[Briefing.com]
BusinessWeek Mentions : Expect these three stocks to trade up this morning after being mentioned in the Inside Wall Street section: Kemet (KEM 30 7/8), American States Water (AWR 27 5/16) and Ultramar Diamond Shamrock (UDS 25 1/2). We have been positive for some time on Kemet and are perplexed why the stock is not trading higher. Kemet is the largest manufacturer of solid tantalum capacitors and the fourth largest manufacturer of multilayer ceramic capacitors in the world. What is a capacitor? Unless you live in a tent, there are a whole bunch in your home as they are electronic components that store, filter and regulate electrical energy and current flow used in virtually all electronic applications and products. Tantalum and ceramic capacitors are the two fastest growing sectors in the U.S. capacitor industry. Furthermore, Kemet is the number one seller of capacitors for cell phones so it stands to continue to benefit from the booming demand for handsets. Overall, the company's capacity remains sold out well into the future, even after taking into account its aggressive capacity expansion plans. The stock is trading at a p/e of 8.3x for the current fiscal year (ending Mar 01) and a forward p/e of 7.5x. And these are based on estimates that analysts have increased 69% and 63%, respectively, over the past three months. Analysts have been impressed with the company's strong sales which more than doubled in the June qtr to $329 mln. Further evidence of the stock being cheap is that the company recently announced a share repurchase program of up to 4 mln shares. While representing 5% of the shares outstanding - good but not great - it is still a hopeful sign when a company believes its stock is a good value. So why is the stock trading so low? Likely because it is in a boring sector and somewhat cyclical. However, even discounting the shares for those characteristics, the stock still looks cheap - the article has a $50 price target in 12 months. Similarly, the bullish article will likely spill over to Kemet's competitors, Vishay (VSH 39 3/16) and AVX Corp. (AVX 30 5/16), so keep an eye on those as well..... |
