Buy Low - Sell High - Semiconductor Stocks Are On Sale
Summary
TLDRThe transcript discusses the current state of the semiconductor industry, highlighting its temporary downturn due to inflation and high interest rates affecting consumer spending on electronics and vehicles. However, the speaker identifies this as an opportunity to invest in undervalued semiconductor stocks like Aehr and Ultra Clean Holdings, which are expected to rebound as demand for new technology increases. The speaker uses a detailed analysis method, including Wall Street predictions and earnings reports, to forecast potential returns on these investments by 2025. The transcript emphasizes the importance of recognizing undervalued opportunities in the market and provides insights into Ultra Clean's role in the semiconductor ecosystem.
Takeaways
- ๐ The semiconductor industry is currently in a downturn due to reduced consumer spending on electronics and vehicles, influenced by high inflation and interest rates.
- ๐ Companies like AEHR and Ultra Clean Holdings are undervalued and present significant investment opportunities due to their strong positions in the industry and lack of debt.
- ๐ Ultra Clean Holdings specializes in providing critical subsystems, parts, and components, as well as high-purity cleaning, coating, and analytical services primarily for the semiconductor industry.
- ๐ The demand for smaller, faster, and less energy-intensive consumer electronics drives continuous advancements in semiconductor technology and manufacturing processes.
- ๐ญ Ultra Clean Holdings operates under two divisions: Products and Services, focusing on delivering quality solutions and meeting customer delivery targets efficiently.
- ๐ The speaker uses a combination of Wall Street predictions, earnings reports, and personal analysis to estimate future stock prices and determine potential returns on investment.
- ๐ก Companies like Nvidia and Google may offer good returns, but the speaker finds greater potential in less popular, currently depressed semiconductor stocks like AEHR and Ultra Clean Holdings.
- ๐ The speaker predicts a 52% return on Ultra Clean Holdings if purchased at the current price, based on an average of various price predictions and the company's future earnings.
- ๐ Ultra Clean Holdings is focusing on cost and overhead reduction by building new facilities and preparing for the resurgence of the semiconductor industry.
- ๐ง The speaker encourages investors to listen to Ultra Clean Holdings' earnings report to understand the company's strategy and potential for growth.
- ๐ค Joining the 'best of us investors' community provides access to investment strategies and opportunities in undervalued stocks, aiming to 'cheat Wall Street' and maximize returns.
Q & A
What is the current state of the semiconductor industry according to the transcript?
-The semiconductor industry is currently in a depressed state due to reduced spending on electronics and vehicles because of high inflation and interest rates.
Why are companies like Intel, Micron Technology, and Super Micro not representative of the entire semiconductor industry?
-These companies are primarily associated with building out data centers, which is only a part of the industry. The majority of the semiconductor business is related to consumer electronics, vehicles, and other devices, which are currently seeing less demand.
What factors are contributing to the decrease in consumer spending on electronics and vehicles?
-High inflation and rising interest rates are causing consumers to spend more on essential items like groceries and rent, leading to a decrease in purchases of electronics, vehicles, and other semiconductor-dependent products.
What is the expected future trend for electric vehicles, PCs, and smartphones according to the transcript?
-It is expected that once data centers are built out and start delivering artificial intelligence, there will be a need to upgrade electric vehicles, PCs, and smartphones, which will revive the depressed semiconductor industry.
How does the speaker use Wall Street's predictions to inform their investment strategy?
-The speaker tracks predictions from Wall Street, analyzes earnings reports, and uses this information to predict future stock prices, allowing them to identify potential investment opportunities in undervalued stocks.
What are AEHR and UCTT, and why are they considered good investment opportunities according to the speaker?
-AEHR and UCTT are companies in the semiconductor industry that are currently undervalued. The speaker believes they are good investment opportunities because they have no debt, are strong companies in their space, and are expected to grow once the semiconductor industry recovers.
What is Ultra Clean Holdings' role in the semiconductor industry?
