Tweet
One of my favorite characters of all time was Quint, from the movies Jaws. He was a real tough guy and full of confidence:
Quint: Y'all know me. Know how I earn a livin'. I'll catch this bird for you, but it ain't gonna be easy. Bad fish. Not like going down the pond chasin' bluegills and tommycods. This shark, swallow you whole. Little shakin', little tenderizin', an' down you go. And we gotta do it quick, that'll bring back your tourists, put all your businesses on a payin' basis. But it's not gonna be pleasant. I value my neck a lot more than three thousand bucks, chief. I'll find him for three, but I'll catch him, and kill him, for ten. But you've gotta make up your minds. If you want to stay alive, then ante up. If you want to play it cheap, be on welfare the whole winter. I don't want no volunteers, I don't want no mates, there's just too many captains on this island. Ten thousand dollars for me by myself. For that you get the head, the tail, the whole damn thing.
Now he did actually end up in the shark’s belly. But never mind all that. In honor of Quint, I make my first stock pick of 2011. Yesterday I bought Triquint (TQNT) at 14.27. I will sell it in 4 to 6 weeks at 16.45. Here’s why I like Triquint:
In the past year, the stock has hit a 52-week low of $5.77 and 52-week high of $14.31. Triquint Semiconductor stock has been showing support around $13.63 and broke through resistance in the $14.09 range. In the last five trading sessions, the 50-day MA has climbed 3.12% while the 200-day MA has risen 1.82%. The stock is currently 11.29% above its 20-day MA, 16.76% above its 50-day MA, and 60.5% above its 200-day MA.
There’s a whole lot of McLovin in this chart, and the 100% run-up since September 2010 is not a coincidence. This company makes products that are now in the sweetest of sweet spots. Though TriQuint won't talk about Apple, technologists have found TriQuint components manufactured in Hillsboro in 2008's iPhone 3G and last year's iPhone 3GS. The Hillsboro, Ore.-based firm has nonetheless confirmed that Amazon uses its technology within a version of its popular Kindle e-reader.
TriQuint products help reduce the cost and increase the performance of connected mobile devices and the networks that deliver critical voice, data and video communications. With the industry’s broadest technology portfolio, recognized R&D leadership, and expertise in high-volume manufacturing, TriQuint creates standard and custom products using gallium arsenide (GaAs), gallium nitride (GaN), surface acoustic wave (SAW) and bulk acoustic wave (BAW) technologies.
TriQuint Semiconductor develops high-performance modules, components and foundry services to communications companies, with a product focus on radio frequency/intermediate frequency (RF/IF) applications. The company operates its own wafer fabrication and product test facilities and uses proprietary processes to manufacture RF, analog and mixed-signal components, lasers, detectors and modules. For 2009, the company reported revenues in three business units: handsets, networks (including base stations), and defense and aerospace. Management believes that nobody else sells cross-frequency integrated products quite like TriQuint's.
The demand for mobile devices has evolved over the past several years as a result of increased demand for improving signal quality, smaller size, and more complex functions such as digital cameras, video recorders, music players, GPS, Bluetooth, Internet access, mobile television and other features. Smartphones has taken this demand to a whole new level. TriQuint has differentiated sales by giving their customers the best size, cost, and performance with interested solutions while many of their competitors continue to pursue discrete architectures.
TQNT's mobile devices segment is mainly derived from sales of electronic components for mobile phones, including transmit modules, RF filters, power amplifiers and power amplifier modules, duplexers, other RF devices and integrated products. In 2009, the handset market accounted for 63% (52% in 200
of revenues. TQNT thinks that some 500 million people are expected to transition from traditional cellphones to smartphones this year, and they also expect a boost from "machine-to-machine" devices such as e-readers and health monitoring system.
