technology opportunity -...

November 2015

TechnologyOpportunity

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In this Issue:

• Two new internal component recommendations

• The tech company behind Nike’s “Manufacturing Revolution”

• Earnings coverage on iRobot, Iridium, OPKO Health, and more

• A look at December and what’s coming up in 2016

Long time subscribers of Technology and Opportunity know we’re especially fond on the semiconductor and computer chip industry.

Among our 24 open positions, 12 qualify as chip stocks, meaning at least half our portfolio is dedicated to internal components of electronic devices. Further, within our closed portfolio, system on a chip (SoC) firm Ambarella is our biggest winner this year at a 111% gain.

To catch up any new subscribers, and to refresh the memory of those of you who have been with us even from the start, there are two main reasons we’ve bought so heavily into chip stocks over the last several months.

The first reason is that semiconductor stocks began taking on intense selling pressure in June,. The industry was running into headwinds at the back end of a pricing cycle and, in anticipation, the market began dumping stock.

The second reason we love chip stocks so much is because they qualify as picks and shovels

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of the ongoing tech gold rush. While countless OEMs across the tech sector battle for product dominance, the semiconductor industry doesn’t care so much about which products live or die – so long as the number of electronic devices continues to increase, these chip firms will reap the benefits.

As the foundation of virtually all modern electronics, we view computer chips as the best possible long-term positions in the entire technology industry. We recommend buying financially sound companies when they’re low, and to average down whenever the prices go lower.

While this strategy might seem a bit dry, it certainly works. We’re not afraid to take the occasional risk on compelling stories and technologies, but when it comes to building a foundation of wealth, we stick with what works, not necessarily with what sparkles.

That said, buying opportunities in the chip sector have become noticeably less and less prevalent since September. The market has recovered about half of its losses measuring from the latest bear-run, and it’s looking about time for us to slow down.

We’ve scoured this market from top to bottom and there are only one stock on our list still trading at an obvious discount. We’re going to recommend that company (plus one incredible value play) for this month’s issue, and then move on to new horizons in 2016.

Of course, we’ll see the occasional opportunity in chip stocks down the road and won’t hesitate to recommend the stocks we like, but our aggressive buying spree is officially coming to a close.

As for December, we’ll be focusing on trimming the fat from our portfolio to harvest tax losses for the year. Our closed portfolio remains up 77.02%, while the S&P is actually down in 2015. We can afford to close a few laggards while still beating the market by a solid margin.

New Recommendation: Flextronics International, Inc. (NASDAQ: FLEX)

Flextronics International (recently re-branded as Flex) provides customized electronics manufacturing services (EMS) to original equipment manufacturers (OEMs) in the electronics industry. The company also supports supply chain efforts, through services packaging, transportation, design, maintenance, repairs, etc.

Over the years, Flex has developed a long customer list of recognizable OEMs including Cisco

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Systems, Dell, Eastman Kodak Company, Ericsson Telephone Company, Hewlett-Packard, Kyocera, Microsoft, Motorola, Nortel Networks, Sony-Ericsson, and Xerox.

In total, Flex’s top 10 customers represent ~65% of the company’s net revenue. No single relationship will make or break Flex, which obviously limits our risk.

In addition to being well diversified on the customer front, Flex is also balanced across a number of electronics industries.

The company’s printed circuit boards (PCBs), for example, are used in cell phone designs, advanced routers, computers, and communication equipment. The company also provides and flexible PCBs and flexible circuit assemblies, hence the name “Flex”.

Flexibility Equals Versatility

Now, in conventional computer the demand for flexible circuit boards and assemblies is quite low. Smartphones don’t bend, and neither do televisions, PCs, or notebooks. But as computing applications have continued to expand, so has the demand for versatile electronic manufacturing.

In regards to flexible computing, the most obvious drivers for this trend are wearable products. Smart watch sales have exploded this year with the recent rise of fitness trackers and the Apple Watch, and judging by every industry report I’ve read, this is just the beginning.

NextMarket Insights, for instance, estimates that annual smartwatch sales will grow from 15 million units sold in 2015 to a staggering 373 million devices by 2020.

