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Bull Of The Day: Ultra Clean Holdings (UCTT)

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Ultra Clean Holdings (UCTT - Free Report) is a Zacks Rank #1 (Strong Buy) and is the Bull of the Day once again.  The last time the stock was the Bull of the Day was November 12 and the stock closed that day at $22.54.  There hasn't been that much movement in the stock since then, but 

Description

Ultra Clean Holdings is a developer and supplier of critical subsystems for the semiconductor capital equipment, flat panel, solar and medical device industries. Ultra Clean offers its customers an integrated outsourced solution for gas delivery systems and other subassemblies, improved design-to-delivery cycle times, component neutral design and manufacturing and component testing capabilities. Ultra Clean's customers are primarily original equipment manufacturers for the semiconductor capital equipment, flat panel, solar and medical device industries. Ultra Clean is headquartered in Menlo Park, California.

Earnings History

As I look at the last four quarters I see a solid history with three straight beats coming after one miss.  The average positive earnings surprise over the last four quarters is 25%.

Earnings Estimate Movement

The Zacks Rank is an algo that looks for the best moves in earnings estimates. The consensus estimates for UCTT is doing just what investors want to see, its moving higher.

I see small increases for this quarter, next quarter, this year and next year.

The Zacks Rank cares the most about the full year number and for 2019 that number has moved from $0.87 to $0.95 over the last 60 days.

The 2020 number has moved from $1.29 to $1.40 over the same time period.

These are big moves... and investors that believe that fundamentals matter know that higher EPS results lead to higher stock prices.

Valuation

I see a 16x forward PE mutliple and that is pretty good considering there is 8.6% topline growth on a year over year basis.  I see a price to book multiple that is just under 2x and a price to sales multiple of 0.86x.

Chips stocks in general have been very strong and this name should benefit from continued investor interest in the space.

Chart

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