We screened for companies with reasonable amounts of debt on their balance sheets and have had significant revenue growth. Here is what we found:
Hecla Mining (HL) is the largest silver producer in the U.S., and has been mining for almost 120 years. Revenues grew by 34% in 2010 to a record of $419 million, after increasing by 62.23% in 2009. Gross margin also improved to 46.52% from 32.34%. The company has no debt on its books, and is the lowest-cost silver producer in North America. However, GAAP EPS did decline to $0.13 from $0.23.
In 2011, the Street expects non-GAAP EPS to be between $0.35 and $0.58. In 2010, non-GAAP EPS was $0.31. The next earnings release is on April 25, with analysts forecasting between $0.10 and $0.16. In comparison, Q1 2010 produced $0.07 for non-GAAP EPS.
In 2010, the company produced 10.6 million ounces of silver (-0.4%) alongside a 45% increase in the price of silver. The company projects to produce 9 to 10 million ounces of silver in 2011. However, as global economic conditions continue to get better, there is plenty of revenue growth opportunity for Hecla Mining. To add some perspective, the silver demand comes from the following segments: industrial (46%), photography (8%), jewelry and silverware (23%), coins (10%), and investment (13%).
HL shares trade 5.8 times sales per share, which is moderately high since 2001. This may reflect that investors are keenly cautiously optimistic on a global economic expansion. Year-to-date, HL shares are down 19.3%.
Silvercorp Metals (SVM) is up 13.5%, year-to-date. The company is engaged in the acquisition, exploration, development and mining of high-grade silver-related mineral properties in China and Canada. Silvercorp is the largest primary silver producer in China through the operation of the four silver-lead-zinc mines at the Ying Mining Camp in the Henan Province of China. The company has applied for a mining permit for its GC silver-lead-zinc mine in the Guangdong Province and recently announced the acquisition of a 70% interest in the BYP gold-lead-zinc mine in Hunan province. In Canada, Silvercorp is in preparation of applying for a Small Mine Permit for the Silvertip high grade silver-lead-zinc mine project in northern British Columbia to provide a further platform for growth and geographic diversification.
Revenues are +16.5% in the company’s 9M11 compared to 9M10 or $124.9 million versus $107.2 million. Gross margin in 9M11 was a solid 74.57%. It was 73.97% in FY 2010 through March. GAAP EPS went from - $0.11 in FY 2009 ending in March to $0.24 in FY 2010.
The first nine months of FY 2011 produced a non-GAAP EPS of $0.30 versus 9M10’s $0.18. The next earnings release is on May 9, with three analysts expecting between $0.11 and $0.15. In comparison, Q4 2010 produced $0.06. In FY 2012, the company expects to produce 5.6 million ounces of silver. Moreover, SVM shares trade with a P/S multiple of 15.8. Investors have big plans for this one. The company also has no long term debt.
Advantest (ATE) just signed a definitive agreement to acquire Verigy (VRGY) for 90.9 billion yen ($1.1 billion). Verigy grew revenues by 66.87% to $539 million in FY 2010 through October. Advantest operates in three segments: Semiconductor and component test system segment; mechatronics system segment, focusing on peripheral devices including test handlers and device interfaces, and services, support and others segment.
In the first nine months of FY 2011, sales increased by 144.9% to 77.5 billion yen ($927.18 million) compared to the same period in FY 2010. Profit margins have also held steady in the upper 40s thus far in FY 2011. Moreover, the company posted positive earnings for the past four quarters, after being in the red from Q4 2008 to Q3 2010. We emphasize that these results were achieved in a tough business environment.
In FY 2011, the company expects 100 billion yen in sales, which would be an increase of 87.9%. The company also has little to no debt on its books. The next earnings release should occur in the last week of April. Year-to-date, ATE shares are down 20.3%. Read more about Verigy here.
Chimera Investment (CIM) is currently yielding 15.8%. The next dividend payment of $0.14 is on April 28 for investors of record at March 31.
The company grew profits by 64.47% to $533 million in FY 2010 through October, after posting a return to positive territory in FY 2009 by drawing in $324 million in profits from - $120 million in FY 2008. For Q1 2011, the company made $156.22 million in profits. In comparison, Q1 2010 resulted in $95.46 million in profits.
For 2011, the Street expects non-GAAP EPS to be between $0.53 and $0.70. In 2010, non-GAAP EPS was $0.66. The next earnings release is on May 2, with analysts expecting between $0.13 and $0.17. In comparison, Q1 2010 produced $0.19. Trading in the low 4s, it beat earnings estimates for six of the last nine quarters. This play is not purely for capital appreciation, but it is for the dividend payments. We consider this company to have a lot of potential. See other examples.
The company invests in U.S. government and private residential mortgage-backed securities representing interests in obligations backed by pools of mortgage loans. It also has a debt to equity ratio of 1.10.
MEMC Electronic Materials (WFR) is a leader in semiconductor and solar technology. MEMC has been a pioneer in the design and development of silicon wafer technologies for over 50 years. With R&D and manufacturing facilities in the U.S., Europe and Asia, MEMC enables the next generation of high performance semiconductor devices and solar cells. Through its SunEdison subsidiary, MEMC is also a developer of solar power projects and a worldwide leader in solar energy services.