TQNT's networks unit includes products that support the transfer of voice and data across wireless or wired infrastructure. Wireless local area networks (WLAN) and worldwide interoperability for microwave access (WiMAX) for laptop computers represent the majority of this market. It sells base station products used in all 2G, 3G and 4G communication systems. TQNT also sell products used to support higher data rates across wireless or wired networks such as point-to-point radio, cable, optical networking and nonmilitary satellite based communication. In 2009, the network market accounted for 25% (37% in 200 of revenues.
Sales to customers outside of the U.S. generated 64% of revenue in 2009, versus 72% in 2008 and 78% in 2007. Sales to customers in China and Hong Kong accounted for 34% and 11% of sales in 2009, compared to 24% and 13%, respectively, in 2008.
The revenue growth for TQNT in the foreseeable future will be driven by the growth of handset devices. The transition to more advanced handsets increases the RF content in each device. This means more sales for Triquint. The magic multiplier effect of all of this is that there will be more rapid growth in China, India and other emerging markets due to an increasing customer base in these regions. As new users in developed countries grow and consumers shift to 3G smartphones, Triquint is going to need a bigger factory. TQNT gets 5x the revenue per unit that TQNT gets for a 3G phone vs. a 2G phone.
TQNT's balance sheet is healthy, they have zero debt and plenty of cash flow.
The growth of mobile computing accelerated demand for TriQuint products
•Over the past five years, gross margin peaked at 32.4% and averaged 31.1%. Operating margin peaked at 5% and averaged 2.6%. Net margin peaked at 5.4% and averaged 2.3%.
•TTM gross margin is 39.6%, 850 basis points better than the five-year average. TTM operating margin is 11.9%, 930 basis points better than the five-year average. TTM net margin is 20.3%, 1,800 basis points better than the five-year average.
TriQuint Semiconductor added jobs at its Hillsboro factory to fill a flood of orders for its wireless chips, used in the iPhone, iPad and other hot mobile devices. With continued growth in 2011, TriQuint could be the first Oregon tech company to hit $1 billion in sales in almost 5 years.
Recently, SAMSUNG selected TriQuint for its complete 3G RF front-end for its popular, new Samsung Galaxy Tab. This is in addition to Samsung choosing TriQuint's total 3G RF front-end solution for its flagship smartphone series, Galaxy S. TriQuint was honored by Raytheon for the third consecutive year at the company’s 2010 SAS Supplier Excellence Award (SEA) recognition event. Winning suppliers represent less than one percent of the SAS supply base. Only 34 companies that supply Raytheon SAS received awards.
TQNT has seen growth in Mobile Devices with revenue up 28% sequentially and 32% year-to-date over the equivalent period in 2009. This follows strong 38% growth in 2009. Consumer appetite for wireless broadband has not abated and demand remains very healthy. Smartphone growth could increase by as much as 50%.
TQNT is winning in market share helped by their penetration of leading smartphone providers (can you say Iphone or Ipad?). The increased RF complexity of smart phone requires solutions for voice, multiple data band, WiFi and GPS, all are driving increased download content to handset of 4 to 6 times the content of traditional cell phones.
This all shows up in the most recent earnings and I’m sure we’ll see a lot more of it when they report earnings next month.
For the third quarter of 2010, TQNT generated revenue of $237.0 million. Revenue increased 14% sequentially and 37% over the third quarter of 2009. Mobile devices revenues showed a robust growth increasing 28% sequentially and 37% from the third quarter of 2009.
Gross margin for the third quarter of 2010 was 41.3%. Third quarter non-GAAP gross margin was 42.3%, consistent with the second quarter of 2010, and up from 35.0% in the third quarter of 2009.
Net income was $110.9 million or $0.68 per diluted share for the third quarter. Non-GAAP net income grew by $11.1 million over the prior quarter to $44.2 million or $0.27 per diluted share. Cash flow from operations was $39.1 million in the third quarter of 2010. Total cash and investments increased about $12.1 million to $187.2 million. Capital spending was $31.7 million compared with depreciation of $12.3 million.
