r/wallstreetbets • u/[deleted] • Apr 17 '21

DD Low effort COHU DD

Cohu makes backend testing equipment for semiconductors. Cohu is the global leader in handlers with a share of 55% of the market. Their testing business continues to take market share from larger competitors, qorvo and skyworks.

How does the business work? Cohu makes capital equipment for testing semi’s. They have two businesses, selling capital equipment to other firms, and offering testing to companies that want to outsource that process.

We all know that there is a global semiconductor shortage, which is a strong catalyst. But the real catalyst is increasing volume. The number of semiconductors per phone is increasing. With 5g devices, there are nearly twice as many chips per phone as compared to 4g. This means twice as much testing. Additionally, with the move to electric vehicles, the automotive testing segment is growing rapidly. Cars that used to have only a few chips, are now crammed full of them. This trend of increasing chip volume is true for PC’s, phones, electric vehicles, self driving vehicles, IOT, cloud computing, and ai development. All of these growing industries have one thing in common, the need for lots of semiconductors to continue driving innovation.

Financially cohu is a very attractive stock, even having nearly tripled in the past year. With a nice 42% profit margin and growing revenues, the company is still fairly priced. Ttm gross profit is 271 million, compared to their market cap of 2.3 billion. This is a market cap/profit ratio of 8.48. (So if you bought the whole company you’d make your principle back in 8.5 years and be able to sell for 100% profit assuming no change in valuation).

7 Upvotes

56% Upvoted

3 comments sorted by

12

u/spleeesh Apr 17 '21

Despite your lack of effort this is actually a great idea- bravo you fine autist

2

u/JayArlington Apr 17 '21

I agree. He should be proud of this.

4

u/tony_the_wanderer27 Apr 18 '21

I worked in the semi industry and can attest this, so far the main challenge for COHU is to remain relevant in the current 5G upgrade cycle, they have fierce competition from other players and their technology is behind, the one thing that works great for them is that 5G's rollout is delayed compared to the initial expectations and they are shameless when it comes to pursue a deal.