Photon Control (PHO.TO)

For a smaller company, it takes time to move a ship. You probably have to wait a year, giving management time to deliver on their strategy and to add value on how they are going to do it. Thinks everything on this is moving in the right direction. The stock is bumping up against all-time highs. This is a name you need to be patient with. He likes the company.

This company cleans wafers for semiconductor companies. Has a great balance sheet. If you X out the cash on the balance sheet, it trades at around 14X next year's earnings. Recently reported a very strong quarter and have a record backlog. Could be a takeover candidate as they trade at a low valuation. (Analysts' price target is $2.25.)

The majority of revenue is coming from semiconductors. Has a high cash position and good insider ownership. This has done very, very well. If they moved to the TSX, that would help valuations. It is really a question of the semiconductors’ cyclicality. You have almost all revenue coming from one particular sector, and some large customers that are expanding. When that cycle turns, investors are wondering what happens to this company's great, huge, fantastic growth rate. There is a risk, this being a relatively small company. Feels the cycle probably has a little more leg to it and wouldn't be too concerned.

He is looking at it. They cleaned up the company. They seem to have some good technology. He wants to see if the earnings are sustainable. They just moved into a new facility. He wants to see if it was perhaps just a short bump up over the last few quarters.

Their specialty is extremely precise temperature measurement when making semiconductor chips. They deal with 5 big guys in the world, and have now got new management. Cleaned up their capital structure. Have clients asking for designed-in operations. Trading at $1.66 and earnings are expected to be $.11 this year, so the stock is trading at roughly 16X earnings. That compares favourably, because earnings last year were $.05. They produce a very large amount of free cash flow. There are still great opportunities in semiconductors, particularly when looking at the Internet of Things. This appears to be cheap. Looks like it has clear sailing.

He really likes this. They largely do positioning slow sensors for the semiconductor industry. Has a new customer they are ramping up, so there is some good organic sales potential. Currently going through a certification process with their new facility, but there are no issues. Very strong balance sheet. Good growth behind them. There is lots to like here.

Had an interesting 18 months. The old CEO made some investments from the company, to a related party he had, and there was a lot of criticism. That got unwound and they replaced management. New management is on a growth trajectory now, and have had a couple of good quarters in a row. Thinks there is more room for the company to improve, both from earnings and some possible M&A.

All the semi conductor companies in the US are going crazy. This is the only Canadian player. Earnings are 100% next year and 30 times earning PE. It broke out to a new high a few days ago. It is doing very well and the sector is very hot. It is not as well known as it should be. (Analysts’ target: $2.00).

They have testing equipment for a couple of industries plus a semiconductor business. They had some non-arms length deals last year and that left the stock stuck in the mud. New management are ramping up and are doing very well. It looks like the stock has started to re-accelerate. Longer term it should get bought out.

There is still great opportunity for the company. They’ve gone through a lot of changes and have new management. Expected to earn $.10 in 2018, which puts it at a 15X multiple, roughly doubling earnings. Produces extremely precise temperature sensing for the measurement and creation in new silicon chips. Thinks there is pretty clear sailing going forward.

Doesn’t know this company very well. They essentially supply equipment to semiconductor manufacturing companies. The risk is that there is a fair amount of cyclicality in the semiconductor industry. If you think the semiconductor industry is cyclical, then those that supply them would be even more cyclical.

They have a great balance sheet, with 25% of market cap in cash and their margins continue to increase. He sees some follow on. Their recent management changes will benefit them. They have a pristine balance sheet. There is a lot of upside and the downside is limited.

An interesting and very profitable company. They went through quite an issue with management. Previous management had made a loan to a business of their own, which had a lot of murkiness to it. New management cleaned it up, and now it is just a function of executing. They have a really strong balance sheet. The stock has been building a base, and as the next quarter or 2 comes out, he expects you will start to see improvements. It is just starting to show up in some of the leading technical indicators that he watches.

It has been a top pick in the past. He likes the cleaner corporate structure. They have no debt and growth potential. They had one time write-offs, but as they move on it will disappear. They have a new client that is starting to ramp up.

There was controversy with the management and a new CEO cleaned it all up. He is looking to buy it all back. There were a lot of one time charges on the last quarterly results. It is probably a takeover target from a bigger player.