| | | HI Kim,
The best value that is very depressed now (from a huge Acquisition of their last competitor XCERRA) is Cohu.
Lots of my lonely posts on this activity here: Subject 3070
My other one is a semi equipment company that has transferred their robotic skills to a new destructive and enabling line of equipment within the life sciences sector ( biosampling and gene sequencing - very fast growth with both business sectors in the 40% margin area BRKS : Message 32306872
IMHO both will be doubles in a year - especially Cohu. Last year at the end of July they traded at 27 ish. The acquisition is creating a lot of relocation and severance expense. They say that twice the expected 20 million in savings (40 million) will have been accomplished by the start of Q1 2020. They are experts at running lean. They had to take out 350 million to buy the bigger company with bigger margins and greater cash, but got it done. Now they need to get leaned out before the market demand picks up. From 1978 to last year they never had a penny of debt - very conservative and solid management. I've visited them many time and have known all the CEO's since 1990's. They treat the company's money like it was their family's I love that!!
For them to have embraced debt to get the merger done was huge commitment - that shows to me how great the future opportunity will be - even if delayed by trade tariff wars - who saw it coming?
A Chinese hedge fund , backed by the Government's money was to buy Xcerra and the cifius committe put the kabash on the deal - enter Cohu step up and double their revenue, but with big initial expenses to be incurred. Cohu has been acquisitive for decades and paid cash only till this acquisition. This rolls up the global semiconductor test business for them - huge future. Much smaller but not unlike the Amat/Varian merger, Kla Tencor merger and the Lam/ Novellus merger. They have achieved true global scale with this acquisition. They pay a 6 cent quarterly dividend and I'm sure that will not increase as long as they have that debt to pay off.
Hope you find this interesting and profitable.
The big cap leaders are : AMAT, KLAC, LRCX, and to a lesser degree TER.
Bob
Also a semi turn down in hand phones and trade wars has deferred a stronger demand in the H2 of this year into next year. Hopefully Q 4 will have better guidance, but right now there is excess capacity of about 5% - which defers Capex. Cohu's largest equipment installed base is in China. So they have big excess capacity.
If new equipment is installed outside of China - it will make for good business. They manufacture their products in Malaysia and the Phillipines, with R&D in Poway Ca.
I've been in and out of them completely 3 times starting back in 1978.
It currently is my largest position and I've been adding all this year as dividends accumulate.
You'll need to get an appointment to post - it is really quiet. I've run everybody but the hardest of heads off - sigh.
Please drop by!
Bob |
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