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Tom Armistead
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I'm a well-informed retail investor and post on SA in order to expose my thought process to critical examination and comment from readers. It makes me a better investor. I'm particularly proud of bullish macro articles posted in 2009 and later, in which I presented ideas that encouraged me to... More
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  • TTM Technologies: Close to Target, Taking Profits 6 comments
    Aug 5, 2009 12:21 PM | about stocks: TTMI
    I wrote TTM Technologies (NASDAQ:TTMI) up favorably seekingalpha.com/article/111380-ttm-technologies-an-electronic-manufacturing-services-bargain on Dec 18th at 5.36.  The stock traded over 11.00 yesterday and I will claim credit for a doubler here. 

    My target price at the time was 12.00.  At the bottom the stock was trading under 5.00 and I was buying daily in mid March at those prices.  Since then I have been taking profits on a pretty steady basis, from April on to yesterday I have been selling, but I still have a meaningful position.  Until recently that was more about mainataining an adequate cash reserve than because I had any reservations about the stock, which is a favorite. 

    Earnings are due any day now.  In the meantime, I have been looking at the possibility that TTMI whcih closed a facility in January and took restructuring charges may be able to leverage the expense reduction in the future if revenues return to what they were before the troubles.  Before the eonomy tanked I thought I saw 20 for this stock.  Then I saw 12.  If the economy makes a decent recovery I may be able to see 20 again, just like the professional analysts, when things look better I change my target.   

    In the meantime I have been taking profits because this is pretty close to my target and the annualized returns holding it from here would not be attractive compared to investing in the S&P 500 index, not to mention with things up as quickly as they have been I have been selling on a systematic basis every time the S&P goes up anouther 1%, raising cash in prepartion for a correction, if we get one.
    Stocks: TTMI
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Comments (6)
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  • Wide Moat Investing
    , contributor
    Comments (69) | Send Message
     
    Looks like solid outperformance--well done.

     

    You bought at a P/E of 4.7, and it doubles. What do you estimate its returns will be going forward, if you find the s&p a better deal? S&P looks to me to return about 6-9% per year from here, assuming low interest rates.
    5 Aug 2009, 01:17 PM Reply Like
  • Respirate
    , contributor
    Comments (155) | Send Message
     
    Good call, Tom. You beat me in handily, as my low entry was $6.89.

     

    I really like TTMI and the way they run their business. The stock is very volatile, making it a good combination to buy very low and ride it up.

     

    Where we differ is in expectations -- I look for it to rise another 50% in the coming 6-12 months. It will undoubtedly go lower in the meantime, but as a good company is safe to hold through the drop.

     

    -- R
    5 Aug 2009, 01:28 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5219) | Send Message
     
    Author’s reply » Wide Moat, right now I am working with the guess that the S&P can make 1,200 by 12/31/2010, yielding about 12.5% annualized, and quite a bit of volatility with that.

     

    So staying with my 12 target for TTMI and guessing that would happen by the same date it would return 6% annualized. I am indecisive about raising my target.

     

    Respirate, I have been fiddling with margins and revenue - if they are able to keep margins where their last guidance implies, possible they could earn 1.16 if revenues revert to historical levels, that X 17 would give me 20. Because they have two segments with different margins it's a guessing game depending on mix of business. Anyway, I can see why you are expecting more from the stock.

     

    This is my third time around with this company, going back to 2001, I have done OK buying low but usually sell a little early. Hopefully when we get earnings, outlook and guidance things will be clearer. As you say TTMI is volatile but well run, always worth following...

     

    Tom

     

    5 Aug 2009, 02:41 PM Reply Like
  • Wisdom vs. Information
    , contributor
    Comments (449) | Send Message
     
    TTMI's TTM OCF went from $1.52 to $1.98, surely it will go up to at least $15, if not $17. what do you think Tom?
    8 Aug 2009, 10:33 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5219) | Send Message
     
    Author’s reply » Good question. I went over the cash flows, there is one large entry from impairments (hopefully a one shot deal), so the size of OCF otherwise would not be that impressive. The change for the quarter is impressive but with revenue down this is coming out of shrinking the balance sheet.

     

    It gets to be about looking past the impairments, what I saw was closing a facility and reducing fixed costs, so that in the event revenue recovers to former levels EPS could be impressive. If in 2010 revenue and EPS were both increasing you would get something like the 15-17 you suggest, maybe more.

     

    The most recent guidance calls for revenue of 134-142 million which is down from 144 in Q2 09. WIth future results very much dependent on increasing revenues and the most recent revenue guidance down sequentially the immediate future does not look good.

     

    I sold off all but 100 shares on Friday, I plan to follow the quarterly guidance and if they start guding revenue higher I would look into re-entering the position.

     

    On Aug 08 10:33 PM Wisdom vs. Information wrote:

     

    > TTMI's TTM OCF went from $1.52 to $1.98, surely it will go up to
    > at least $15, if not $17. what do you think Tom?
    9 Aug 2009, 07:17 AM Reply Like
  • Wisdom vs. Information
    , contributor
    Comments (449) | Send Message
     
    ouch, without that 130M the TTM OCF goes negative, good eyes, thank you; OCF for H1 is already 42.9M, minus about 15M one-time type accounting, so that suggests upside ~$13.5 somtime in the next four Q
    9 Aug 2009, 02:35 PM Reply Like
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