Return on equity increased sharply over the prior year. On a non-GAAP basis, return on equity is 19.1% year-to-date - more than double the prior year. TQNT will be rolling out additional capacity in Texas in the third quarter of next year. There’s no doubt they are planning on some increased utilization and expansion! Increased capacity utilization translates directly into increased gross margins for the company.
As growth continues (thanks to the Iphone and Ipad) the stock price will grow with it. Smart phones will drive new technology adoption and change user behavior around technology. Therefore, those companies that supply into smart phones (like TQNT) are cooking with gas right now. TriQuint supplies to all the major smart-phone makers (including Apple, Research in Motion, and HTC) with the exception of Nokia.
On a valuation basis, TQNT does not look expensive despite a 140% run in the stock in 2010. The shares trade at a trailing P/E of 13.89, a forward P/E of 14.91 and a PEG ratio
The company believes fourth quarter revenue will be between $245 million and $255 million. At the midpoint, this implies revenue growth in 2010 of 33% over the prior year. Looking to 2011, the company believes continued robust growth in demand should lead to revenue growth of about 20%. For the fourth quarter of 2010, the company expects that strong growth in the mobile devices market will lead to a non-GAAP gross margin between 41% and 42%. Non-GAAP operating expenses are expected to grow to about $59 million, or 24% of revenue. Fourth quarter net income is expected to be between $0.26 and $0.28 per share on a non-GAAP basis. The company is 91% booked to the midpoint of revenue guidance.
Think about this: TriQuint's handset revenues increased 77% from a year ago during a terrible financial crisis such that most companies in most sectors reported negative comparisons to the period a year prior.
So I guess we can all agree that TQNT is doing great…but will it continue to do so. Sales most definitely will increase in 2011 following the big increase in 2010 because of improving end-market demand for all of the business TQNT participates in. There is going to be more robust demand for 3G mobile devices led by the monster growth in Apple’s products. On top of all that, Asia and India are going bananas. So we’re going to get higher 3G sales in China with increasing iPhone sales…is this nuts or what?
TQNT will continue to feast off of the transition to more advanced smartphones which will require greater RF gizmos inside of them. Annual gross margin will continue to increase over the 40%+ margins they are already booking.
So I guess everyone wants numbers now. The company has started four quarter revenue will be between $245 million and $255 million. Fourth quarter net income per share is expected to be between $0.26 and $0.28 on a non-GAAP basis. Their outlook for 2011 says they can grow the top line 20% next year.
Now the ANAL-ysts see 2011 earnings at $0.96/share on Revenues of $1.02 billion. Please stop. Really?
$$$MR. MARKET$$$ projects 2011 revenues to be $1.17 billion which will generate earnings of $1.22 per share. TQNT is going to make these numbers easily. We’re in the middle of a mushroom cloud explosion of these items. If you take my modest estimates è $1.22/share x PE of 14 = share price of $17.08, which is higher than my sale target.
Here’s what Ralph Quinsey, the boss, has to say:
“Looking forward, I believe the RF market will be healthy for many years to come and with our strong product lineup both industry leading technology platforms I expect strong financial performance.”
“I’m very comfortable and proud of the broad technology portfolio that we have, but we do have a active engagement with some other place looking for nice add-ins to our portfolio. There are some interesting targets out there. Nothing that I can talk about specifically, but we do have focus resources on that and we will see the continued profit, no change from where we have been, but we do actively look for those and our interesting target of the company.”
"We're seeing the high-end wave now in smartphones, but the next wave is going to be low-end smartphones."
“I am very pleased with our results this quarter and am excited about our long term opportunities. We’ve turned in record third quarter revenue and, not including favorable non cash tax effects, generated more non-GAAP net income in Q3 than we did in either of the preceding 2 years. Our strategy of RF integration, multi-market innovation, and growth for scale has been effective. Looking forward I expect that the RF market will remain healthy and TriQuint will benefit from a strong product roadmap built on industry leading technology platforms.”
I love love love love this stock…what do YOU think?
