The Semiconductor Stock You Should Know About

Originally Published August 1st, 2022

Welcome back to the Weekly Value Finder. If you missed last week’s article you can find it here.

This week we are going to dive into a company that may be set to benefit from the recent Chips Act that has recently made its way up the ladder and into action. While you may think that I am going to dive into the familiar names such as Intel, Nvidia, or even Texas Instruments, I am actually going to throw a curveball.

I want to talk about something far more boring than the actual chips that will change the industry and advance technology into the stratosphere. I want to talk about a company that is doing the boring work of packaging and testing many of these chips.

This company is Amkor Technology, Inc. (AMKR).

Never heard of them? Most haven’t, but Amkor has been a staple around the industry since they were founded in 1968. Based out of Tempe, Arizona, Amkor has been a global name in testing and packaging and has been headed South due to supply chain issues affecting revenue. This may not be an issue soon.

Amkor currently sits at around $20 per share, up around 30% since the start of July, but still down 30% from their 52 week high. While I am not saying that the high was the correct price, the short term gain should not be overestimated either.

The company has been printing cash of late and using it wisely to reduce the debt on the balance sheet. With just under $5 per share in cash & short term investments, a book value of just over $12, and a P/E ratio of ~7, this is a value investors type of stock.

Add to all of this that the company has recently (2021) added a dividend payout to their arsenal. While the dividend is small, at under a 1% yield, it shows that the company is ready to return wealth to their investors. With a very small payout ratio, it could be likely to see increases in the future as the cash continues to stabilize the balance sheet.

This isn’t a magic bullet of a stock. This isn’t even a net-net that could warrant a massive rise as people realize that it is priced extremely low. What is though, is a potential sleep well at night type investment that could be a consistent winner in a value investor’s portfolio.

Your Homework for the Week:
Find a reason why the company will not benefit from the Chips Act and why the cash flow may not be sustainable.

As always, thanks for reading and Happy Investing!

The Profit Investigator