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But the demand for wearable, flexible computing will also extend well beyond the domain of basic wrist-wear. In fact, the concept of wearable, connected clothing is an idea some of the biggest apparel providers are already flirting with.

And who are they looking to? Well, Flex of course.

On October 14, Flex earned a groundbreaking partnership with Nike, Inc ((NYSE: NKE) for its electronics manufacturing services. Specifically, the company is adding electronic capabilities to its shoes, to bring customers “customized solutions and increased performance innovation.”

Nike’s press release called these efforts a “manufacturing revolution” for the company. It went on to add:

NIKE has been actively developing new technologies to enhance its manufacturing business model for the past few years with investments in automation, modernization, sustainability, and innovative new methods of manufacturing such as Flyknit. The partnership with Flex advances this work by bringing new capabilities and expertise outside of the existing footwear industry to create future systems for making product and to catalyze innovation across NIKE’s global supply chain.

Flex’s proven expertise in design, engineering and manufacturing in industries like automotive, medical and consumer electronics make them a perfect partner to help us revolutionize footwear manufacturing. Together, the future of personalized, rapidly-delivered product that is made more efficiently and with less waste is well underway.

NIKE is currently working with Flex at its Milpitas, Calif., innovation campus testing new methods of make, automation techniques and broad disruptive technologies. Flex will also be undertaking a product customization program near NIKE’s Memphis, Tenn., distribution center.

On the same day of this press release Nike also made another telling announcement: It announced a revenue target of $50 billion by the end of fiscal 2020 – up from $30 billion today. While Flex has not revealed exactly what its partnership with Nike will entail, it seems safe to say this deal is pretty huge.

In addition to Nike, the world’s largest sports apparel provider, runner-up Under Armour (NYSE: UA) is also banking on the wearable electronics trend.

Under Armour CEO Kevin Plank recently estimated that 50 billion retail items will have a connected chip within five years. His vision is for Under Armour to be on the forefront of the

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apparel side of that trend with connected apparel that can read your biometrics.

If we believe that our future is going to be defined by these hard pieces of glass or plastic that sit in our back pockets, you’re crazy. It is going to convert into apparel

In the last six months we more than doubled the size of our connected fitness team. Our brand’s trajectory in the digital space is unprecedented, and we’re building the most equipped and talented team to deliver products that will change lives everywhere through health and fitness technology. The talent we have secured and on-boarded is monumental, and our connected fitness team is poised to advance the entire landscape of the technology industry.

Obviously there’s no way to know for sure if Under-Armour will also turn to Flex for its personalized manufacturing services, but depending on the fitness company’s plans, it just might be the only option.

At the very least, we know Nike is betting big on a relationship with Flex, which is enough on its own to make our ears perk.

But that’s not all!

In addition to its obvious expertise in consumer and industrial electronics, Flex has also recently become a unique play on the renewable energy industry.

Over the past few years the Flex has been quietly been growing its solar business despite its long reputation providing services for consumer electronics OEMS. Flex produces solar panels for SunEdison, SunPower, and a number of other solar OEMS. In total, Flex has a manufacturing capacity of 1.7 GW, making it the largest solar panel maker outside of China with over 10 million panels shipped.

Building on these efforts, the firm announced in September it would be buying solar tracker company NEXTracker for $245 million. NEXTracker produces single-axis solar trackers, which work by angling solar panels toward the sun to generate more power.

Trackers have been around for years, but the concept has gained traction recently as companies like NEXTracker have found ways to eliminate the heavy infrastructure (plenty of steel, cement, labor, moving parts, etc.) that conventionally goes along with tracking.

Unlike traditional methods, the company’s Self-Powered Tracker only needs one motor per row of panels and substantially reduces wiring. With this technology NEXTracker has established itself as perhaps the most successful new tracking companies, recently having signed major

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contracts with developers including SunEdison and Blatter Energy for projects around the globe.

All said and done, the deal is expected to add add between $80 million and $120 million to Flex’s fourth quarter top line. Extending this run rate, the deal will have paid for itself by the end of 2016.