I am HUGE!!
$$$MR. MARKET$$$
www.mrmarketishuge.com
Quint: Y'all know me. Know how I earn a livin'. I'll catch this bird for you, but it ain't gonna be easy. Bad fish. Not like going down the pond chasin' bluegills and tommycods. This shark, swallow you whole. Little shakin', little tenderizin', an' down you go. And we gotta do it quick, that'll bring back your tourists, put all your businesses on a payin' basis. But it's not gonna be pleasant. I value my neck a lot more than three thousand bucks, chief. I'll find him for three, but I'll catch him, and kill him, for ten. But you've gotta make up your minds. If you want to stay alive, then ante up. If you want to play it cheap, be on welfare the whole winter. I don't want no volunteers, I don't want no mates, there's just too many captains on this island. Ten thousand dollars for me by myself. For that you get the head, the tail, the whole damn thing.
Now he did actually end up in the shark’s belly. But never mind all that. In honor of Quint, I make my first stock pick of 2011. Yesterday I bought Triquint (TQNT) at 14.27. I will sell it in 4 to 6 weeks at 16.45. Here’s why I like Triquint:
In the past year, the stock has hit a 52-week low of $5.77 and 52-week high of $14.31. Triquint Semiconductor stock has been showing support around $13.63 and broke through resistance in the $14.09 range. In the last five trading sessions, the 50-day MA has climbed 3.12% while the 200-day MA has risen 1.82%. The stock is currently 11.29% above its 20-day MA, 16.76% above its 50-day MA, and 60.5% above its 200-day MA.
There’s a whole lot of McLovin in this chart, and the 100% run-up since September 2010 is not a coincidence. This company makes products that are now in the sweetest of sweet spots. Though TriQuint won't talk about Apple, technologists have found TriQuint components manufactured in Hillsboro in 2008's iPhone 3G and last year's iPhone 3GS. The Hillsboro, Ore.-based firm has nonetheless confirmed that Amazon uses its technology within a version of its popular Kindle e-reader.
TriQuint products help reduce the cost and increase the performance of connected mobile devices and the networks that deliver critical voice, data and video communications. With the industry’s broadest technology portfolio, recognized R&D leadership, and expertise in high-volume manufacturing, TriQuint creates standard and custom products using gallium arsenide (GaAs), gallium nitride (GaN), surface acoustic wave (SAW) and bulk acoustic wave (BAW) technologies.
TriQuint Semiconductor develops high-performance modules, components and foundry services to communications companies, with a product focus on radio frequency/intermediate frequency (RF/IF) applications. The company operates its own wafer fabrication and product test facilities and uses proprietary processes to manufacture RF, analog and mixed-signal components, lasers, detectors and modules. For 2009, the company reported revenues in three business units: handsets, networks (including base stations), and defense and aerospace. Management believes that nobody else sells cross-frequency integrated products quite like TriQuint's.
The demand for mobile devices has evolved over the past several years as a result of increased demand for improving signal quality, smaller size, and more complex functions such as digital cameras, video recorders, music players, GPS, Bluetooth, Internet access, mobile television and other features. Smartphones has taken this demand to a whole new level. TriQuint has differentiated sales by giving their customers the best size, cost, and performance with interested solutions while many of their competitors continue to pursue discrete architectures.
TQNT's mobile devices segment is mainly derived from sales of electronic components for mobile phones, including transmit modules, RF filters, power amplifiers and power amplifier modules, duplexers, other RF devices and integrated products. In 2009, the handset market accounted for 63% (52% in 200
of revenues. TQNT thinks that some 500 million people are expected to transition from traditional cellphones to smartphones this year, and they also expect a boost from "machine-to-machine" devices such as e-readers and health monitoring system. TQNT's networks unit includes products that support the transfer of voice and data across wireless or wired infrastructure. Wireless local area networks (WLAN) and worldwide interoperability for microwave access (WiMAX) for laptop computers represent the majority of this market. It sells base station products used in all 2G, 3G and 4G communication systems. TQNT also sell products used to support higher data rates across wireless or wired networks such as point-to-point radio, cable, optical networking and nonmilitary satellite based communication. In 2009, the network market accounted for 25% (37% in 200
of revenues.Sales to customers outside of the U.S. generated 64% of revenue in 2009, versus 72% in 2008 and 78% in 2007. Sales to customers in China and Hong Kong accounted for 34% and 11% of sales in 2009, compared to 24% and 13%, respectively, in 2008.
