I have a feeling that FEI Company (NASDAQ:FEIC)
is going to be the sort of stock that adds to my collection of grey
hairs. There's not a lot to criticize in terms of the quality of the
company - it has built leading share in electron microscopy with a broad
range of offerings (scanning electron, transmission electron,
dual-beam, fixed ion beam, et al) and has made a point of using
innovation and product development to essentially create new market
opportunities for its technology. Margins are pretty good and the
company has put together a solid recent run of annual returns on
invested capital.
The issue, then and now, is price. I thought FEI Company looked too pricey in February
and the market did punish the company for consecutive cuts to sales
guidance, but it's not exactly cheap yet. On the other hand, quality
scientific equipment companies don't often trade at bargain prices and
FEI Company is looking at multiple growth opportunities across its end
markets. I'm inclined to maintain "price discipline" here and wait for a
better price/value trade-off, but I won't be surprised if a strong
third quarter (a beat-and-raise) sends these shares back into the high
$80s or above.
Follow this link to the article:
FEI Company's Retreat Not Quite Enough
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