Kim Bolton Teradyne Inc TER-N PARTIAL SELL Dec 31, 2024

Semis are the basic building block of the modern economy. The most economically sensitive area. The group has gone through a correction. Highly doubts the rally is over. Huge shortage of chips. TER, LRCX, and AMAT all look attractive. Demand will be quite strong going forward.

Is up 17% in May. They directly benefit from AI because they produce semi-testing equipment. It trades at 37x with 55% and 35% earnings growth in the next two years.

Makes equipment for the chip industry. Recall the dartboard chart described at the top of today's show of the automation/robotics ecosystem. In the hardware space, just outside the manufacturers. Testing equipment for semiconductors, wireless, storage devices. Ensures quality and reliability of high-tech products. About 20% runway to $150. Yield is 0.4%.

What's also very cool is that, yes, it's in automation. But it's also gotten into robotics to the tune of about 25% CAGR growth rate consistently for the last 2 years, compared to 20% for peers. Definitely a leader, great company.

TER does develop 'advanced robotic systems' so we would expect it to at least be involved in the sector. It spent $435M on research and development projects last year. The stock has had a good start to the year, up 10%. P/E is 43X. It has about $600M net cash and earnings growth is projected at 30% in 2025. The last quarter was very good and estimates have ticked higher in the last four weeks. We think it looks good for a higher growth thematic stock. 
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