Always Nice to See Vindication!

Over the weekend Barron's wrote a positive article about KLIC, a stock I have mentioned many times within this blog. Today they are up nicely due to the Barron's Bounce. Here is what I wrote in early May:

KLIC - I think these guys are at the top for a reason. When I did the math, I frankly could not believe it.  This is a company with a market cap of $872m and by my math they have almost $500 in excess cash.  What does that mean?  That means they could theoretically pay a $5 dividend per share and still have the same earnings stream going forward.  They make the equipment to allow companies to make semi conductors.   Over the past three years, their operating income has gone from 150m to 182m.  Did I mention their market cap was only 872m and they have 500m of excess cash.  Think about it,  if you had $1b, you could (theoretically buy all their stock)... say $13 a share.  You could immediately pay yourself a $5 per share dividend.  Now you are only $8 per share out of pocket.  Over the past three years they have average $2 per share in income.  That is a 25% return per year on your $8.  Pretty good, no? But we do not have to pay that premium, as small time investors, we can buy as much as we want for $11.39 a share.  Then we wait for the big guys to figure it out.  Now I know it is not that simple.  There is a reason for the discount.  They are only expected to earn 77 cents this year and 1.45 nect year.  There is a cycle in CapEx spending.  But when that spending starts to ramp back up, you would be sitting in proverbial catbird seat.