Gobbledygook - INTC - AMKR??
Let’s spend some time thinking about Intel - INTC - $21.
INTC eliminated the dividend, and declared that even 2025 was going to be a washout. But don’t worry they say, everything will be alright by 2026. Yeah, sure. The stocks sells at book value, and about 4x what INTC earned in 2019-20.
INTC essentially has become on one of the greatest “dead money” stocks of all time. I really wanted to hear a clear long-term story. Unfortunately, most of what INTC said was gobbledygook.
Gobbledygook is a real word, invented by a Texas Congressman in the 1940’s. Some testimony the Congressman heard had so much jargon, he said it sounded like turkeys gobbling.
I think INTC’s problems are caused by building their own fabs, rather than using fabs run by contract manufacturers in Taiwan. They failed to make this clear. I want to believe the long-term story, but Intel spoke in terms only experts could decode.
What INTC is calling their “foundry” business will not breakeven until 2027. Maybe I can go back to an old investor day and learn the code, but for now I am giving up.
Note: After giving up, I did find a decent 6/23 presentation that explains how INTC will measure its own foundry costs. However, there is still no clear explanation about why INTC insists on almost never using outside foundries.
The reason INTC is a cheap stock is because they determined to compete with Taiwan Semiconductor and other foundries.
Teradyne - TER - $117 - is the stock I want to own, but I am waiting for the 90’s. TER has big market share in test equipment. I think I understand this business, but there are China risks.
Looking through the technology wreckage I stumbled on Amkor Technologies - AMKR - $29 - (1x sales, 6x EBITDA, 1.7x book, more cash than debt). Best I can tell, they seem to package semiconductors made by others. The stock is down from $45 to $29, and the $7 billion market cap keeps AMKR under the radar. I want to learn more.
OK, I am officially an idiot. AMKR is the second largest holding of my guys at First Eagle - FESCX. A good idea was hiding in plain sight. Now, I am 100% more intrigued. Their position dates back to June, 2021 when the stock was $20-$25.
Maybe I have found a technology stock.
It’s a slow Sunday afternoon, let’s recast the next 20 list:
Mosaic, FMC, Lindsay, CNH Industrial
Nexstar
Royalty Pharma, Perrigo, Roche, Azenta, Henry Schein, Charles River, Baxter, Avantor, Acadia, Neogen
Hasbro
Amkor Technologies
Columbia, Oxford
Alexandria RE
Borg Warner
Harly Davidson, Polaris
Yeti
Etsy
Lamb Weston
Choice Hotels, Norwegian Cruise, Viad, Vail Resorts
Rogers, Teradyne, Logitech
Peabody, Civitas
Antero Midstream
Marcus
Dow Chemical
Portillo’s, First Watch, Bloomin Brands, Wendy’s
Liquidity Services
LKQ
Goodyear
Krispy Kreme
Magnite
Ziff Davis
Lincoln National
Northwest Natural, AES, Essential Utilities (and 20 more utilities)
Unifi