This semiconductor measurement systems company was recently recommended by Zacks, based on an 84% estimated earnings growth rate for this year. The company beat earnings estimates in its last quarter by $0.27.
Nanometrics (NANO)
From Upside
Smaller is better for Nanometrics (NANO). The company sells measurement and inspection systems to semiconductor makers seeking ways to shrink chip designs, accelerate product development, and improve performance.
Major customers include Micron Technology (MU) and Taiwan Semiconductor (TSM). Uncertainty regarding the semiconductor capital-spending cycle could impact the shares, but Nanometrics offers plenty of upside given recent market-share gains and product launches.
Nanometrics earns strong Quadrix® scores, including a 97 Overall and 99 in Earnings Estimates. At 17 times estimated current-year earnings, the stock trades at a 17% discount to the median semiconductor-equipment stock in the S&P 1500. The P/E is just 15 excluding net cash of $124 million, or roughly $5 per share.
For 2018, the consensus calls for per-share earnings of $2.30 and implies 87% growth—an aggressive but achievable target based on recent growth and major contract wins.
The stock is being initiated as a Buy.
Richard J. Moroney, CFA, Upside, www.upsidestocks.com, 800-233-5922, June 4, 2018