Hello Friends! When the market starts acting healthier, as it is at least a little today (?), I find that my kind of stocks start coming to the top of the heap! As always, let me start with the disclaimer, and remind all of you to do your own due diligence before making any investment decisions based on information on this website and to consult with your investment advisor on the suitability of any investment you might wish to make.
I came across Artisan Components (ARTI) a few moments ago on the list of stocks moving higher and it seems to fit my requirements for stocks to list here. As I write, ARTI is trading at $18.88, up $1.36 or 7.76% on the day. I do not own any shares of this stock nor own any options or other leveraged positions.
According to the "Snapshot" on cnn.money.com, Artisan's "...principal activity is to develop high performance, low power and high density embedded memories and other intellectual property components. Semiconductor companies utilize these products to design and manufacture complex integrated circuits in high volume applications such as portable computing devices, cellular phones, consumer multimedia products, automotive electronics, personal computers and workstations."
On January 26, 2004, ARTI reported 1st quarter 2004 results. Revenue came in at $20.1 million for the three month period ended December 31, 2003, a 43% increase over the $14.0 million reported in the first quarter of fiscal 2003. GAAP earnings came in at $3.7 million or $.15/share vs $2.2 million or $.11/share the prior year.
Looking at the "5-Yr Restated" financials on Morningstar.com, we can see that revenue growth has been beautiful with $14.9 million in revenue in 1999, $20.3 million in 2000, $25.8 million in 2001, $37.2 million in 2002 and $68.5 million in the trailing twelve months.
Earnings have not been quite as steady, ranging from $.07/share in 2000, dropping to a loss of $(.88)/share in 2001, back to $.12 in 2002, and $.34 in 2003.
Free cash flow has also been inconsistent with $1 million reported in 2001, $7 million in 2002, but $(1) million reported in 2003. The drop in 2003 is attributable to 5-fold increase in "capital spending" from $1 million in 2002 up to $5 million in 2003. The balance sheet is solid and this variability in free cash flow is not a big concern to me.
According to Morningstar.com, ARTI has $98.8 million in cash, enough to pay off the current liabilities of $15.8 million and the long-term liabilities of $5.2 million more than four times over! In addition, ARTI has $30.5 million in other current assets.
Looking at "Key Statistics" on Yahoo.com, we can see that ARTI has a market cap of $422.36 million. The trailing p/e is a bit rich at 50.05, but due to the rapid estimated growth we have a forward p/e (fye 30-Sep-05) of 22.92. Thus, the PEG is very reasonably priced at 0.91. The price/sales is still a bit rich at 5.22.
Yahoo reports 22.21 million shares outstanding with 20.60 million of them that float. There are a LOT of shares out short--3.81 million as of 2/9/04--representing 18.48% of the float or 5.605 trading days. No dividend is paid and not stock split reported on Yahoo.
How about the technicals on this stock? Here is the "Point and Figure Chart" on ARTI. The stock appears to be trading relatively sideways since mid 2002 and recently DID drop through a support level at about $18. However, you will need to decide for yourself on this graph!
I actually like this stock a lot. The p/e is a bit rich but the PEG is reasonable (under 1.0) so the pricing isn't too bad. The balance sheet is superb but I cannot tell you intuitively about the particular business this company is involved in. What about the shorts? Well, if this stock continues to move up, we will see a squeeze which may really generate some buying interest as the short-sellers scramble to cover their borrowed and pre-sold shares!
Thanks so much for stopping by! If you have any questions, comments, or words of encouragement, please feel free to leave them right here on the blog or email me at firstname.lastname@example.org