Stockchase Opinions

Steve Martin ATS Automation Tooling Systems ATS-T DON'T BUY Nov 22, 2007

3 different business lines including a solar business. Key feed stock for making a solar cell is polysilicon, which is in a massive global shortage. They have not been able to secure this so are using other material resulting in the cost structure lagging. Margins are practically negative.
$4.090

Stock price when the opinion was issued

misc industrial products
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PAST TOP PICK
(A Top Pick Feb 27/23, Up 7%)

Automation is here to stay. They have great experience and lots of opportunities.

DON'T BUY

AI is a really hot theme that's being chased. Operating fundamentals not as strong as he would have thought, in terms of profit margins, ROC and free cashflow. Avoid. Better businesses out there. Better way to play is through chips or sensors, such as TSM or TEL. 

DON'T BUY

Impressive global reach. Improves line speed and yield in manufacturing. Maintenance contracts, too. Less profitable than markets. Leveraged balance sheet. Trades at a premium of 20x vs. market at 15x. No dividend. Better ideas out there.

BUY

Current valuation a little high - but is a quality business (~13% ROE). Strong brand name is a good long term investment. 

BUY ON WEAKNESS

Lots of contracts in last year that were EV-related. Recently, EV sales slowed. Market got worried, stock came down. Yesterday, largest shareholder offloaded stock. Good time to buy in mid-high $40s, EVs aren't going away. Probably just delays, no cancellations. Accretive acquisitions in life sciences, which are high margin.

BUY ON WEAKNESS

A long-term compounder, a top performer, but ATS is not easy to understand. They buy tech and manufacturer companies. IS concern that EV sales are flopping, but the PE of ATS looks attractive. Would look at during a pullback.

HOLD
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

Investors are still fretting about the decline in the backlog, and then its largest shareholder compounded problems by selling a large block of shares. We would remain a HOLD at the current (cheap) valuation and reference this recent answer. We might start picking away with more at the $42 level in any further declines. 
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HOLD

Has sold shares in this business. Sold out at $55. Appears to be recovering. Will take time to tell future of business. Wait and see. 

WAIT

Struggling. The best we can say is that the chart seems finally to be stabilizing. Hard to say whether it needs a washout before the downtrend is over. Trying to bottom, but hasn't picked up yet.

When you ask yourself what could happen, technicians look at a 50% retracement, where a stock would give up half of the move. So, if you went from $15 to $60, that's a $45 gain. Half of that is $22.50. The high of $60 - $22.50 brings you to $37.50, which is close to the 2022 lows.

PAST TOP PICK
(A Top Pick Feb 27/23, Down 28%)Disappointing growth in EV equipment.

Rolled over and he got stopped out. Wasn't making higher highs and higher lows, no longer in an uptrend. In your portfolio, you have to quickly carve out the ones that aren't working before they hurt you.