-Ultra Clean Holdings is a global leader in supplying critical subsystems, parts, components, ultra-high purity cleaning, coating, and analytical services, primarily for the semiconductor industry.
How does Ultra Clean Holdings support the development of advanced semiconductor technology?
-Ultra Clean Holdings works closely with customers from design through implementation, providing leading-edge solutions, and focusing on quality to enable transformative technologies and accelerate time to market.
What are the two divisions that Ultra Clean Holdings operates under?
-Ultra Clean Holdings operates under two divisions: Products and Services. The Products division focuses on precision components for processed tools, while the Services division specializes in cleaning, coating, and analysis specifications for semiconductor chamber parts.
How does the speaker suggest an investor can verify the opportunities presented by UCTT and AEHR?
-The speaker suggests that investors should go to Seeking Alpha, listen to Ultra Clean Holdings' earnings report, and analyze the information provided by the company's CEO and CFO to understand their potential and make informed decisions.
What is the speaker's overall investment strategy for the semiconductor industry?
-The speaker's strategy is to invest in currently depressed semiconductor stocks that are undervalued by Wall Street, with the expectation that these companies will experience significant growth once the semiconductor industry recovers.
Outlines
๐ Semconductor Industry's Current State and Future Outlook
This paragraph discusses the current state of the semiconductor industry, highlighting that despite the rise in stock prices of companies like Intel, Micron Technology, and Super Micro, these only represent a part of the industry. The real opportunity lies in the companies that manufacture conductors for electric vehicles, appliances, and electronics, which are currently experiencing a downturn due to reduced spending on these products. The speaker predicts that once data centers are built and start delivering artificial intelligence, there will be a surge in demand for new devices, leading to a resurgence in the semiconductor industry. The speaker emphasizes the potential of identifying companies like Aehr Test Systems (AEHR) that have strong fundamentals but are currently undervalued, suggesting that they could offer significant returns when the industry rebounds.
๐ข Wall Street's Predictions and Investment Strategies
The speaker shares a detailed methodology for predicting stock prices based on Wall Street's expectations and personal analysis. They track 34 stocks and use a combination of projected earnings, PE ratios, and analyst predictions to forecast future stock prices. The example given revolves around Apple's stock, where the speaker calculates a potential return based on 2024 earnings and current market conditions. The speaker also discusses how to identify undervalued stocks like Google and Nvidia, which could offer substantial returns if bought at the right price. The focus is on finding 'moonshot' opportunities in the market that are currently overlooked by Wall Street.
๐ Uncovering Hidden Gems: AEHR and Ultra Clean Holdings
The speaker introduces two lesser-known companies, AEHR and Ultra Clean Holdings (UCTT), which are currently undervalued but have significant potential for growth. The speaker explains that these companies are in the semiconductor business, which is currently in a trough due to high inflation and interest rates affecting consumer spending on electronics and vehicles. However, the speaker believes that these companies are poised for a comeback once the economy stabilizes and consumer demand for new devices increases. The speaker encourages investors to research these companies, listen to their earnings reports, and understand their business models to seize the investment opportunities they present.
๐ Ultra Clean Holdings: A Closer Look at the Semiconductor Industry's Backbone
This paragraph delves into the specifics of Ultra Clean Holdings, a company that provides critical subsystems, components, cleaning, coating, and analytical services primarily for the semiconductor industry. The speaker outlines the company's role in advancing semiconductor technology by working closely with customers from design to implementation, enabling transformative technologies, and accelerating time to market. The company operates in two divisions: products and services. The products division focuses on ultra-clean precision components for processed tools, while the services division specializes in cleaning, coating, and analysis specifications for semiconductor chamber parts. The speaker emphasizes Ultra Clean's position as a global leader and its ability to meet the quality, delivery, and cost requirements of the semiconductor industry.
