Making Inroads Into Handheld Markets

It has been kind of a turbulent year for U.S. companies. But it’s always nice to see a company really starting to perform at the end of the year.

That’s the story of today’s company. They’ve adjusted their business plan to strengthen the long term viability of the company. Now they’re coming back stronger than ever.

 

QUICK FACTS

Ticker                                     ACLS

Industry                                  Information Technology Services

Recent Price                         $1.31

Market Cap                            $139.4 m

Shares Outstanding              106.42 m

Average Volume                     240,322

Dividend Yield                         N/A

Website                                  http://www.axcelis.com /

 

COMPANY DESCRIPTION

Axcelis Technologies (ACLS) is a Massachusetts based semiconductor company. They design and manufacture processing equipment, such as ion implantation devices, which are integral for certain types of chip fabrication.

So what is ion implantation? It’s pretty much using modern technology to speed up a bunch of ions and then launching them into a solid surface. Much like the crash tests you see in automobile commercials. The purpose of this is to actually change the physical, chemical or electrical properties of the solid.

The Ion Implanter side of the business brought in about $72.1 million in the quarter ended June 30 2011. It is the largest segment of Axcelis’ income statement, accounting for 77.2% of revenue.

 

FINANCIALS

This is not a company with a complicated statement of operations. Their revenue for the quarter was up from approximately $58.2 million last year to $93.4 million this year. Cost of revenue as a percent of sales has stayed pretty steady.

And even when the company’s revenue was up over 60% operating expenses were only up 18.6%.

Last year the company was running at a loss of $15.6 million, now they have a net income of $6 million.

Want another simplifying factor? This is a company with zero debt.

 

KEY METRICS ANALYSIS

Trailing P/E                                        12 x

Price / Sales                                      0.4 x

Return on Assets                               3%

Insider ownership                              1.2%

Short Ratio                                         7.6 x

Current Ratio                                     4.35 x

Total Debt To Equity                           N/A

 

RECENT EVENTS

The company took the last downturn as an opportunity to retool their entire product line. Their revenues have doubled, margins are now positive, and they’ve been profitable since Q4 2010.

Management values the world’s market for ion implantation to be about a billion dollars. There are three different segments in this market, high current, which accounts for 50%, mid-current for 35% and high energy for 15%.

ACLS recently released their new product, the Optima HDxt, which is a high current ion implanter. Management thinks offering this new product for the largest section of the market will increase their market share.

Another exciting thing about the HDxt line is what the company dubs ‘damage engineering.’ To put it in layman’s terms the ion implantation is done at a lower temperature. The purpose is to lower current leakage on better performing low power devices.

This is especially attractive for chip makers developing products for hand held devices. Catering to the tablet and smart phone industry is a good place to be right now and management knows it.

 

MANAGEMENT TEAM

Mary G Puma – CEO

Jay Zager – Executive VP and CFO

Bill Bintz – Executive VP of Engineering and Marketing

Kevin Brewer – Executive VP Manufacturing Operations


STOCK ANALYSIS

 

 

 

 

 

Chart Courtesy of StockCharts.com

 

ACLS has had a bumpy ride in 2011, despite the fact that their financials have drastically improved.

ACLS’ 52-week low was $1.00 and the 52-week high was $3.77.  Right now the stock is trading at $1.31.  The 50-day moving average is near $1.27 a share and the 200-day moving average is at $1.59.  The company has a market cap of $139.4 million and 106.4 million shares outstanding.

 

 

Discover more great penny stock trading ideas with a subscription to Zenect Wealth.