Intevac, Inc. (IVAC)

Company has 3+ quarters of backlog at a good margin. Only question is whether they can hit profitable operating scale and fund R&D at the same time while outmaneuvering much larger competitors. Company continues to innovate in a very specialized market.

Wow, dropped 10% on Friday. Maybe a bit late, but I need a potential short-term fast dropping hedge without much near term upside in case of a bear or bull trend. This came up #4 on my reverse screener so I'm suprised to see a 4-star rating and will go against the trend.

IVAC looks like a solid company that's had a huge over-correcting bounce up in a competitive somewhat cyclical industry. A reasonable pullback should bring it into the mid-high $6 or low $7 range quickly. Should underperform based on gloomy 1Q & 2Q guidance anyways.

buy@15 sell@30

March 4, 2008 9:19 AM EST

Intevac Inc. (Nasdaq: IVAC) Chairman, Norman H. Pond, bought 38,144 shares on 02/29 at $12.15, bringing his stake to 820,129 shares.

Intevac, Inc. provides disk sputtering equipment to manufacturers of magnetic media used in hard disk drives.

STREETINSIDER.COM

Great looking company... magic formula!

MFP. This company has a great spreadsheet....very little debt, a P/E right at 5, and a pretty awesome ROI.

Seeing as how they're on their way down for a while, I figure this is a good time to pick them up.

Plus, they make night vision goggles. How cool is that.

Solid earnings history. Solid growth. Under-valued.

High ROIC, good earnings

looks very good on the reports. nice ROE $ ROA.

high cash flow (right now 100M cash and 360M market cap) and almost no debt.

low PE.

it has dropped a lot for no obvious reason and should go up soon.

I know flash drives are cool but hard drives are not going away. There might even be upside to the imaging side of the business

It's bouncing nicely off a 2-year low. It has a 6 PE, was just upgraded by analysts and I see no reason it should be down this much.

Good basic fundamentals and it has a lot of room for improvement just to return near previous ceiling.

MFI and CAPS

These guys make sputtering equipment for making hard disk drives, and their main customers are the hard drive manufacturers, like Seagate and Sony, among others. There is some significant risk involved with having a few concentrated customers like this, especially in a cyclical industry like hard drives. The recent price war in the industry has hurt the entire industry, as profit margins come down. When Seagate announced that earnings would be lower than expected, IVAC's stock shot down on the same day.

This is a cyclical industry, and a friend of mine in the industry said that now is a good time to buy stock in hard drive manufacturers. They are at a low point now, with prices depressed by fear of continued lower profits. As the industry recovers, companies will need to show they have a competitive advantage over their competitors, which means innovation of new technologies. Very likely, this will include the purchase of more advanced technologies from companies like IVAC, whose most recent product is poised to be the sputtering machine of choice.

IVAC has wonderful financials, and continually comes up on screens looking for small-cap growth. Here are some examples:

Pre-tax profit margin of 20%.
ROIC of 30%.
Revenue growth of 50%.
Earnings growth of 30%.
Expected growth rate of 17.5% (reduced during the industry slowdown).

Value:

DCF analysis shows fair value of $47.
Price-to-book of 3.
PEG of 0.68.
Price-to FCF of 7.

Clearly, the market believes this stock is going to underperform its recent history. With a margin of safety like this built in, there is a great deal more upside than downside.

This is on my short list for my next real-money purchase.

http://shadunskymethod.blogspot.com/2007/06/intevac-is-worlds-industry-leader-in.html

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To me, this is a value play for a good long while. PE of 12!!! And a 50% upside from where I'm standing. On it again, for a ride back to the top.

Nice growth stock, hit recently by downgrade and predicted slowdown/pricing pressures in disk drive biz. Overall, I still like the future growth, the 11 P/E and EPS ($2.13). Solid, growing company who has staked its claim of market share in this ancillary niche of the disk drive business.

Been growing nicely the last several years. This may be due to retract a bit over the next few years, but the company is tightly run with good margins and healthy fundamentals. I see it as undervalued despite already nice runup in price this year.