Stealth solar stock – and cash on sale

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CYPRESS SEMICONDUCTOR
Who would have thunk?  Sunpower (SPWR), one of the premier solar power companies in the U.S. and particularly active in the BIPV (building integrated photo-voltaics) market, is 70% owned by Cypress Semiconductor (CY).  So if you are a little skittish on buying a straight solar stock because of the balance sheet, consider putting it together with semi-conductors in Cypress.

CY has been hit in this market along with the rest of the semi-conductors (and solars for that matter), but get this – it’s being talked of as a value stock.  So I did my checking and my little cash analysis thaing, and lo and behold, for $21.97, you get diversified semi-conductor business, major participation in the booming solar industry, and $8.35 in cash – 38% of the share price!  Is that a deal?  You bet your BIPV.  (Anyone remember Rowan and Martin’s Laugh-in?)

TESSERA TECHNOLOGIES
Tessera (TSRA) practices nano-technology of sorts – well, miniaturization at least – with a big part of it for the electronics industry.  A stock of $40 not 7 days ago, is now trading at $14.07.  Why?  because the U.S. patent office is “reviewing” some of its patents.  These reviews can take up to 2 years, and the patent is in force throughout.  So for this stock to be taken out back and shot over this seems absurd.  The stock was on my strong-balance-sheet list at $40! (Um, I hope nobody bought … ) 

Now, at $14.07, again we have a company in a unique business with unique know-how, where 35% of its stock price is cash – with a P/E of 15 putting a growth stock squarely in the value category.  And the total liabilities it has are covered easily 7 times over by that cash.

FORMFACTOR
I own Formfactor (FORM) already in the REAP portfolio.  It makes specialized semi-conductor test equipment and it’s customers are a wide range of chip companies.  I started buying in the $30’s, and now it’s down to $17.50.  Fair enough.  Bad market; everyone suddenly hates semiconductors. 

But this is the stupid part.  This is a company that operates in a specialized market with not that much competition, offering something that all fabs need, and it’s stock is 65% cash, at a P/E of 11.7,  with it’s liabilities covered 6 times over.  (I think I just wet myself).    In fact, I think this is going to be the next Jesse’s Corner trade.

You don’t get opportunities like Tessera and Formfactor especially very often, and because Cypress is already halved from its year high, it becomes a relatively lower-risk way to play solar (although it does have some debt – but that’s more than off-set by its cash).  Even buying Sunpower directly is not as big a risk as many of the other solar companies, because it has sugar-daddy Cypress to fall back on if it gets a little tight for cash.

Don’t take my word for it – check’em out.

 Cheers,
Allocator
a.k.a George Parkanyi
gparkanyi@hotmail.com

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