This optical equipment maker beat revenue forecasts by half a million dollars last quarter, and growth is expected to continue at double-digit rates for the next few years.
Newport Corp. (NEWP)
from The Periscope Report
Newport Corp. (NEWP) makes lasers and optic equipment that test products all along the manufacturing process to ensure they adhere to product specifications. We love this industry, because if you make one widget or a million widgets, you still need testing equipment. And you always have to upgrade testing equipment.
Although this is a competitive industry, NEWP makes most of its products according to customer specifications, which means the customers are loyal to and reliant on NEWP. Thus, recurring revenue is fairly visible, thanks to tracking new orders and backlog every quarter, which have both been increasing for NEWP. 
NEWP has also been uniform with acquisitions, which adds to the customer base and allows for international expansion. NEWP has averaged one large acquisition per year for the past five years. The CEO said he expects to keep this pace up, using Cash Flow to fund the acquisitions while continuing to pay down debt.
We are expecting strong earnings growth for NEWP in 2016 and 2017, which makes the stock look dirt-cheap at current levels. Our earnings forecast for 2016 is $1.37 per share, or 30% growth over 2015 earnings of $1.05 per share. With the current stock price, it is trading for just 10.8 times expected earnings. The PEG ratio is 0.37; anytime this ratio is below 0.50, it presents a great buying opportunity.
NEWP also generates strong cash flows. Based on our cash flow forecasts, the fair value for NEWP’s stock is $40 or 167% higher than the current stock price.
Tom Byrne, The Periscope Report, 4025 Sunset Ridge Drive, Canyon Ferry Crossing, Helena, MT 59602, 406-465-4663, August 25, 2015