The revenue growth for TQNT in the foreseeable future will be driven by the growth of handset devices. The transition to more advanced handsets increases the RF content in each device. This means more sales for Triquint. The magic multiplier effect of all of this is that there will be more rapid growth in China, India and other emerging markets due to an increasing customer base in these regions. As new users in developed countries grow and consumers shift to 3G smartphones, Triquint is going to need a bigger factory. TQNT gets 5x the revenue per unit that TQNT gets for a 3G phone vs. a 2G phone.
TQNT's balance sheet is healthy, they have zero debt and plenty of cash flow.
The growth of mobile computing accelerated demand for TriQuint products
•Over the past five years, gross margin peaked at 32.4% and averaged 31.1%. Operating margin peaked at 5% and averaged 2.6%. Net margin peaked at 5.4% and averaged 2.3%.
•TTM gross margin is 39.6%, 850 basis points better than the five-year average. TTM operating margin is 11.9%, 930 basis points better than the five-year average. TTM net margin is 20.3%, 1,800 basis points better than the five-year average.
TriQuint Semiconductor added jobs at its Hillsboro factory to fill a flood of orders for its wireless chips, used in the iPhone, iPad and other hot mobile devices. With continued growth in 2011, TriQuint could be the first Oregon tech company to hit $1 billion in sales in almost 5 years.
Recently, SAMSUNG selected TriQuint for its complete 3G RF front-end for its popular, new Samsung Galaxy Tab. This is in addition to Samsung choosing TriQuint's total 3G RF front-end solution for its flagship smartphone series, Galaxy S. TriQuint was honored by Raytheon for the third consecutive year at the company’s 2010 SAS Supplier Excellence Award (SEA) recognition event. Winning suppliers represent less than one percent of the SAS supply base. Only 34 companies that supply Raytheon SAS received awards.
TQNT has seen growth in Mobile Devices with revenue up 28% sequentially and 32% year-to-date over the equivalent period in 2009. This follows strong 38% growth in 2009. Consumer appetite for wireless broadband has not abated and demand remains very healthy. Smartphone growth could increase by as much as 50%.
TQNT is winning in market share helped by their penetration of leading smartphone providers (can you say Iphone or Ipad?). The increased RF complexity of smart phone requires solutions for voice, multiple data band, WiFi and GPS, all are driving increased download content to handset of 4 to 6 times the content of traditional cell phones.
This all shows up in the most recent earnings and I’m sure we’ll see a lot more of it when they report earnings next month.
For the third quarter of 2010, TQNT generated revenue of $237.0 million. Revenue increased 14% sequentially and 37% over the third quarter of 2009. Mobile devices revenues showed a robust growth increasing 28% sequentially and 37% from the third quarter of 2009.
Gross margin for the third quarter of 2010 was 41.3%. Third quarter non-GAAP gross margin was 42.3%, consistent with the second quarter of 2010, and up from 35.0% in the third quarter of 2009.
Net income was $110.9 million or $0.68 per diluted share for the third quarter. Non-GAAP net income grew by $11.1 million over the prior quarter to $44.2 million or $0.27 per diluted share. Cash flow from operations was $39.1 million in the third quarter of 2010. Total cash and investments increased about $12.1 million to $187.2 million. Capital spending was $31.7 million compared with depreciation of $12.3 million.