๐ฏ Navigating the Market: Strategies for Identifying Opportunities
The speaker concludes by reiterating the importance of focusing on currently depressed semiconductor stocks, which they believe present the greatest opportunities for significant returns. They encourage investors to research and understand the companies they are interested in, such as Ultra Clean Holdings, and to listen to their earnings reports for insights. The speaker also mentions their own investment approach, which involves identifying undervalued stocks with strong fundamentals rather than following the front runners. They invite listeners to join their investment community to learn more about how to 'cheat Wall Street' and find similar opportunities in the market.
Mindmap
Keywords
๐กsemiconductor industry
๐กelectric vehicles (EVs)
๐กartificial intelligence (AI)
๐กUltra Clean Holdings
๐กearnings reports
๐กinflation
๐กinterest rates
๐กmarket trough
๐กinvestment strategy
๐กPE ratio
๐กearnings per share (EPS)
Highlights
The speaker discusses the semiconductor industry's current state and its impact on various tech stocks.
Intel, Micron Technology, and Super Micro are mentioned as key players in the semiconductor industry.
The speaker identifies a shift in investment focus from data centers to other areas of the semiconductor industry.
Electric vehicles, smartphones, and PCs are expected to drive the need for semiconductor upgrades in the future.
AEHR and Ultra Clean Holdings are highlighted as undervalued stocks with significant potential for growth.
The speaker introduces a 'cheat sheet' method for predicting stock prices based on Wall Street's expectations and earnings.
Apple's stock price prediction is used as an example to demonstrate the 'cheat sheet' method.
The speaker emphasizes the importance of identifying stocks like Google and Nvidia that offer high return on investment.
The semiconductor industry is currently in a trough due to high inflation and interest rates affecting consumer spending.
The speaker believes that the semiconductor industry will rebound once consumer spending on electronics increases.
Ultra Clean Holdings' role in the semiconductor industry is explained, highlighting their critical subsystems and services.
The speaker provides a detailed analysis of Ultra Clean Holdings' potential return on investment based on current market conditions.
The importance of understanding a company's financial health and market position is stressed for successful investing.
The speaker encourages investors to research and listen to company earnings reports for a deeper understanding of investment opportunities.
The potential for significant returns on investment in undervalued semiconductor stocks is reiterated.
The speaker shares a method for calculating potential returns on investment based on current stock prices and projected earnings.
The speaker's investment philosophy focuses on finding opportunities in undervalued stocks rather than following the market leaders.
Transcripts
I know you believe that semiconductor
prices are on stocks are up because to
you semiconductors means Intel means
Micron Technology means uh super micro
macro computer but that's only a part of
the industry that's the industry that's
building out the data centers and that's
not where the big element and the big
opportunity is no that's the the
semiconductor industry I talking about
that is down is those people who make
the conductors for the electric vehicles
for any vehicles for toaster for
smartphones for PCs and you're not
spending money on that and neither is
anybody else because you're spending all
your money at the grocery store your
rent is going up your interest rates are
going up on your credit cards so you're
pulling back so the general
semiconductor industry is depressed now
if you believe that electric vehicles
and PCs and and smartphones are going to
have to be upgraded because once these
data centers are built out and they
start delivering artificial intelligence
then you're going to have to buy all
these new things and that will bring the
depressed semiconductor industry back
and so if we can identify such as aehr
that is down 40% probably down 70% from
its high and recognize that they have no
debt they're a good strong company they
own their space and when that business
comes back they're going to explode well
I want to show you another one it's
called Ultra Clean systems between the
two of these you can make probably in
2025 from what you can buy them at today
you're going to make over 100% let me
walk you through it I'm going to first
show you my cheat sheet and how I derive
what the price is going to be on these
stocks in 2025 and where you should buy
them now and I'm going to substantiate
why those prices of 2025 are correct and
then I'm going to take you and I'm going
to introduce you so that you know what
Ultra Clean does I've already told you
what aehr does and this is where you
