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Minyan Mailbag: Tech Stock Bottoms?


It's hard to call a true bottom but many of these names could be close.

Prof. Udall,

I enjoy reading your articles on Minyanville. I read a blog (Below NAV) which had quite a few tech stocks on it. I was wondering what your thoughts on MKS Instruments (MKSI), Silicon Image (SIMG), Rudolph Technologies (RTEC), Integrated Silicon (ISSI) and Eagle Test Systems (EGLT) were? Also, I used to work at Lam Research in the 90's and you could always count on semi-caps to rise/fall on buy/despair and sell/euphoria. Quite a few of the stocks are nearing bottoms with regards to P/S ratios which are a good barometer for the semicaps.

I saw that
you mentioned Kulicke & Soffa (KLIC) and Brooks Automation (BRKS). MKSI and RTEC were mentioned above as they are in the same space and it seems that Credence Systems (CMOS), Electroglas (EGLS), Asyst (ASYT) (also has insider buying) are nearing attractive buy points. I used to use KLIC as an early barometer for the semi-caps as their stock price tended to lead the rest of its brethren but not sure if that still holds true.

Happy Holidays!
- Minyan Andre

Minyan Andre,

As I said, literally hundreds of stocks currently are grossly oversold and pricing in something between a bad recession and total calamity. Of the stocks you mentioned I know MKSI and RTEC the best and they have exquisite balance sheets. If memory serves me right, many of the others don't look as strong on that basis or from a net cash position.

EGLT has a very nice balance and net cash position as well but it's not quite as liquid as many of the stocks I named. Interestingly, Nextest Systems (NEXT) got acquired recently with almost zero pin action in this space.

Again, it's hard to call a true bottom but many of these names could be close and if the big R ends up being a big scare then there could be solid upside among many of these names.

Currently though, the market is very illiquid and on a razor's edge. Defining your risk limits in size, allocation and balance sheet strength is something to be ever mindful of.

MKSI could very easily be on the list.

-Prof. Udall
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