Michael, James and others,
It looks we are getting very close to "value"
levels in the semi-equipment industry. Overall
the industry is growth-cyclical and now it's being
punished by both overcapacity and Asian crisis.
However, the secular trend is up, and the
worse the current downturn, the better should be the
next upturn. We may be early, but on the upturn
we may get 2-3 baggers. The downside: almost all companies
are cash-flow negative, so Buffett fans need not apply. :-)
What are concrete buys? The "gorilla" of the
industry AMAT is still expensive. All other players
are smaller and have their niches. Michael mentioned
SFAM, which I like though it's competing with AMAT.
My current pick is ASYT.
biz.yahoo.com
It's a monopoly leader in its niche and the niche
may even hold steady during the downturn because automation of
fabs has a nice ROI and semis can retrofit older fabs,
even when they are not building new ones. It is selling at
~1.3 PSR, 1.8 p/book, has ~$6 cash per share. They are
expecting to remain profitable during the downturn.
I added some at 15.75 and plan to average down.
If you are looking for more net-net type of plays,
KLIC is a market leader, but most volatile of the semi-equips.
Now down to .8 PSR, 1.3 p/book. Buy at $12. CFMT, COHU,
EGLS, SMTL may appeal to someone who wants to have a
broader portfolio. Each has their own positives and negatives.
For hi-yield suggestion, look at HELX. It has high
PSR, but its ROE is phenomenal.
Good luck
Jurgis |