A Look at the Numbers

As for value, Flex is priced quite favorably compared to the majority of its internal component peers. Shares currently trade at a trailing earnings ratio of 12.66, and a forward ratio of just 9.54.

The company’s PEG also sits at 0.9, which by classic valuation measures indicates the stock is undervalued.

Flex’s cash position is also strong with $1.67 billion on hand. The company has $2.67 billion in debt, which is more than manageable when you consider the company’s recently obtained $600.8 million bottom line.

In 2013, Flex’s net income was just $277.1 million, so it’s easy to see just how quickly this company can grow its profit. At its current valuation, Flex looks is priced like a value stock, but the growth story in wearables and solar are enough to make us question the market’s current sentiment.

We’re buying Flextronics Inc. (NASDAQ: FLEX) under $12.00 a share. We’re putting a conservative one year price target of $14.50 in place.

New Recommendation: LG Display Co., Ltd (NYSE: LPL)

Sticking with the theme of flexible electronics, we have one more company to introduce this issue: LCD panel and consumer electronics firm LG Display.

Not to be confused with LG Electronics, LG Display is its own independent company with a niche focus on panel technology. It is one of two organic light emitting diode (OLED) companies trading on the public market, and it’s drastically undervalued right now.

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Beyond becoming the new standard for crystal clear resolution, the flexibility of OLED allows displays to wrap around the edges of devices, providing more surface area and multiple viewing angles.

OLED displays can be rolled up into a tube for easy transportation or worn like wristbands. The technology can create a more panoramic viewing experience on curved televisions and can even be used as virtual paper. These are just a few applications of bendable displays that are beginning to emerge, and flexibility isn’t the only thing OLED brings to the table.

In addition to flexibility, OLED displays offer a lightweight, power efficient, and durable alternative to conventional touch screens. This means thinner and lighter devices with larger screens and more battery life. And that’s not to mention OLED’s higher resolution rates, higher contrast, and faster response times.

According to IDTechEx, a research firm that’s been tracking OLED displays since 2001, the market for plastic and flexible AMOLED displays will rise to $16bn by 2020. For perspective, sales came in at less than $1.9 billion in 2015.

Further, the firm expects every market to have a positive CAGR, and you might be surprised to see that Mobile phones are far from the biggest growth opportunity.

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A Jack of All Trades

Oddly enough, LG Display, which currently controls 26.7% of the OLED market (more than any other firm) and is priced like a dog.

Here are a few mouth-watering value figures which lead us to believe this is one of the most mispriced stocks on the market:

• A trailing P/E of 5.5

• A PEG ration of 0.50

• Price to Sales ratio of 0.26

At the same time, LG Display last recorded 9.3% revenue growth, $2.2 billion in cash with a manageable $3.8 billion in debt, and a generous dividend yield of 2.28%.

When you put all the pieces of LG Display together, what you get is a rare stock that offers the three core aspects of any great equity investment: growth, value, and income. This one should be a no-brainer.

We’re buying LG Display Co (NYSE: LPL) under $10.00 a share. Our one year target is $16.50.

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Portfolio Snapshot and Updates

Ambarella Inc. (NASDAQ: AMBA)

Snapshot:

Ambarella develops low-power, high-definition video compression and image processing components. The company’s products are used in a variety of high-definition and ultra-high-definition cameras including: security IP-cameras, sports cameras, wearable cameras, aerial cameras, and automotive video came recorders. Ambarella’s compression chips are also used in broadcasting TV programs worldwide.

Updates:

Ambarella continues to experience selling pressure as the market worries about GoPro’s ability to grow its business. With ~40% of revenues coming from action cameras’ Amberalla’s stock has had a tendency to move ~40% in tandem with GoPro stock.

The market has really shown its disdain for GoPro since we recommended both stocks last issue. We never expect to catch the exact bottom, but this has admittedly moved down far more, and far quicker than our initial expectations.

That said, our bullish thesis on Ambarella remains the same, and running away with the rest of the herd is not something we’re going to do.

Ambarella will hold its third quarter conference call on Thursday, December 3 5:00 pm EST. Considering the market’s current sentiment towards the company, it’s going to be difficult, if not impossible to disappoint.

