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Tri-Quint Semi Re-visited

|Includes: Qorvo, Inc (QRVO)

 

Back in January we wrote about TriQuint,

( An Opportunity to Rebuild Lost Capital, Jan. 26, 2009 )

suggesting it could be a place to park some capital while the market decided which direction it was heading.  Our own expectations were for the S&P, which was then at 836.57, to drop to something between 700 and 600, which it did, hitting a low of 676.53 on March 9.   At the same writing, TQNT was priced at $1.99, and we did not see much further downside risk there, tho it did hit a low of $1.94, also on March 9 - - - did somebody say something about the Ides of March?

 

We still see TriQuint Semi as an excellent long-term investment for the following reasons:

 

  • Cash Flow from Operations has remained positive over the last 2 quarters;
  • In spite of losing $15.6 mil in the 1st Qtr, they still were cash flow positive to the tune of $6.4 mil;
  • R and D spending has held steady over the last 4 quarters;
  • R and D has exceeded Selling, General, Admin Expenses over the last 4 quarters;
  • Selling, plus G & A, has declined by 20% Sept, 08 thru March, 09;
  • No Long-term Debt and no Short-term Debt = NO DEBT;
  • Excellent cash position:  Current ratio = 4.15 to 1;
  • Institutions baled, but Insiders bought (and with cash, not options);
  • Not overly dependent on Defense contracts - - only 14% of Sales Qtr ending Mar 31, 2009

 

 

Yes, they took a bath in the last quarter of 2008, as did the market in general. But they have tightened operations, taken control of their cash, and continue to carve out a niche for themselves inside a fast-growing sector of the communications industry.

 

<<<We are a supplier of high performance modules, components and foundry services for communications applications. Our focus is on the specialized expertise, materials and know-how of RF and other high and intermediate frequency applications. We enjoy diversity in our markets, applications, products, technology and customer base. Our products are designed on various wafer substrates, including compound semiconductor materials such as gallium arsenide (“GaAs”), gallium nitride on silicon carbide (“GaN”), and piezoelectric crystals such as LiTaO3. We use a variety of process technologies using GaAs substrates including heterojunction bipolar transistors (“HBT”) and pseudomorphic high electron mobility transistors (“pHEMT”). Using various other substrates we also manufacture surface acoustic wave (“SAW”) and bulk acoustic wave (“BAW”) products. Using these materials and our proprietary technology, we believe our products can offer key advantages such as steeper selectivity, lower distortion, higher power and power-added efficiency, reduced size and weight and more precise frequency control. For example, GaAs has inherent physical properties that allow its electrons to move up to five times faster than those of silicon. This higher electron mobility permits the manufacture of GaAs integrated circuits that operate at higher levels of performance than silicon devices. We believe that these advantages are a tremendous benefit to our customers, which include major communication companies worldwide.>>>

 

<<<Our business strategy is to provide our customers with high-performance, low-cost solutions to applications in the handset, networks and defense & aerospace markets. Our mission is, “Connecting the Digital World to the Global Network™,” and we accomplish this through a diversified product portfolio within the communications and defense & aerospace industries.>>>

 

 

With this being said, TQNT continues to be volatile, but still a worthwhile addition to a long-term growth portfolio.  (See charts below)  Current price is just slightly over Book Value of $3.486.

 

Chart 1

TQNT Volatility

 

 

 

 

Chart 2

TQNT vs SP 500 Yr-to-date

 

 

 

 

For those less inclined to make any long-term investment these days, but still seeking a way to “grow the portfolio”, we suggest using Tri-Quint’s volatility to swing or day-trade for those short term profits that can rebuild capital in shrunken portfolios.  TQNT has a beta of 2, strong daily volume, and a price of less than $5, all of which makes it an excellent trading vehicle.

(See www.hottingersignals.com )

Long TQNT