter.
ACLS seems like a prime buyout candidate. However, potential acquirers might hesitate based on the possibility that shareholders may expect a huge premium.
Now let's say they can achieve 40% market share in 3 years, and let's say the implant market has grown a bit by then to 1.2 billion. So that would be about 500 million dollars in sales per year. At a gross profit of 40%, that would be 200 million gross annual profits. And let us conservatively assume their market cap should be 5x of gross profits. So that's a market cap of 1 billion. That's about 3x their current market cap. So that would be 9 bucks per share.
Now no one is going to buy the company today for 9 bucks a share because that is just based on potential. There are always things that can go wrong along the way. But a potential acquirer ought to be willing to pay half of the upside. In other words, 6 bucks a share.
It seems to me that would be a reasonable goal as far as what shareholders should expect from a buyout. You lose out on some of the upside potential, but you instead take a bird in the hand instead of two in the bush.
How would shareholders feel about that? I believe that would be fair. And I think it may be coming, so I will probably buy a bit more today even despite the fact that it is pricier now.
Well it's a growth stock, pretty pricey but that's because it has huge potential. I would love to get back in this stock but as a value investor, 18 is too high for me. Unfortunately, I doubt it will ever dip down enough to create what I would consider another window of opportunity.
One factor is probably the fact that they did news releases announcing some excellent orders over the last month or two. So I think people probably already were expecting that their quarterly report would be a pretty upbeat one.
One thing I probably haven't given ACLS enough credit for. The accolades they win for being the best at customer service.
It would seem to me that it should be harder for a smaller company to maintain a stellar reputation for customer service, simply because I would think their size precludes them from being able to provide as much support as far as things like how much support staff they have to offer and how many locations there are able to offer support at.
But however they do it, these guys manage to get rave reviews for the quality of their customer support. Add to that the fact that they now offer what appears to be the best of breed family of implanters, and that could prove to be a powerful one-two punch.
It would have been nice to have simply held ACLS stock from when it was under a dollar.
But it actually made sense not to take that risk. The fact is that when ACLS was under a buck, its future was far more iffy than it is today. They were the also-ran in implanters with a new family of products whose success was totally in doubt.
Well now things are a lot more clear. The new products are selling and their future looks very bright. And you now have to pay 3 times as much for the stock. You could already have a 3 bagger with ACLS but you would have had to take a lot of risk.
Now its upside is more like 100-150% gain over the next 2-3 years. So the reward is a lot lower. But so is the risk, because they have now shown that they have a product line that is highly competitive.
Good companies don't only go up because business does well. They can also go up when they get "discovered" by the investor community. With ACLS up two days in a row after reporting the quarterly, I think ACLS is starting to be noticed a lot more. That should lead to a higher valuation than what the same company would have if it were in the shadows like ACLS has been up to now.
But the real sign of ACLS hitting the "bigtime" would be if we start seeing bashers on the board. Now ACLS used to have some critics here, but that was criticism of the "old ACLS". The one where it was a legitimate question whether they had enough critical mass to survive in this marketplace.
What I am talking about is now that ACLS is clearly on a path to success, bashers with some sort of agenda should emerge and start talking down the stock. That would be the bullish indicator.
Then when the rally is long enough in the tooth that Jim Cramer jumps on the bandwagon, that will be the time to take profits.
It's basically the technology. They had excellent new products under development, but that doesn't help until they actually are on the market.
Now their business situation looks extremely promising. It's not that they were lousy managers and all of a sudden they are now geniuses. It is that they had a path of engineering development that led to a very promising long-term business situation, but that doesn't help in the short term.
So in the short term, people bashed Puma for being a lousy manager yada yada. Nope, she has just been playing the cards she had to work with, a shaky short term business situation and a promising long term one.
And now we are on the path to the promised land. ACLS is competently run and has been for years. During the lean times they were setting themselves up for future success by developing Purion.
Well, the promised land is now on the horizon.
Thinking about getting some. I previously felt this company was too risky because they need to drastically revamp the business. It appears they are indeed in a pretty early stage as far as that goes. Maybe one would be best off waiting a year or two and seeing if they are on a path to offering an attractive set of products. But th e y do have some expertise and I think th e y have smart people working for them. With the strong balance sheet their medium term downside is probably not that bad. Upside, if they do manage to succeed in developing a new set of competitive products, the upside potential of the stock should be in the 5x-10x range.
Well they bought the buddy robot company. Hope they know what they are doing. Paid quite a bit. But I have been impressed with the market strategy of Teradyne mgt so I have to give them the benefit of the doubt. Hopefully the robot company is one that has a lot of potential. I assume that part of the motivation was the belief that they could apply the robot technology to some of their other products.