It has been a while since I've written about Xcerra (NASDAQ:XCRA), a small hyper-cyclical player in the semiconductor test market. When I last wrote about the company, I thought the shares looked undervalued below $12.50 in May of 2014. The shares did break into the $10s a few times after that, but the momentum in the system on a chip (or SoC) testing market faded faster than expected and Xcerra took an all-too-common cyclical tumble back into the mid single-digits.
The shares do appear undervalued again today, and the company is addressing new markets that meaningfully expand its total potential revenue opportunity. That said, Teradyne (NYSE:TER) and Advantest (NYSE:ATE) have commanding share in the industry and it's far from certain that Xcerra's new opportunities are going to work out as hoped. I can see the appeal here for risk-seeking investors who want to find a high-leverage play on increased semiconductor equipment spending, but I think this is definitely the sort of stock you "date" as opposed to making a long-term commitment.
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Xcerra Waiting For The Next Elevator In The Testing Cycle