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Technology Stocks : Cohu, Inc. (COHU)
COHU 15.27+1.6%Oct 21 4:00 PM EDT

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To: robert b furman who wrote (6655)3/14/2019 11:50:24 AM
From: robert b furman1 Recommendation

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Chart update:

Weak guidance creating a sell off (or market makers selling short and creating overhead weight which depresses stock price).

No one stock is better at this than Cohu.

It provides a wonderful buy the dip opportunity.

This sell off looks like a 5 wave down A of a zig zag ABC due in the future.

Time to buy is when it begins to goe sideways and Macd will bottom on the very low part of the chart.

Yesterday had big volume - this is shorting - pushing selling supply on a hurt stock.

This greases the skids, but must be repurchased at a later date. That's when the sideways price action on much lighter volume soaks up the lowest price action.

The Q1 of 2020 is not that far off. Expect the Q1 earnings to come out in 3rd week of April. That will push this down wave to happen quicker.

I'd expect a much stronger guidance in Q2. Q2 and Q3 are the busy quarters.

Auto picks up always as new models come out in October and those new models using radar for driver awareness systems will be in backlog.

G5 is a second half growth story,unless its roll out is accelerated. BOTH T and VZ have announced a roll out of 5G to about 30 cities after having the initial cities show great use.

Verizon (VZ) will be rolling out its 5G Ultra Wideband Network next month, starting with service in Chicago in Minneapolis.

Service in the cities will start April 11 and will expand to more than 30 markets this year, the company said.

Jones is cutting 2.5 million in cost per quarter but spending that much to get it done.

Consumables have fallen in line at 125 million and expected to grow 10% for next 5 years. That PLUS a 100% sell rate on new equipment (which is a big boost on Cohu's handlerse which Xcerra has achieved already in the past)

That's where Mueller's 300 million in 5 years comes from. Cohu gets 100% penetration on their handlers plus 10% on both companies installed owner base.

Keep in mind that 65% margins on 300 million = 195 million of gross margin on a opex of 145 million.

That leaves 50 million minus stock compensation, impaired intangibles, and other non-gaap adjustments - all before the profit of selling a new system falls on top of already in the black.

We are in the "not yet understood profit power" of this company.

This is where the market gets it wrong and price gets too cheap.

When the debt is paid back and market share growth plods relentlessly on this stock will boost the dividend and be a solid blue chip dividend growth stock.

Its long term but just look what happened to AMAT, KLAC, LRCX after they joined forces with their greatest competitors vs beat themselves up over margin competition.

All justification to buy the dip, during this early digestion of a bigger company by a smaller company.

I've bought 4 dealerships in my career, and believe me I never had them turned around to my way of management thinking in the first 100 days.

One is still trying to learn who the solid employees are.

This will take time and that uncertainty is creating a great "add to" buy period.

Hope that helps and if you can take advantage of this opportunity.

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