You can tune in to the call here: http://investor.ambarella.com/events.cfm

Analog Devices, Inc. (NASDAQ: ADI)

Snapshot:

Analog Devices is a semiconductor company specializing in data conversion and signal processing technology. The company develops analog-, mixed-, and digital-signal processing integrated circuits (ICs) used in industrial, automotive, consumer, and communication markets

http://investor.ambarella.com/events.cfm

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worldwide

Updates:

No big news from Analog this month, but the company will be reporting fourth quarter results on Tuesday, November, 24. We’re expecting strong earnings due to solid iPhone sales, so keep an eye out next month for our take on the call. Also, be sure to check out a webcast of the call for yourself here at: http://investor.analog.com/events.cfm

Applied Materials, Inc. (NASDAQ: AMAT)

Snapshot:

Applied Materials is an American manufacturer that supplies various equipment, services, and software to semiconductor fabricators — among other technology-based industries — to enable the manufacture of a wide range of electronic components.

Updates:

Applied Materials reported revenue of $2.37 billion this quarter, up 4.6% year over year. Revenue missed the average analyst estimate of of $2.39 billion by a hair, but the company did beat consensus on the bottom line.

All revenue segments for Applied Materials were up, with the exception of the Silicon Systems Group (semiconductor chip production). Despite the drop in this segment, the company is performing relatively well in the face of current macro headwinds. Applied’s memory revenues are outpacing the its peers and the company expects to gain market share in both DRAM and NAND.

During the conference call, management reflected the expectation of flat revenue growth for its semiconductor business in 2016. Regardless, AMAT remains fairly priced with a low-risk balance sheet and solid dividend yield. The company continues to be a long term hold and unique income generator within the tech industry.

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Atmel Corporation (NASDAQ: ATML)

Snapshot:

Atmel is a semiconductor manufacturer that makes microprocessors and microcontrollers used in machine-to-machine (M2M) communication. This expands from the connected home all the way to vehicles that communicate with each other.

The list of markets Atmel is currently going after includes industrial automation, energy management, smart homes, building automation, connected vehicles, mobile electronics, and wearables.

Updates:

It’s official. The Atmel Acquisition by Dialog Semiconductor has become a mess. Activist hedge fund Elliot has taken a 5% stake in Dialog and is now urging investors to vote against the Atmel deal, citing a lack of continuity between business models of the two companies.

At the same time, German and U.S. authorities have declared the acquisition as clear to proceed and this is likely what will occur. As owners of Atmel, we are hoping the see the acquisition get shot down as well, but not counting on it. The price was not in our favor and put as at a loss for a company we bought into as a long term growth story. The vote will take place during Dialog’s shareholder meeting on November 19.

CalAmp Corp. (NASDAQ: CAMP)

Snapshot:

CalAmp Corp. provides wireless communications solutions for various applications worldwide. It offers solutions for mobile resource management, machine-to-machine (M2M) communications, and other emerging markets that require connectivity. Its M2M and MRM solutions enable customers in energy, government, transportation, and automotive markets to optimize their operations by collecting, monitoring, and reporting business-critical data from remote and mobile assets.

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Updates:

No big news for CalAmp this month, minus the appointment of John Warwick as Senior VP of operations. Warwick previously held a similar position at Maxwell Technologies, Inc. (NASDAQ:MXLW).

The City of Oakland has also successfully deployed CalAmp 4G routers for its fire departments broadband solution, though the size and scope of the deal is not yet clear.

Corning Inc. (NYSE: GLW)

Snapshot:

Corning Inc. manufactures high-quality ceramic and glass material for consumer and industrial applications. The company is best known for its incredibly durable Gorilla Glass, commonly found in consumer devices such as smartphones and tablets.

Updates:

Following third quarter earnings, Corning has announced that it has entered into an accelerated share repurchase agreement with Morgan Stanley to repurchase $1.25 billion of common stock. The program expected to be completed in the first quarter of 2016 and will be completed with cash on hand.

In total, this puts Corning’s share repurchase program over $10 billion through 2019. As is usually the case, we welcome the return of capital to shareholders, and view the buyback as the right course of action for what’s currently a cash rich company.