need to be looking and where you can
make some money if you put the money in
these depressed stocks here is what you
need to know this is my cheat sheet I
call it a cheat sheet because this is
how I try to cheat Wall Street uh I try
to figure out where they believe the
stock price is going and then where I
can buy it to get taken advantage let me
give you an example uh I I track uh
about 34 stocks and what I'm trying to
do is to predict based on W what Wall
Street tells me and the information that
I can gather what Apple's price is going
to be in the future and that's in these
green bars here that I do for all the
stocks that I track that I track
basically I start with uh what's the
price based on uh 2024
earnings uh that uh that Apple will
achieve in the next 24 months again
based on uh 2024 earnings and as you can
see the earnings in 2023 were
$616 and projected in 2024 to be
$656 and then
$7.15 in uh 2025 so what I do is I take
and I I smize that the market believes
it's worth uh
$170
59 based on its earnings of
2023 of
$616 and a PE ratio of
27.7 so what I do then is say Okay based
on earnings of 656 and the same PE ratio
what price would that give me and that's
that 181 then I go to the analyst and
and there are 38 analysts who track um
uh apple and their average price for
2024 12 months from now is
$250 the tech price the high that that
uh uh Apple has achieved recently is
189 and the fair value this is an
analysis of their cash flow their free
cash flow what is the value of this
stock based on the its ability to
generate cash and that's
$173 54 I take those four numbers I
average them and I say okay at current
price of $170 159 what would that
average price give me uh over the next
uh uh 12 months and that's
17.6% if I can buy at my Target price of
165 Which is
$559 less than what it is selling for
today I'll get a
[Music]
2.68% return over the next 12 months
that's how this works okay and so you
can see I can find some stocks such as a
Google if I buy it at my Target price of
$130 selling currently at 152 I'll make
48% if I buy it at today's price of 52
I'll make 26% that's how this works okay
so let's just give you some
examples uh Nvidia if I buy it at my
Target price of
$664 I'm going to make
121% if I buy it at today's price I'll
make 54% but what I have to look at is
that number that's the If I multiply its
current PE ratio towards its earnings of
next year 2024 it's worth
$3,681 why is that because its earnings
from 2023 are going to increase by 288
per is that realistic probably not but
for me to make a comparison of all the
stocks and then put my own knowledge
into it I can come up with if I can buy
it at 664 or I'm going to make 120% on
it now I don't care whether I buy it or
not quite honestly because I don't care
what stocks I own what I care about is
how much I make what I want to show you
is the opportunities of a lifetime
that's down here that's what I call my
moonshots basically there you have to
recognize as I said earlier that the
semiconductor business is in a trough
it's down why is that because you aren't
buying EVS you aren't buying a new phone
you aren't buying a new refrigerator why
is that because inflation is high
because interest rates are high so you
have pulled back because you're spending
more at the gra grocery more at the gas
pump more on your utilities more on your
rent so you aren't buying those things
that the the mass semiconductor world is
making you
are you see the semiconductor world as
Nvidia
and and Micron Technology they are
building semiconductors for the data
centers that's not where you spend
that's not where the majority of the
semiconductor business lives it lives in
the EVS in the toasters in the
refrigerators in the cars and it's
currently depressed two of the stocks
that I believe are are are just a gift
from God are AE HR and
um Ultra Clean Holdings unless you
follow me you've never heard of them
because they right now are depressed I
told you that Nvidia has 38 analysts
following it and and and studying it and
reporting to their superiors about it
aehr has won one Wall Street analysts
reporting on it they get no publicity
they get no headlines they get one
analyst you uh Ultra Clean has three I
get this from Zach now are there
possibly more yes but those who report
to Zachs one for AE HR three for
uctt so they don't know what I want to
do is educate you I've told you about
ACR I want to educate you on
uctt ultra clean I'm going to show you a
video here in a second that will explain
entirely what they do and then I want
you to go to their earnings report and
listen to their CEO and their financial
officer and see if you don't believe
like I do that I've got an opportunity
here that seldom comes down the pike
because Wall Street isn't paying
attention to it I believe ultra clean uh
will give me based on its current price
of uh
$446 I believe it will give me a
52% return if I can buy it for roughly
