SONS just seems too incredibly cheap at this point. Enterprise value to gross annual profits ratio is only a little above 1. That is the sort of valuation you saw on tech stocks in Summer of 2002, after which the ones I bought rose 600% over the next couple years. This goes in the "deep value bin" along with other dirt cheap stocks such as ESIO, EXFO, and KLIC.
Couple years ago, a tough critic here was saying the problem with VECO is that LED makers have acquired a big overcapacity of MOCVD machines and thus the demand for more machines would be small for some time to come.
Wonder where we are in this process today? Has that cycle played out and is there now perhaps a prospect of some good sales going forward?
I guess I'll listen to their last conf call to try to get more perspective.
The growth is the iffy part. There is a widespread view that wirebonding is a technology of the past. Thermosonic bonding of bumps may be a good future revenue source, but the question is how well is Kulicke positioned for advanced packaging. Will they be the dominant vendor for electrical interconnect in advanced packaging like they were in the current generation? Or will they be a niche player?
In the meantime, in my view wirebonding is a log way from dead. And Kulicke is a cash cow with a dirt cheap stock in that business, and that makes them a deep value stock, whether or not they are a growth stock.
I see this as an incredible buy as a value stock. If they can achieve growth as well, then the upside is even higher.
It is a good growth stock though. I believe I have documented on a previous post while I believe this stock should reach double digits within 2-3 years.
Semiconductor related stocks seem to be getting hit a lot less hard than the Nasdaq as a whole in the last few days. That's probably because the semis were already hit hard the last few months, so they''ve already had their downturn.
One I think might be a "next INFN" is ACLS. They have struggled as a distant second place vendor in the market for ion implanters, a piece of critical equipment for semiconductor fabrication. They have a new product line called Purion which appears to be superior to their competitor's offering, and is making good inroads. It has the potential to greatly expand their market share, especially since they now have a product family spanning the whole range of implanter products, so that they have a much larger SAM than when their market share was primarily based on their strong position in high energy implanters. My goal is for them to see double digits from their current stock price in the low 3 dollar range. I think that may occur within 2-3 years.
INFN is a company with awesome technology, but you always have to factor stock price into judging an investment, and in my opinion, the fact that this company is so good is reflected in the rise in its stock price from 8 dollars to the 20s, and I think most of this company's upside has already shown up in the stock price.
Dumb management I don't think has much of a bearing. They are in a product upgrade cycle. Their revenue base has been older generation products. I don't care how smart managers are, if they don't have a strong product offering their business is not going to thrive.
But now they have Purion. A lot of circumstantial evidence suggests that this is the superior ion implant product line on the market.
So now the business is starting to take off. Even if management is dumb, which I doubt, even a dumb management can show good business performance when their company has the superior product on the market.
And even if mgt were dumb in some ways, they certainly aren't dumb when it comes to product development.
Furthermore, I find it extremely impressive that a small company in the highly cyclical business of semiconductor fab equipment could stay afloat during a product upgrade cycle in which their ENTIRE product line became "legacy" and has been replaced by a brand new product line.
Yes, that is big. 278 mil isn't a big hit to the company's balance sheet. 1.54 bil would have been. It seems to me Marvell is a lot more reasonable candidate as a possible investment in light of this development.
Book value is largely based on the value of their oil and gas reserves which can fluctuate radically depending on the price of those commodities. If oil & gas prices are low enough then their properties are worth diddly squat. Long term, they might have good value, but as I always say, what good is the long term if your company goes belly up before the market recovers? I have looked at gold stocks that way but certainly any natural resource industry is susceptible to that when commodity prices go into the toilet.
If there were some way to invest in an oil or gas company that just owns some deposits but doesn't produce from them and is debt free, then you could just sit on those deposits till the next boom in oil and gas prices comes, whether it be 2 years from now or 20. But I am not aware of an investment vehicle for doing that.
As a fundamentalist, I expect the stock to be way higher in a few years based on the outstanding business performance I expect them to be able to achieve. But some of that upside could happen in the short term if more investors take a look and reach the same conclusion and bid the stock up in anticipation of that future business performance.
I bought a little more. I wish I understood this company better, but the numbers do suggest it is dirt cheap, and if they have some decent quarters the stock ought to be quite a bit higher.
As to cash. A lot of the companies in the semi eqt business have cash equal to 20-30% of their market cap if not more. I think that is a good idea considering how cyclical this industry is. Axcelis has net cash on the balance sheet, but not a ton of it, I believe something like 30 million dollars. I think they should just bank their cash for the forseeable future. If they had a mountain of cash, buybacks might be appropriate, but they don't have a mountain of cash. And I'm not sure there are acquisitions that would be worthwhile for them to consider. They have a business focused very much on one specific type of product, and the business prospects for those products over the next few years are awesome.
To me, if they underpromise on earnings, all the better. The earnings will be what they will be regardless of what they project they will be. When Purion is in high volume production a few years down the road, I believe Axcelis will be making money hand over fist.
No wonder my order didn't execute, I didn't select "after hours". Did it again and bought 2k shares at 3.15. May sound a little pricey but I am very bullish on this company right now and it is possible it will be up quite a bit upon opening tomorrow morning.