Corning jointly plans to a) hike its dividend (a current yield of 2.7%) by at least 10% annually, and b) invest ~$10 billion in R&D through the same period.

Sales during the third quarter were negatively affected by slowing demand in Corning’s Display segment and the company expects LCD glass volumes to drop slightly in Q4. With the ongoing reduction in share count and Corning’s continued dominance in this market, these should be of minor concerns for long-term stock owners.

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Drone Aviation Holding Corp. Inc. (OTC: DRNE)

Snapshot:

Drone Aviation Holdings Corp., through its subsidiary, Lighter Than Air Systems Corp., provides aerial and land-based surveillance and communications solutions to government and commercial customers in the United States and Internationally. The company uses its patented tethered-drone technology to allow for sustained flight time.

Updates:

We recommended Drone Aviation Holding Corp. back in March and have neglected to cover the stock in recent issues out of pure error. This was pointed out to us through a recent subscriber email, so a big thanks, and jointly an apology, to those of you who have been missing our coverage on the company.

My inclination is that not many of you took our advice on Drone Aviation eight months ago, due to the fact it’s taken so long for anyone to notice our neglect of coverage. Quite frankly that would be a good thing, as Drone Aviation is our second worst performing stock of the year by a wide margin.

It seems we jumped the gun on Drone Aviation as the company has taken longer than expected to materialize our expectations. We got caught on the top of a hype cycle and it cut our investment by 70%.

If you’re going to be an aggressive investor, you’re bound to get burned now an again and this just happens to be one of those times. Next month we’re going to make a decision on what to do with Drone Aviation. The company has a few compelling catalysts on the horizon including a NASDAQ uplisting and increased production of its WATT tethered-drone, so we’re hesitant to push the sell button just yet.

Expect more detail on that next issue.

Fabrinet (NYSE: FN)

Fabrinet provides foundry services to optics OEMs. In short, the company has high-level expertise at putting together optical components for other optoelectronic companies using its precision process technologies. The company’s technologies and systems include materials and process analysis, optical and electro-mechanical assembly, fiber handling and alignment,

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packaging, and various testing services.

Updates:

No company news or updates this issue.

Fanuc Corporation (OTC: FANUY)

Snapshot:

Fanuc Corporation is a leader in industrial robotics, with a product lineup that includes factory automation systems, laser cutting, motion control, and compact motors. Fanuc serves a wide range of industries including aerospace, agriculture, construction, metal forming, and automotive manufacturing.

Updates:


GoPro, Inc. (NASDAQ: GPRO)

Snapshot:

GoPro, Inc. manufacturers a line of standalone high-definition action cameras, with its flagship ‘Hero’ product line. The company also produces various mounting accessories for its cameras and software applications for video editing and social media.

Updates:

It’s been an ugly year for IPOs with Fitbit, Twitter, and GoPro being the most obvious candidates to take the fall. We bought into GoPro last month looking for a bottom, but we haven’t found it yet. The market has developed an obvious disdain for the company right now, but it’s still our thesis that the bears are going to fall into hibernation this winter.

At a P/E of just 17.36, GoPro is by no means an overly hyped stock anymore. Growth remains strong, even if not as powerful as it was last holiday season. Jointly the company’s future in virtual reality and social media has become increasingly compelling. Don’t let the share price scare you yet on this one.

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Intel Corporation (NASDAQ: INTC)

Snapshot:

Intel Corporation designs, manufactures, and sells integrated digital technology platforms worldwide. It is the single-largest provider of semiconductors by revenue. It operates through PC Client Group, Data Center Group, Other Intel Architecture, Software and Services, and “All Other” segments.

Updates:

No official news for Intel this issue, but I urge anyone who owns, or is considering owning stock in the company to check out the following Business Journal article and video highlighting Intel’s connected home showcase. It should give you an idea of just how many devices the company’s semiconductors will eventually find their way into: Click here.

International Business Machines. (NYSE: IBM)

Snapshot:

IBM is an American multinational technology and consulting corporation, with headquarters in Armonk, New York. IBM manufactures and markets computer hardware, middleware, and software. The company provides infrastructure, hosting, and consulting services in areas ranging from mainframe computers to nanotechnology.

