Gt Advanced Technologies Inc (NASDAQOTH:GTATQ)

CAPS Rating: 3 out of 5

GT Solar International designs and manufactures equipment that is used to produce solar wafers and cells. It also provides services for the production of photovoltaic wafers, cells and modules, and polysilicon."


Player Avatar 007mercucio (< 20) Submitted: 4/13/2013 3:45:21 PM : Outperform Start Price: $3.61 GTATQ Score: -118.96

This company looks like is it rich with potential and indeed it is already showing some of it, but there is more to come. Even if solar didn't pan out in the long run, they are diversified into synthesizing gems, which can be used for a wide variety of things...that and many other things. In other words, their eggs aren't all in one basket. Meanwhile solar is still paying the bills for now. Look at their P:E. As I type this, it's about 5.5x. This stock looks poised to grow.

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Member Avatar 007mercucio (< 20) Submitted: 6/16/2013 2:39:23 AM
Recs: 1

I believe GTAT is a bargain at this time. It is at its lowest level since early May (it closed at $3.78, on Friday), but there are trends which stand to increase GTAT share price beyond a simple 10 times projected EPS.

2013 projected EPS: $0.29 (with some foreseeable bullish wildcards which could drive it much higher than that)
2014 projected EPS: $.37 (same here)
2015 projected EPS: $.44 (and here)

Which is an upward trend of about +28% & +20%, annually, respectively, even without the upward wildcards. So, even on fundamentals the price is good at this time... but what are the wildcards?

(1) Back in May, the company excluded $352 million of its backlog from its 2013 earnings estimates, given market conditions and uncertainty as to whether its customers would come through on their furnace orders. It is still very possible that they will come through on these orders. GTAT has said as much. They took these orders off of their estimates so that shareholders wouldn't get burned if the orders fell through. But, again, the orders could still come through: indeed the customers ARE contractually obligated to keep them. If that happens this year, the earnings for 2013 will almost certainly exceed expectations.

(2) As the solar market seems to be heating up again, GTAT straddles between solar and sapphire with its crystal growth furnace technologies. GTAT has a chance of seeing new sales from Asia (China) if the solar market heats up again, this year. That would happen because Chinese companies would need to modernize to remain competitive with American and European companies, in terms of cell efficiency. The newer GTAT crystal furnaces make a more efficient polycrystalline which Chinese companies could need in order to remain competitive.

(3) Laser optics and mirrors can be made from sapphire; the military has recently come forward with field-ready laser systems. These are not just prototypes. Northrop Grumman's Firestrike Laser system, for example, was televised shooting down a target drone from the deck of a destroyer, earlier this year. As global militaries turn to laser systems for such roles as missile defense, companies such as GTAT, stand poised to gain an unexpected windfall from growth of sapphire demand for laser optics; GTAT makes furnaces which synthesize large sapphire crystals. As the military is bound to use American companies to produce its purchases, GTAT is uniquely situated.

(4) Recent advances in microchip manufacturing utilize slivers of non-electric-conducting, heat-conductive sapphire to draw heat away from silicon microchips to increase semiconductor efficiency and reduce heat levels. These chips can be used in all sorts of devices where high performance matters... some examples could be processors for PC's, Laptops, phones, portable devices and console games. As performance increase is essential to competition, these companies always demand newer chips. This drives, and could increase, demand for sapphire.

(5) The new ultra bright LED's which are recently in use are produced using sapphire. This can be expected to drive a continued source of demand for industrial sapphire crystals.

That is my short list of bullish wildcards for GTAT. Each one bears consideration, and, in my opinion, they collectively justify a bullish outlook on GTAT's earnings growth projections, because each of them reflects GTAT's ability to address market demands which can reasonably be expected to increase in a greater-than-linear way, with time.

One last note: For sake of objectivity, I mention that I have a financial stake in GTAT's stock increasing. These reasons explain why I accepted that stake. GTAT is poised to reap tremendous profit from growth and tech trends. Although share price has dropped this past week, I view that as short term volatility - an overreaction to a Goldman Sachs announcement about Rubicon Technologies; I expect the aforementioned trends to increase GTAT's profitability, and, therefore, increase the share price even beyond its recent heights.

Member Avatar 007mercucio (< 20) Submitted: 6/16/2013 1:29:58 PM
Recs: 1

I mention 4 additional ways that GTAT's products stand to bring lucrative and/or revolutionary technologies to market, and financial profit to GTAT.

First off, silicon ingots (large silicon crystals) are semiconducting, and can be used for manufacture of silicon microchips for the semiconductor industry. GTAT makes ovens which can form (at ultra high temperatures) these large silicon ingots. Although silicon ingots are nothing new, in terms of industry, it remains a lucrative business, and GTAT is capable of delivering ovens to this sector.

Next, because sapphire is a 9/10 on the Mohs scale, it has an extremely scratch resistant surface. GTAT has developed a method of making ultra thin sheets of sapphire which can be used as a touch screen for mobile devices and smartphones. Although their touch screen material would be three times as expensive as Corning's gorilla glass, it would also be alot more durable. Given the exponential market gains in the mobile device and smartphone sector, in recent years, this technology could bring significant profit to GTAT.

Third, sapphire sheet has been used in manufacture of bullet proof glass. It is layered onto glass as the top surface layer, in order to maximize the outer hardness of the glass armor. This is a revolutionary advance in glass armor technology, and, yet again, could bring significant profit to GTAT as military and private security aircraft, vehicles, etc, are fitted with bullet proof glass.

Fourth, on a similar note, the nose cone (instrument cover) for smart weapons is sometimes made from sapphire in order to protect it from incidental impact, and give it a scratch resistant surface which can go untouched, even in sand storms. Depending on adoption and retrofitting practices by militaries, this could bring profit to GTAT. If the U.S. military were to adopt and/or retrofit its current stockpiles with this new instrument pod window, as an American company, GTAT would be uniquely situated to profit.

In sum, the uses listed here, and in the previous article, should make one thing very clear: Although GTAT is specialized in providing industrial equipment to support the industrial manufacture of crystals, it has a diverse customer base spanning multiple industries and purposes within those industries. These industries include: Medical, science, R&D, military, optics, jewelry, chemical, semiconductor, LED and solar... Because many applications of GTAT products are from within newly emerging growth sectors, & whereas GTAT has market positioning & specialized patents, GTAT is uniquely poised to profit from emerging market opportunities. That means emerging market and tech trends from many diverse industries could elevate GTAT earnings above current estimates. Although I cannot see into the future, these facts lead me to think of GTAT as a good investment opportunity, especially at the current share price, which is based on relatively certain short term financial expectations without exploring short term possibilities (again, such as the open-ended $352 million in backlog contracts) and mid-to-long-term marked demand growth opportunities.

Member Avatar 007mercucio (< 20) Submitted: 6/16/2013 1:40:49 PM
Recs: 0

As a closing note on this series, the most recent (June 15, 2013) Reuters report on GTAT gives the following estimated 12 month target price:

High: $7.00
Mean: $4.46
Lowest: $3.50

Member Avatar 007mercucio (< 20) Submitted: 6/24/2013 12:16:43 AM
Recs: 0

There are currently over 40% short shares on GTAT. At the point in time when it starts moving up, those shorts could be caught in a short squeeze, and be forced to cover, which would drive up the price to crazy high levels really fast.

Member Avatar cadepend (< 20) Submitted: 9/9/2013 12:10:53 PM
Recs: 0

Thank you fellow Fool 007mercucio. Thought at first your user name was mercutio. Anyway, you may or may not be a fellow of infinite jest, but you have not spoken more than you would stand to.

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