$469 less or $40 I'll make
69.9 once this new once this
semiconductor business once you buy your
new pc you buy your new phone you buy
your new car your new toaster and your
new refrigerator which will probably
happen sometime in 2025 after interest
rates come down after inflation slows
down these companies will be back on
track to what they can Pro they can
provide for you so let's let me just
take you through Ultra cleans based on
their earnings for next year which are
going to go from 56 cents this year to
aund or to a142 or
153% gain based on that at their current
PE ratio of
79.6 it's going to have a price of
$112 based on the three analysts that
their average price of $50 and based on
their high tech that's the high they had
when the EVS were being sold back in
2020 and
2021 the price is $65 based on Fair
Value the their ability to generate free
cash flow the price is
$43.65
actually less than what it is selling
for today I take those four prices I
average them and based on this price of
if I can get it for $40 I'll make
69.7% over the next 12 months if I go
ahead and buy it at
$44.5 I'll make
52% the choice is yours so that's how I
do this now what I want to do is educate
you
on Ultra Clean Holdings so you know what
they do you know where they fit into
this ecosystem and then I'm going to
challenge you to and I'll show you where
you can get it to go listen to their
last quarter's earnings report and you
will learn this company is building new
facilities condensing their their cost
and overhead because they're priming
themselves for the return to what they
experienced in the past as semi
conductors take off in the future watch
this ucct is a global leader in the
supply of critical subsystems Parts
components ultra- High Purity cleaning
coating and analytical Services
primarily for the semiconductor industry
World demand for smaller faster and less
energy-intensive consumer electronics
requires continuous progress in the
development of semiconductor technology
it also takes revolutionary changes in
the design and construction of the chips
and equipment used to manufacture these
devices with our wealth of experience
wide range of Leading Edge Solutions and
Relentless focus on quality we work
closely with our customers from design
through implementation to enable their
transformative Technologies and
accelerate their time to Market we
operate our business under two divisions
products and services let's start with
our products
division as Society accelerates the need
for smarter connected products ucct is
committed to helping its semiconductor
customers deliver the next ever smaller
technology node to the world production
of these Advanced chips requires Ultra
Clean Precision components for processed
tools uct's chemical and gas Delivery
Systems are configured with Superior
technical expertise in design and
Manufacturing our TurnKey systems permit
the precise delivery management and
control of specialty gases and chemicals
in semiconductor display Fab and subfab
infrastructure high quality weldments
are key in delivering new chemicals for
the advanced deposition and Edge markets
with a focus on cleanliness
contamination control uniformity and
overall quality thermal control in
complex manufacturing equipment means
ensuring all the chemical precursors and
byproduct reactants are managed to
provide High reliability performance we
address our customers most challenging
temperature management needs our
mechatronic experts engage in all
aspects of the value chain to deliver
Solutions including mechanical control
and placement Precision for process
repeatability and high yield UCT
efficiently and effectively perform
system integration involving low volumes
of Highly configurable complex
assemblies and modules from mechanical
assembly to electrical and pneumatic
routing we offer a complete fully tested
subassembly many of which Shi directly
to the end user with vertical
integration and key strategic
Partnerships we consistently meet our
customers delivery targets reliable
costeffective high volume manufacturing
involving critical gas or liquid inputs
requires a robust physical
infrastructure uct's fluid Solutions
supports the gas delivery system for
wafer fabrication equipment including
valves fittings and hoses critical
building blocks in the value chain for
ucct meeting the stringent requirements
of high performance Industries requires
understanding the capabilities of
individual parts or components and
ensures the performance of the entire
system whether working with high Purity
corrosive chemical Delivery Systems for
Semiconductor applications or high
pressure temperature sensitive solutions
for chemical and pharmaceutical
processes uct's end-to-end development
and Manufacturing capabilities enable us
to more effectively address complex
application
challenges uct's services division is a
leader in the industry because we have
an in-depth understanding of the
