Apologies for a Christmas reference when we are still in October. However, it seemed appropriate to highlight a cheap cash rich tech stock named Rudolph Technologies (RTEC). Not only does it have a fortress balance sheet but it is posting double digit revenue increases and selling at a low valuation.
Rudolph Technologies manufactures process control defect inspection, metrology, and process control software systems used by microelectronics device manufacturers.
7 reasons to buy RTEC at under $10 a share:
- The company has over $120mm in net cash on its balance sheet (approximately 40% of its current market capitalization)
- The median price target of the five analysts that cover the stock is $14 a share. Price targets range from $12 to $17 a share. Credit Suisse has an "outperform" rating and a $13.50 a share price target on RTEC.
- The company has doubled its operating cash flow over the past two years and the stock is priced at roughly nine times OCF.
- RTEC is selling at less than 10 times forward earnings, a deep discount to its five year average (24.6).
- The company is tracking to a 17% revenue increase in FY2012 and analysts expect just under a 10% sales increase in FY2013.
- Rudolph Technologies has crushed earnings estimates four of the last six quarters. The average beat over consensus during that time frame averaged over 30%.
- The stock has solid medium-term technical support at the $8.50 level (see chart below).
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in RTEC over the next 72 hours.