Zilog emerges from bankruptcy and wins raves for its newest products
The prices of most stocks discount the future. But some exceptions sneak through. If you can find a company that trades at a discount to today’s market and that also has tremendous potential for future growth, you’ve hit the jackpot. Basically you’re getting tomorrow’s growth for free.
One such rare gem is Zilog, which designs, manufactures, and markets semiconductors for the communications and embedded control markets. The company trades at less than 1 time sales, 1.6 times book, and 9.5 times EBITDA. By contrast the average semiconductor company trades at 3.5 times sales, 3.5 times book, and more than 20 times EBITDA. The company is even more of a bargain when you look at future growth prospects.
One reason Zilog trades at such a discount to its peers is that it emerged from bankruptcy in May 2002 and like most companies in that position trades on the Bulletin Board. In addition, because no major Wall Street firm follows the company it has remained under the Street’s radar.
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