It’s been a while since I’ve written on Entegris (ENTG), but this is a semiconductor supplier where I’ve loved the story for a long time. And why not? Entegris focuses on specialty materials and systems for the semiconductor industry and is directly leveraged not only to volume growth, but increasing complexity in chip design. With good moats, strong underlying chip volume growth, healthy margins, and opportunities to apply its core capabilities into other growth markets (like bioproduction), there’s a lot to like.
The exception is valuation. That combination of strong underlying growth, margin leverage, and defensible market positions has led to a robust valuation that I find very difficult to reconcile to the fundamentals. Of course there will be growth/momentum investors to tell you how valuation doesn’t matter, and maybe this is a case where it’s true, but at this point Entegris is basically a leveraged bet on even more semiconductor industry volume and company-specific content growth, as well as opportunities in life sciences.
Read the full article here:
Entegris Offers An Exceptional Growth Story, And A Rich Valuation
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