QC Optics (Amex: OPC) designs, manufactures and markets laser based defect detection systems for the hard disk, semiconductor, and flat panel display markets. QC Optics went public last October at $6.10 (with a warrant), but the stock was crushed this year as orders temporarily slowed down. The price fell to as low as $2.375 before recovering to about $4.
Based on 1996 earnings (before a non-cash charge), QC Optics' has a P/E of just 8.70 and has a book value of $2.38 and a current ratio of 4.7. Sales grew 31% in 1996 to $13,577,104 and the company has a market cap of only about $13 million. The first half of 1997 has been weak, but things appear to be improving. In July, the company received a series of orders, worth approximately $6 million, from a MAJOR computer hard disk manufacturer. And the total potential of the orders may be much greater than that. Considering QC Optics 1996 sales level, this is a very significant order for QC Optics. And orders from other major hard disk manufacturers may not be too far off.
If orders from the semiconductor market pick up as expected, and additional large orders for hard disk defect detection systems are received, earnings in 1998 could be spectacular. Perhaps $0.70. Maybe even $1. Using a P/E of just 15 (A competitor has a P/E over 30!) would mean a stock price of $10.50 to $15. This would be a significant increase over the current price of about $4. And gains for QC Optics warrants could be even greater. Of course, QC Optics is a very risky stock and the $0.70+ earnings may not develop, and if they do, the market may give QC Optics a P/E lower than 15. And there is certainly no guarantee that the company will receive significant orders for its products. But QC Optics seems to have the right products at the right time, and if the orders do materialize, QC Optics' stock could be a huge winner.
QC Optics' customers include Intel, IBM, Micron, AMD, Seagate, Xerox, Lucent Technologies, and many others. Competitors include KLA Instruments, Hitachi, Nikon, DPI Technology Systems, System Seiko, and Phase Metrics.
I'm not suggesting that people run out and buy QC Optics, but considering the huge potential for the stock, I think it is worth checking out.
SEC Filings: sec.gov
Quote, graph and news: quote.yahoo.com
Report: financialweb.com
I'd love to hear what people think of this company. Positive and negative comments are welcome.
Jeff |