Updates:


InTEST Corp. (NYSE: INTT)

Snapshot:

INTT is a semiconductor capital equipment company, which means it manufactures machines used in the production of electronic components.

The semiconductor capital equipment industry can be divided into two classes: front-end and back-end. The front-end involves silicon wafer and computer chip fabrication. The back-end

http://www.bizjournals.com/portland/blog/techflash/2015/11/intel-made-a-tiny-house-to-show-off-the-internet.html?ana=yahoo

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involves assembly, packaging, and testing.

InTEST works on the back-end of this cycle, providing automatic test equipment (ATE) used by semiconductor manufacturers to test their integrated circuits and wafer products.

Updates:

InTEST recorded third quarter results this month. Here are a few highlights from the 10-Q and call:

• $8.4 million, compared with 2014 bookings of $10.6 million

• 40%, of third quarter bookings derived from non-semiconductor test.

• Net revenues were $9.2 million, compared with 2014 net revenues of $10.8 million

• 34% of net revenues were derived from non-semiconductor test.

• Third quarter gross margin was $4.3 million, or 47%. This compares with 2014 gross margin of of 48%.

• Cash and cash equivalents were $25.4 million at September 30, 2015, up 8% from the most recent quarter

Despite what wasn’t a stellar quarter for InTEST, net revenues and net earnings were within guidance and the company delivered its 24th consecutive quarter of profitability. We’ve long said that our number one reason for owning InTEST is its ability to maintain robust margins, even in challenging macro environments like that the entire semiconductor industry is facing right now.

The company has jointly announced a share repurchase program, which is a trend we’re seeing among electronics component providers. While growth is expected the be slow, many firms are aiming to increase shareholder value by returning capital and lowering the amount of available shares.

InTEST remains a hold so long as management maintains its history of profitability.

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Iridium Communications Inc. (NASDAQ: IRDM)

Snapshot:

Iridium is a global communications provider. The company offers the world’s most extensive voice and data service through a fleet of next-generation low-orbit satellites. It is currently launching the NEXT satellite constellation to serve the machine-to-machine (m2m) communications market.

Updates:

Iridium posted notable earnings late last month, beating both top and bottom lines and sending shares up 7.7% in a single trading session. Here are the main takeaways:

• Earnings at $63.8M, up 9% year over year-over-year

• Operating margins at 60%

• Service revenue at $81.2 million

• Equipment, Engineering, and Support revenue 24.8 million

• Total billable subscribers were 781,000, up 7.6% year over year

• Re-affirmed full-year outlook for total service revenue growth of 1-3% and operational EBITDA of about $230million.

• Expected total service revenue between $420-$465 million for 2018

Commercial service remained the largest vertical for Iridium with a 60% share. The company’s long term outlook for its service unit remains incredibly strong and it has the subscriber growth and base to back it up.

Additionally. Iridium has announced yet another strategic partnership for use of its NEXT constellation which is currently being deployed. The deal is with maritime and communications equipment firm Furuno Electric, which will be developing a new part of its portfolio for satellite communications service with Iridium.

Here’s the bread and butter of the press release:

The Iridium global mobile satellite network delivers reliable communications, anywhere on the planeteven polar regionsand its unique mesh architecture of 66 cross-linked satellites is less susceptible to inclement weather or interference that may impact the performance of other systems. This reliable, truly global coverage

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is necessary for critical maritime communications.

Barring any roadblocks in the installation of NEXT, Iridium will remain a hold through 2016

iRobot Corporation (NASDAQ: IRBT)

Snapshot:

iRobot is an American robotics company that serves the consumer, medical, enterprise, and military industries. iRobot’s product functions range from home cleaning to telecommunication to various military operations. iRobot currently generates the vast majority of its revenue from its Home Robotics division.

Updates:

iRobot reported earnings in line with expectations this month, but the big news was a downward revision of full year revenue expectations to an range of $610 million to $615 million citing caution in international markets.

