Camtek Looks to Break Out on Strong Prospects
After the United States and China, Israeli companies have the most listings on the NASDAQ. Known for its technological innovations, Israel is producing some amazing companies. A small-cap technology growth stock worth a look at is Israel-based Camtek LTD. (NASDAQ:CAMT), a global provider of solutions used by technology clients to increase their manufacturing effectiveness and yield.
Camtek focuses on the big growth areas of semiconductor fabrication and packaging, and printed circuit board (PCB) and IC substrates.
With a market cap of around $161.0 million, Camtek is small, but offers aggressive investors strong prospects and a “growth at a reasonable price” situation.
CAMT stock has easily outperformed the S&P 500 on a risk-adjusted basis with an advance of 35% this year and 80% over the past year.
At this point, Camtek stock is well up from its 52-week low of $2.50 in September 2016 and off 44% from its range high of $7.67 in June 2017.
Camtek has been around for some time but hasn’t been able to stage a sustainable breakout. However, I’m looking for this to change.
The major resistance level is $6.00, which CAMT stock broke but failed to hold in 2001, 2004, 2006, 2014, and—more recently—in May 2017.
Chart courtesy of StockCharts.com
The one-year chart of CAMT stock shows a rally at above the 50-day moving average, but, again, the stock failed to hold after reaching above $6.00 in May and just below $8.00 in June.
Also Read: Best Semiconductor Stocks List for 2017
Camtek stock has breached below its 50-day moving average but is holding its 200-day moving average.
The current lag in CAMT stock provides an opportunity for above-average price appreciation going forward.
Strong Fundamentals Point to Strong Upside for CAMT Stock
The underlying revenue and earnings picture for Camtek is attractive, especially given the size of the company.
Revenues have been on the rise for the past two years. The stock is under some pressure as Camtek is expected to see revenues contract 12% to $96.4 million this year but come back with 7.4% growth to $103.5 million in 2018. (Source: “Camtek Ltd. (CAMT),” Yahoo! Finance, last accessed September 1, 2017.)
The thing that impresses me is the ability of Camtek to manage its cost side, achieving profitability in two of the last three years, which is encouraging for a small company.
For 2017, Camtek is predicted to double up on its earnings to $0.39 per diluted share versus $0.18 per diluted share for 2016, and follow with $0.46 per diluted share in 2018.
The earnings per share (EPS) trend is up $0.02 for 2017 over the past 90 days and down $0.01 for 2018.
Camtek trades at an attractive 9.65 times its 2018 EPS, a big improvement over the 21-times trailing EPS. The price/earnings to growth (PEG) ratio of 0.74 implies CAMT stock trades at below its projected five-year compound annual growth rate CAGR for earnings, which is incredible for a small technology stock. Even if Camtek stock jumped 50%, its multiple would still be below the S&P 500. Camtek deserves a larger multiple than the index, so the return potential is intriguing.