Cohu, Inc. (COHU)

[peterquinnvet]

Cohu ( COHU 3.86% ) is a minnow of the semiconductor industry with a valuation of just $1.3 billion. But that's not a true reflection of its importance, because while it doesn't produce any chips itself, it provides testing and handling equipment critical to the manufacturing process.

The company's equipment is used to inspect and handle chips used in consumer products, industrial applications, mobility (think 5G networking), and even the automotive industry. Its defect-detection capabilities are important in ensuring the final product fits within quality standards before it reaches the end-user.

The new car industry has been one of the hardest hit by semiconductor shortages during the pandemic. Cohu has shifted its focus to that segment, which has become its largest, representing 17% of the company's total revenue. As new vehicles are fitted with a plethora of sensors and digital features, chipmakers are increasingly demanding Cohu's Neon inspection system, which is designed for handling semiconductors used in such applications.

Cohu had its biggest ever year in 2021, generating $887 million in revenue and $3.45 in earnings per share. Its stock, therefore, trades at a price to earnings multiple of just 8.1, which is a 68% discount to the iShares Semiconductor ETF. That means Cohu stock would need to more than triple to trade in line with its peers in the industry.

https://www.fool.com/investing/2022/03/08/5-semiconductor-growth-stocks-to-buy-now-and-hold/