In the U.S., growth for iRobot was strong, though, and the company expressed its belief that the international headwinds are temporary. iRobot also reiterated a number of its accomplishments this quarter, with CEO Colin Angle pointing out:

During Q3, we successfully launched our first connected Roomba, the 980, on our web site and have subsequently begun shipping it into U.S. retail and overseas markets. We received and fulfilled multiple defense and security orders and announced two significant new IDIQ contracts, and we sold six Ava 500 robots and 13 RP-VITA robots.

In total, domestic revenue increased by 23% year over year which is enough to brush away concerns that the U.S. market has become saturated. The holiday season is right around the corner, and we expect to see another strong quarter in domestic sales to close out the year.

Micron Technology Inc. (NASDAQ: MU)

Snapshot:

Micron is best known for producing many forms of semiconductor devices. This includes DRAM, SDRAM, flash memory, and SSDs. Its consumer products are marketed under the

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brands Crucial Technology and Lexar. The company was named one of the Thomson Reuters Top 100 Global Innovators in 2012 and 2013. It is ranked among the top-five semiconductor-producing companies in the world.

Updates:

Micron rallied leading up to our prior issue after crushing analyst expectations, but the pessimism surrounding the stock hasn’t gone away. 2016 is going to be a rough year for Micron, and the memory sector in general, but the value on share price to too obvious to ignore. Micron remains one of our must own, long term stock stories.

NXP Semiconductors N.V. (NASDAQ: NXPI)

Snapshot:

NXP specializes in near-field communication (NFC) technology. NFC allows for wireless communication between devices at very short distances with increased security. The technology is being used in public transport, event ticketing, home health care, patient identification, interactive museum exhibits, contactless credit cards, and as hotel keys, just to name a few markets.

Updates:

NXP reported a mixed third quarter, and softened forward guidance that’s taken a 20% chunk out of our position.

After several consecutive quarters of strong growth, and better-than-expected guidance, the reaction to the miss does seem a but overdone, but we’re not quite ready to double down and we definitely don’t plan to sell.

Our long term outlook on NXP remains strong, but there are some company is running into a number of inventory concerns that simply don’t bode well for the next quarter. Our recommendation is to hold, with the intent of averaging down if the opportunity presents itself.

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Oceaneering International, Inc. (NYSE: OII)

Snapshot:

Oceaneering International provides engineering services and hardware primarily to customers operating in marine environments. The company’s services are marketed to oil and gas companies as well as the aerospace and construction industries. The company receives the bulk of its revenue from ROVs and Subsea Products.

Updates:

Oceaneering reported third quarter earnings late last month. The main highlights include $743.6 million in revenue and, net income of $68.5 million, and the declaration of a 2.44% quarterly dividend.

The company also lowered its 2015 EPS guidance to a range of $2.60 to $2.66, from $2.70 to $2.90, down 6% at the midpoints. Oddly enough, Oceaneering stock has rallied since the call, which tells us the market was already discounting the company’s prior guidance figures.

Operating margin shrunk yo 26%, compared to 31% a year prior, but still remain strong. Oceaneering is well-positioned to handle what’s turned into a brutal oil market. Prices will rebound at some point, and when they do the growth will kick right back up.

OPKO Health, Inc. (NYSE: OPK)

Snapshot:

OPKO Health is a mid-stage biotechnology development and medical diagnostics company. OPK has a deep drug candidate pipeline spanning from kidney disease to cancer treatments. It also provides a revolutionary diagnostic test known as the 4Kscore, used in prostate cancer screening. The company’s proprietary diagnostic technologies allow doctors to keep blood-based tests in house rather than outsourcing to outside laboratories.

Updates:

Last month this is what we had to say about OPK:

“Shares have taken a beating in recent months, but don’t let the price action fool you. With Frost still buying and a major product launch on the horizon, there’s not much reason to worry.”

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This month, we get to tell you that OPK increased Q3 revenues by a whopping 622%, sending the stock into a new rally.

Here are the highlights:

• Revenues: $143M (up 622.2%);

• Costs and Expenses: $151.3M (up 122.5%);

• Operating Loss: ($8.3M) (up 82.8%);

• Net Income: $128.2M (up 363.2%);

• EPS: $0.25 (up 327.3%);

• Quick Assets: $212.1M (up 118.9%)

There’s really not much else to be said after taking a look at these figures. With the launch of Rayladee around the corner and such drastic improvement in financial performance, OPK’s future is looking incredibly bright. We’ve remained very patient on this one, and it’s now starting to pay off.

