How To Make 79% On Your Next Investment
The Dynamic Wealth Report
August 19, 2010
by Robert Morris, Editor
A couple of months ago I introduced a fantastic little semiconductor
equipment stock. You might remember it. The company is Milipitas,
California based Nanometrics (NANO).
In the article,
The Best Trend In Tech Just Got Better, I told you I
expected big things from this company. I also said I could see these
shares jumping 46% in the months ahead.
Well, I was wrong…
I should have said this is a phenomenal company and I think it can
more
than double in value! (I’ll tell you why in a moment.)
First let me refresh your memory…
NANO makes high performance process control metrology systems. Chip
makers use these systems in the fabrication of semiconductors,
high-brightness LEDs, data storage devices, and solar cells.
I know it sounds complicated, here’s what you really need to know…
Metrology systems are a key part of the chip making process. They
improve the performance of chip making equipment. And this helps
increase manufacturing yield.
In other words, NANO’s systems help improve product quality, lower
manufacturing costs, and increase profitability. These systems are music
to a chip maker’s ears.
So, getting back to how I was wrong about NANO…
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In my previous article, I told you the company was poised for big growth
over the next 12 months. I was expecting revenue to jump 109%. And I was
looking for earnings of $1.18 per share.
Fabulous year over year growth any way you slice it.
But here’s the kicker…
It turns out my growth forecast wasn’t nearly robust enough. I
under-estimated how strong this company’s revenue and earnings growth
truly is.
The truth is, NANO’s metrology systems are selling faster than votes on
Capitol Hill!
Remember, chip makers essentially stopped buying chip making equipment
in 2008 and 2009. No need to boost capacity as demand for semi-conductors
was drying up. Now, with demand for chips skyrocketing, chip makers are
scrambling to increase production.
And NANO is raking in the cash hand over fist.
Check out these astonishing second quarter earnings…
Revenue more than tripled year over year to a record $50.8 million. What’s more, revenue jumped a hefty 37% from the first quarter. A great
sign sales growth is accelerating.
Earnings were nothing to sneeze at either. Net income rocketed 97% over
first quarter levels to $11.6 million. And earnings rose a whopping 82%
to $0.51 per share.
But there’s even more…
The company literally blew away analysts’ already formidable estimates. Analysts were looking for revenue of $39.3 million and earnings of $0.27
per share. That’s right, NANO nearly doubled the earnings forecast.
As you might imagine, the stock soared on the news.
You can see from the chart above the stock gapped up huge on August 6th. And the shares continued surging, climbing to a high of $14.18
yesterday.
Congratulations to those of you who bought NANO when I first recommended
it.
You’ve had an extraordinary opportunity to capture stunning gains of
up to 77%... in just two months’ time!
And this is only the beginning…
Analysts have ratcheted revenue and earnings estimates significantly
higher. They’re now forecasting 2010 revenue of over $197 million and
earnings of $1.97 per share.
Based on these estimates,
NANO is still shockingly undervalued… even
after the huge jump in price.
At a recent price of $13.84, the shares are trading at just 7.2x the
2010 estimate. With projected five year earnings growth of 20%, the
stock’s PEG ratio is a paltry 0.36.
No doubt about it, NANO is poised to rocket higher!
The company’s in hyper-growth mode. The shares deserve a P/E at least
equal to the industry average of 13x… if not higher. However, using just
the industry average, the shares are worth $24.83.
That’s dynamite upside potential of 79%!
Take a closer look at NANO for your own account. You can buy it here or
take your chances of picking up shares on a pullback. Either way, you
won’t be sorry.
• Real Estate ETFs Moving Lower
Today’s Zillow Homeowner Confidence Survey shows homeowners are more
pessimistic about the values of their homes. A shocking 33% of them said
home values are headed lower in the next six months. As a result, real
estate ETFs are dropping today:
Direxion Daily Real Estate Bull 3X Shrs (DRN) is down over 7%
ProShares Ultra Real Estate (URE) is falling nearly 5%
iShares Dow Jones US Real Estate (IYR) is dropping 2.4%
Direxion Daily Real Estate Bear 3X Shrs (DRV) is
jumping 7.8%.
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