Niche Technology Firm Set for Growth
|Written by GSCR Staff|
|Tuesday, 22 October 2013 06:30|
In Monday’s Goldman Guide we stressed the fact that we like the small cap tech and energy sectors for the foreseeable future with an emphasis on top-line growth.
Ultra Clean Holdings, Inc. (NASDAQ - UCTT – $7.11) is a niche technology firm that provides services and products to OEM’s in the semiconductor capital equipment, flat panel, medical, energy, and research industries. It offers precision robotic systems for use when accurate controlled motion is required; robotic surgery products; and gas delivery systems consisting of gas lines, comprised of several filters, mass flow controllers, regulators, pressure transducers and valves, associated interconnect tubing, and an integrated electronic and/or pneumatic control system mounted on a pallet. The Company also provides chemical mechanical planarization subsystems; chemical delivery modules, which deliver gases and reactive chemicals from a centralized subsystem to the reaction chamber; and top-plate assemblies that form the top portion of the reaction chamber. In addition, it offers frame assemblies that form the support structure to which other assemblies are attached and include pneumatic harnesses and cables that connect other critical subsystems together; process modules, which are subsystems of semiconductor manufacturing tools that process integrated circuits onto wafers; and other high level assemblies for use in semiconductor manufacturing, research, flat panel, energy, and medical equipment industries.
Yesterday after the market close, Ultra Clean announced 3Q13 financial results and handily exceeded Street EPS expectations. Highlights included top-line revenue growth of 6% from 2Q13 to $107.7 million and by beating the consensus EPS estimate of $0.09 by $0.03 to earn $0.12 earnings per share. This is a nice catalyst that should bring about at least a short term accumulation phase.
Based upon basic technicals such as DMA, UTCC looks like a must-own stock at current levels. Additionally, top-line revenue growth is expected to increase over 10% to nearly $475 million in 2014. Revenue estimates were confirmed by CEO Clarence Granger during the conference call yesterday.
UTCC trades at lower volumes so the price level may take some time to jump up to what we expect to be and achievable level of $10 or so by sometime in 1Q14.
Have a great day!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
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