stringent cleaning coating and Analysis
specifications of new and recycled
semiconductor chamber Parts our
facilities around the globe process over
a million Parts each year and our
Solutions improve chip makers
performance and minimize downtime while
lowering the cost of ownership uct's
exclusive cleaning capability focuses on
the most critical process areas of wafer
fabrication and includes patented
chemistry that selectively removes
deposition and offers a minimally
abrasive non-con process in an
environmentally friendly manner uct's
proprietary performance Coatings
increases yield and Tool availability we
protect the tool Surface by reducing
corrosion during etch and increasing
adhesion during the deposition processes
all Coatings are done with
state-of-the-art Robotics and monitored
using statistical process control
parameters to meet our customers
specifications finally uct's chemtrace
capability reduces Fab variability by
analyzing everything from fab air
quality Chamber Park cleanliness wafer
Quality Chemical and water Purity
through to the clean room consumables
chemtrace has a network of accredited
commercial Testing Laboratories located
around the globe and is a partner of
choice for customers who want to improve
Fab results amid growing semicond
conducted demand and increased device
complexity UCT is ideally positioned to
deliver solutions that meet our
customers quality delivery and cost
requirements our broad Suite of
highquality product and service
capabilities help to solve the complex
challenges of today's semiconductor
industry and enable our customers
success what I now want you to do is to
go to Seeking Alpha if you don't
subscribe to Seeking Alpha there is a
discount coupon in the description that
uh you can you can get it uh when you go
to Seeking Alpha you go to
uctt and you page down and you're going
to see this little squiggly line and it
says Ultra Clean Holdings earnings
transcript you click on that and that
takes you to their earnings report from
October the 25th um
2023 this is the transcript that goes
through it what I like to do is to
listen to it and read it at the same
time so I push click here and welcome to
the ultra clean Q3 2023 earnings call
and webcast and so now you're getting
the operator who is explaining to you
who's going to report and that is going
to be that's going to include uh Jim
show hommer which is the CEO and sieri
Savage which is the CFO as you listen to
this you're going to hear Jim tell you
that the the overall atmosphere of the
semiconductor industry is slowing down
and they're going through a trough but
he's also going to explain to you how
they have uh done a lot of work of
acquiring another company to give them a
larger footprint a larger Tam then he's
going to explain to you how they they're
consolidating their uh production
centers from two or three buildings to
one and making themselves more efficient
as they move through this period when
they're larger customers are working
down their inventory because they aren't
getting the orders for the toasters for
the refrigerators for the EVS you'll
also learn that their largest customer
is
asml the Norwegian company that makes
the the the uh companies that do the
lithographic printing of the machines
that uh make semiconductors their next
largest suppliers or largest customers
are are the the foundaries and that's
going to be the um TW Taiwan
semiconductor and Samsung and now as he
he he alludes to they are building a
relationship through asml delivery of
their latest
lithography uh uh machines to entail
listen to this and come away and see if
you don't believe this is an opportunity
of a lifetime okay that's how how I
invest in stocks I'm not interested in
buying the the front runner right now
because he doesn't have the potential
that these depressed stocks do this is
where I'll make my big money will I
continue to own and buy at at at any
dips in Amazon and Google and apple of
course I will because those are the
stocks that are going to lead us through
this change in our world called
generative artificial intelligence
if if you watch my yesterday video
you're going to learn this is going to
change your life but right now the
opportunity is in the depressed
semiconductor stocks and they're on my
cheat sheet and I promise to you I'll
find some more so how can you
participate that join the tribe go to
best of us investors and join our
Platinum level right now we have it on
sale for 50% off of our monthly fee and
you can come along with this ride for
how to cheat Wall Street out of their
game beat them at their game and we can
do that if we can go where they don't go
where they don't they they want to talk
to you about Nvidia they want to talk to
you about super micro they want to talk
to you about Micron they don't even know
about air systems and Ultra Clean talk
to you again
[Music]
tomorrow
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