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Bull of the Day: Kulicke & Soffa (KLIC)

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Kulicke & Soffa (KLIC) is a $3 billion provider of semiconductor packaging and electronic assembly solutions supporting the global automotive, consumer, communications, computing and industrial segments.

And they were also a small but key player in the post-WWII electronics and semiconductor revolution, with groundbreaking innovations from its founders Frederick Kulicke and Albert Soffa.

As a pioneer in the semi space since 1951, K&S has provided customers with market-leading assembly and packaging solutions for 70 years. In 1979, Kulicke was honored with the first SEMI Lifetime Achievement Award for his contribution in wire bonding and die attach in the area of assembly equipment.

And in 1985, Soffa won the SEMI Lifetime Achievement Award for his contribution in manual and wire bonders in the area of assembly equipment.

Nowadays, most semi investors know of Lam Research (LRCX) and Applied Materials (AMAT) as the powerhouses of wafer fabrication equipment (WFE) that chipmakers buy to build their wares.

But KLIC is a key facilitator between persistent silicon slicing and potential demand destinations like Taiwan Semi, Intel, or Apple. That's because in recent years the company has expanded its product offerings through strategic acquisitions and organic development, adding advanced packaging, electronics assembly, wedge bonding and a broader range of expendable tools to its core offerings.

From the company website...

K&S prides itself on establishing foundations for technological advancement - creating pioneering interconnect solutions that enable performance improvements, power efficiency, form-factor reductions and assembly excellence of current and next-generation semiconductor devices.

Dedicated to empowering technological discovery, always, K&S collaborates with customers and technology partners to push the boundaries of possibility, enabling a smarter future.


What stands out to me here is the need for customization of semi solutions. Every customer has very specific needs across all industries including desktop, mobile, tablet, auto, cloud, manufacturing, robotics, healthcare, telecom and IoT.

That spells a growing opportunity of markets for KLIC.

Why KLIC is a Zacks #1 Rank

Of course, it's all about the earnings estimates -- and not how much I admire the company.

After a crushing pandemic shutdown, KLIC has bounced back hard with projected sales this FY21 (ends September) of $1.1 billion, representing 78% growth!

And EPS is projected to vault 245% to $3.28.

By these measures, KLIC is trading at just 3X sales and 16X on a P/E basis.

While I still love the value here in an exponential industry (limits to growth not yet visible), I wish I had published this report last week for you before the stock surged to new highs today.

Yet, I still think buying KLIC in the $50's should a be a good long-term risk/reward calculation. It should definitely be on the radar of bigger WFE makers.

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Kulicke and Soffa Industries, Inc. (KLIC) : Free Stock Analysis Report
 
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