In 2010, revenues shot up by 92.44% to $2.23 billion, after dropping by 41.95%. GAAP EPS turned positive to $0.15 from - $0.31. In 2008, it was $1.69. Gross margins have been thin due to rapid rises in the cost of goods sold.
In 2011, the Street expects non-GAAP EPS to be between $0.94 and $1.54. In 2010, non-GAAP EPS was $0.15. The next earnings release is on April 15, with analysts expecting between $0.05 and $0.23. In comparison, Q1 2010 produced - $0.04 for non-GAAP EPS.
WFR shares trade with a price to sales multiple of 1.3. From 2003 to 2007, the multiples were 2.7, 2.8, 4.5, 5.8, and 10.7, respectively. Because the company also has a debt to equity ratio of 0.01, these shares are poised for a significant upswing. The company does have exposure to Japan, but also has a network of 12 manufacturing facilities around the world. The Utsunomiya facility in Japan is one of eight that manufactures semiconductor wafers, and one of three that engages in the slicing and polishing ("wafering") of 300 millimeter wafers for the semiconductor industry. The facility also engages in wafering a small volume of 200 millimeter wafers. The facility does not grow the semiconductor crystals for which it provides wafering. Year-to-date, WFR shares are up 15.1%. Four of these ETFs have significant stakes in WFR.
ReneSola (SOL) grew revenues by 136.2% to $1.2 billion, and profits soared to $169 million in 2010. GAAP EPS came in at $1.94, after posting -$0.98 in 2009. Also, the EBT margin was a healthy 18.99%.
In 2011, analysts expect non-GAAP EPS to be between $1.30 and $2.71. In 2010, non-GAAP EPS was $1.93. The next earnings release is on May 9, with the Street expecting between $0.52 and $0.64. In comparison, Q1 2010 produced $0.14.
The company’s price to sales per share ratio is 0.8, whereas competitors have much higher multiples: First Solar (FSLR) with 5.4, Trina Solar (TSL) with 1.7, LDK Solar (LDK) with 1.1, and Yingli Green Energy (YGE) with 1.4. ReneSola also has a debt to equity ratio of 0.37.
The company expects to ship between 400-450 megawatts to new and existing customers in 2011. In comparison, the company shipped 291.1 megawatts in 2010. Year-to-date, SOL shares are +20.7%. We also wrote about ReneSola in “9 Great Stocks Trading Under $10.”
JDS Uniphase (JDSU) is a provider of communications test and measurement solutions and optical products for telecommunications service providers, wireless operators, cable operators and network equipment manufacturers. The company is also a provider of communications test and measurement solutions and optical products for telecommunications service providers, wireless operators, cable operators, and network equipment manufacturers. In FY 2010 through June, the company posted a GAAP EPS of - $0.17. In FY 2009 and FY 2008, those figures were - $4.02 and - $0.10, respectively. Gross margin has steadily risen from 28.27% in FY 2006 to 40.11% in FY 2010 and 42.38% over the trailing 12 months.
Non-GAAP EPS in FY 2010 was $0.41. In FY 2011, analysts expect non-GAAP EPS to be between $0.87 and $1.00. Q1 and Q2 2011 produced non-GAAP EPS of $0.20 and $0.29, respectively. In comparison, it was $0.04 and $0.12 in Q1 and Q2 2010, respectively. For Q3 2011, assuming the company makes $440 million in revenues with an 11% operating margin, a conservative non-GAAP EPS estimate would be $0.175. Juxtapose that with $0.10 for Q3 2010. Analysts expect between $0.17 and $0.24 in Q3 2011. Earnings results are released on May 2.
JDSU trades with a price to sales multiple of 2.9. From 2005 to 2007, the multiples were 3.8, 2.6, and 2.0, respectively. The company also has a debt to equity ratio of 0.29. Year-to-date, JDSU shares are +43.9%.
Applied Materials (AMAT) is the global leader in providing innovative equipment, services and software to enable the manufacture of advanced semiconductor, flat panel display and solar photovoltaic products. In FY 2010 through October, GAAP EPS returned to green to $0.70 from -$0.23. In FY 2008, it was $0.70. Revenues grew by 90.46% to $9.54 billion, after declining by 38.33%. EBT margin was 14.53% in FY 2010, but was in the 20’s from FY 2004 to FY 2007.Gross margin also improved to 38.91% from 28.54%.
In FY 2011, the Street expects non-GAAP EPS to be between $1.29 and $1.61, and the company expects $1.50+. In 2010, non-GAAP EPS was $1.03. Q1 2011 already produced $0.36 (versus $0.13 in Q1 2010). The next earnings release is on May 24. Analysts expect non-GAAP EPS to be between $0.35 and $0.39. In comparison, Q2 2010 produced $0.22.
AMAT shares trade with a price to sales multiple of 2.0. From 2001 to 2008, those multiples were 4.6, 4.4, 8.3, 3.7, 4.3, 3.1, 2.6, and 1.7, respectively. Due to the mixed bag of revenue and EPS growth, two more consistent quarters of revenue and non-GAAP EPS growth should give enough merit for the multiple to be near 2.5. The company also has a debt to equity ratio of 0.03. Year-to-date, AMAT shares are up by 11.1%.