Rubicon Technology, Inc. (NASDAQ: RBCN)

Snapshot:

Rubicon is an electronic materials provider that develops, manufactures, and sells monocrystalline sapphire and other crystalline products for light-emitting diodes (LEDs), radio frequency-integrated circuits (RFICs), optoelectronics, and other optical applications. The company’s products include two- to six-inch sapphire cores for use in LED applications and into components, such as lens covers for mobile devices.

Updates:

No coverage for Rubicon this month, but keep an eye out next issue as the company is a primary candidate for our annual tax loss harvest.

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Science Applications International Corporation (NYSE: SAIC)

Snapshot:

SAIC helps governments integrate technologies by providing full life-cycle services. This includes but is not limited to hardware engineering, program management, training and simulation, cloud computing services, software design, and logistics/supply chain support.

At its core, SAIC is a company that leases talent. The company has ~13,000 employees, 68% of whom are deployed to customer sites. Its value rests primarily in this talent base and the relationships it’s built with clients over the years.

Updates:


Synaptics Inc. (NASDAQ: SYNA)

Snapshot:

Synaptics designs and manufactures human interface solutions for mobile computing, communication, and entertainment devices. Most notably, the company creates chips used for processing touchscreen movements in mobile devices. The company’s clients include Google (NASDAQ: GOOG), Amazon (NASDAQ: AMZN), Blackberry (NASDAQ: BBRY), Nokia (NYSE: NOK), Samsung (KSE: 005930), HTC, LG, and Sony.

Updates:

Synaptics announced its quarterly earnings results shortly following last month’s issue. The company reported $1.49 EPS for the quarter, beating the analyst consensus estimate by $0.03.

The company had a small miss on revenue of $470.00 million for the quarter, compared to analysts expectations of $472.43 million. Revenue was up 66.2% compared to the same quarter last year.

The big news for Synaptics this month, though , was not earnings but a big win for the iPhone 6. Digitimes reports Apple has placed orders with Synaptics its for LCD driver integrated circuits that will go into 2016 iPhones.

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TCP International Holdings Ltd. (NYSE: TCPI)

Snapshot:

TCP sells LED lighting solutions for business and consumer markets. This includes Internet-connected lighting solutions that can be controlled straight from a smartphone. The value proposition for TCP and its technology is energy efficiency and savings through automation. The company should also benefit from its early positioning in the growing Internet of Things industry.

Updates:

No coverage for TCP this month, but keep an eye out next issue as the company is a primary candidate for our annual tax loss harvest.

Vishay Intertechnology Inc. (NYSE: VSH)

Snapshot:

Vishay Intertechnology is the world’s number-one manufacturer of infrared optoelectronic components. The company offers a broad range of optoelectronic components (both visual and non-visual), including optocouplers, optical sensors, transceivers, LCD displays, infrared emitters, etc. Vishay targets a wide customer base across various industries including the automotive, aerospace, consumer, industrial robotics, telecommunications, renewable energy, medical, and computer hardware markets.

Updates:

Vishay experienced a small hit on its third quarters top line due to the temporary shutdown of its manufacturing facility following the Tianjin explosion. Here are the key takeaways from the 10-Q and call:

• Operating margin of 4.3%, or adjusted operating margin of 7.3%

• Revenues of $560.7 million

• Revenues lost due to Tianjin facility temporary shut-down approximately $20 million

• Book-to-bill above 1

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• Guidance for fourth quarter revenues of $540 - $580 million and gross margins of 21% to 23%

Despite falling behind on revenue, the company managed to beat the consensus earnings estimate by 6 cents. Vishay has also declared a $0.06 quarterly dividend (a 2.08% yield), which was in line with previous expectations.

Technology and Opportunity Copyright © 2015, 111 Market Place, Suite 720, Baltimore, MD 21202. All rights reserved. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein. Technology and Opportunity does not provide individual investment

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