Kulicke & Soffa Industries (NASDAQ: KLIC) is
a leading supplier of semiconductor assembly equipment, materials and technology. The firm provides the bonding wire, packaging materials and expendable tools necessary to semiconductor assembly and also makes the bonders used to connect wires between the pads of a semiconductor die and the leads on the chip package. Clients include Texas Instruments (NYSE: TXN) and STMicroelectronics (NYSE: STM).
The company pleased investors last week, when it reported Q4 EPS of 47 cents and revenues of $236.8 million. Analysts
had been looking for 33 cents and $226 million. Return on Q4 invested capital totaled 48.6 percent. Management also guided Q1 revenues to $220 million, versus consensus of $215.0 million. AmTech Research subsequently reiterated its "buy" rating on the issue. The KLIC price popped on the news and then moved into a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the shares with one "strong buy," two "buys" and three "holds." Analysts see a 19% average annual growth rate, through the next five years. The KLIC P/E ratio (12.23), Price to Sales ratio (0.54), Price to Book ratio (4.51), Price to Cash Flow ratio (7.71), Sales Growth rate (46.71%), EPS Growth rate (235.71%) and Return on Equity (46.42%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 86% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past twelve months, it has traded between $6.47 and $12.46. A stop-loss of $6.15 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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