Return on equity increased sharply over the prior year. On a non-GAAP basis, return on equity is 19.1% year-to-date - more than double the prior year. TQNT will be rolling out additional capacity in Texas in the third quarter of next year. There’s no doubt they are planning on some increased utilization and expansion! Increased capacity utilization translates directly into increased gross margins for the company.
As growth continues (thanks to the Iphone and Ipad) the stock price will grow with it. Smart phones will drive new technology adoption and change user behavior around technology. Therefore, those companies that supply into smart phones (like TQNT) are cooking with gas right now. TriQuint supplies to all the major smart-phone makers (including Apple, Research in Motion, and HTC) with the exception of Nokia.
On a valuation basis, TQNT does not look expensive despite a 140% run in the stock in 2010. The shares trade at a trailing P/E of 13.89, a forward P/E of 14.91 and a PEG ratio
The company believes fourth quarter revenue will be between $245 million and $255 million. At the midpoint, this implies revenue growth in 2010 of 33% over the prior year. Looking to 2011, the company believes continued robust growth in demand should lead to revenue growth of about 20%. For the fourth quarter of 2010, the company expects that strong growth in the mobile devices market will lead to a non-GAAP gross margin between 41% and 42%. Non-GAAP operating expenses are expected to grow to about $59 million, or 24% of revenue. Fourth quarter net income is expected to be between $0.26 and $0.28 per share on a non-GAAP basis. The company is 91% booked to the midpoint of revenue guidance.
Think about this: TriQuint's handset revenues increased 77% from a year ago during a terrible financial crisis such that most companies in most sectors reported negative comparisons to the period a year prior.
So I guess we can all agree that TQNT is doing great…but will it continue to do so. Sales most definitely will increase in 2011 following the big increase in 2010 because of improving end-market demand for all of the business TQNT participates in. There is going to be more robust demand for 3G mobile devices led by the monster growth in Apple’s products. On top of all that, Asia and India are going bananas. So we’re going to get higher 3G sales in China with increasing iPhone sales…is this nuts or what?
TQNT will continue to feast off of the transition to more advanced smartphones which will require greater RF gizmos inside of them. Annual gross margin will continue to increase over the 40%+ margins they are already booking.
So I guess everyone wants numbers now. The company has started four quarter revenue will be between $245 million and $255 million. Fourth quarter net income per share is expected to be between $0.26 and $0.28 on a non-GAAP basis. Their outlook for 2011 says they can grow the top line 20% next year.
Now the ANAL-ysts see 2011 earnings at $0.96/share on Revenues of $1.02 billion. Please stop. Really?
$$$MR. MARKET$$$ projects 2011 revenues to be $1.17 billion which will generate earnings of $1.22 per share. TQNT is going to make these numbers easily. We’re in the middle of a mushroom cloud explosion of these items. If you take my modest estimates è $1.22/share x PE of 14 = share price of $17.08, which is higher than my sale target.
Here’s what Ralph Quinsey, the boss, has to say:
“Looking forward, I believe the RF market will be healthy for many years to come and with our strong product lineup both industry leading technology platforms I expect strong financial performance.”
“I’m very comfortable and proud of the broad technology portfolio that we have, but we do have a active engagement with some other place looking for nice add-ins to our portfolio. There are some interesting targets out there. Nothing that I can talk about specifically, but we do have focus resources on that and we will see the continued profit, no change from where we have been, but we do actively look for those and our interesting target of the company.”
"We're seeing the high-end wave now in smartphones, but the next wave is going to be low-end smartphones."
“I am very pleased with our results this quarter and am excited about our long term opportunities. We’ve turned in record third quarter revenue and, not including favorable non cash tax effects, generated more non-GAAP net income in Q3 than we did in either of the preceding 2 years. Our strategy of RF integration, multi-market innovation, and growth for scale has been effective. Looking forward I expect that the RF market will remain healthy and TriQuint will benefit from a strong product roadmap built on industry leading technology platforms.”
I love love love love this stock…what do YOU think?
I am HUGE!!
$$$MR. MARKET$$$
www.mrmarketishuge.com
Comment