Brooks Automation Offers A Two-For-One With Exposure To 2 Healthy Growth Markets

I don’t know how much longer Brooks Automation (BRKS) will operate as is, what with the Street preferring more pure-plays these days, but for the time being this is an interesting way for investors to pursue exposure to two attractive growth markets – leading-edge semiconductor manufacturing and life sciences, with an attractive “kicker” to gene therapy in the latter.

Not surprisingly, Brooks doesn’t trade a like a value stock, and this stock is going to have more appeal to investors who care more about growth and growth stories than by-the-numbers valuation. While I do like the long-term growth potential of both businesses, I would note cyclical risk in the semiconductor business and valuation risk in life sciences given the high level of investor enthusiasm for plays in that sector.

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Brooks Automation Offers A Two-For-One With Exposure To 2 Healthy Growth Markets

Investopedia: Applied Materials Gets Two For One With Varian

With Wednesday's announcement of its deal for Varian Semiconductor (Nasdaq:VSEA), Applied Materials (Nasdaq:AMAT) has to get full marks for a shrewd move and a surplus of chutzpah. It was just the other day when a major analyst downgraded Applied Materials on the basis of questions about the semiconductor equipment cycle. Clearly AMAT is playing with a longer-term horizon. 


The Deal
Applied Materials has reached a deal with Varian to acquire the company for $63 per share in cash. That is a total price of $4.9 billion or about $4.6 billion after netting out Varian's cash. At this price, Applied Materials is paying a 55% premium for Varian shares, and giving investors the best price these shares have ever seen (and a 29% premium to the consensus analyst target price, for the very little that is worth). (For more, see Mergers And Acquisitions: Understanding Takeovers.)

What Applied Materials is Getting
In many respects Applied Materials is getting two really interesting businesses in one deal. Varian is a leader in ion implantation systems, tools that basically build transistors on chips through doping. Varian has really benefited from an industry switch towards single-wafer processing and has built a roughly 75% market share in this business. In fact, Varian is well ahead of rivals like Axcelis (Nasdaq:ACLS) and Applied Materials quit this business years ago after finding it too difficult to get competitive traction. 



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Investopedia: Hot Stocks To Start 2011

So far 2011 is off to a great start. 

Fears of a U.S. federal government shutdown? No problem. North Africa and the Mideast in an uproar? Not to worry. Rising inflation and decreasing fears about equities? It's all good.  

Not only have the markets climbed the wall of worry quite easily so far this year, they all appear to be using the same rope. The Dow Jones, S&P 500 and Nasdaq are all up about 5% so far this year. But as is always the case, markets operate like ducks on a pond - things seem quiet and steady on the surface, but there are a lot of little feet madly paddling away out of sight. With that in mind, let us look at some of the top performers in 2011.

Solar - The Sun Has Come Out Tomorrow
Solar carries the rap for being economical and attractive only because of heavy government subsidies - subsidies that will presumably go away in the newly frugal world of 2011. It's not bothering the stocks, though, as this sector is up more than 36% so far this year. While tiny solar companies have seen the sun shine, large players like Jinko (NYSE:JKS) and LDK (NYSE:LDK), with the former announcing a 23% sequential revenue jump in Monday's earnings report. (For more, see Top Solar Stocks To Watch.)


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