Newport Corporation (NASDAQ: NEWP) manufactures
a variety of high technology systems and components used in the aerospace, fiber-optic communications, health care, and semiconductor manufacturing industries. These include lasers and amplifiers, photonics instruments, precision micro-positioning systems, vibration isolation systems, optical hardware and opto-mechanical subassemblies. The firm also offers automated systems for manufacturing disk drives, photovoltaic cells and multi-chip modules. Agilent Technologies (NYSE: A) and Corning (NYSE: GLW) are major competitors.
The firm pleased investors last week, when it announced workforce reduction, outsourcing and administrative streamlining actions designed to improve financial performance. Management also guided Q3 revenues to $106-$112 million ($109.7M consensus), Q4 EPS to 15-25 cents (13 cent consensus) and Q4 revenues to $115-$125 million ($121.3M consensus).
NEWP shares
popped on the news and then passed into a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with four "holds". Analysts see a 77% growth rate, through the next year. The NEWP P/E ratio (12.24), Price to Sales ratio (0.81), Price to Book ratio (0.93), Price to Cash Flow ratio (7.04) and Price to Free Cash Flow ratio (19.68) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 90% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $9.24 and $16.15. A stop-loss of $9.25 looks good here. Note that the firm is expected to announce Q3 results in late October.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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