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- Thursday, July 3, 2008

Tech:stocker - Ultratech, Forget The Name, Buy The Stock

With the street's unwanted welcome of the bear market today as the Dow Jones Industrials slipped 20% below their high of last October, we at tech:stocker think it's a good time to explain our investment recommendations for the current market. Having a portfolio that is no more than 60% equities, 5% bonds (as long as they don't invest in subprime mortgages), and 35% cash is a good strategy right now. We like having 35% cash under our mattress as there will be good opportunities to put investors in a position to take advantage of the economy when it recovers. Don't worry, it will recover.

Our current strategy is to have a portfolio that is a mix of "stable staples" (companies that are of real importance to the consumer) and strategic selection of small and micro caps that are less immune to the wild mood swings of nervous investors.

This brings us to Ultratech, Inc. (UTEK:NASDAQ), formerly known as Ultratech Stepper. If investing in companies were a beauty contest, Ultratech would be begging for change outside of the pageant because nobody would let them inside. Their site looks like a project for a high-school Internet class that only has access to computers running Windows 95. And yet, this is the type of micro cap that excites the gang at tech:stocker.

A company that develops, manufactures, and markets photolithography and laser thermal processing equipment is not going to send most investors into a crazed frenzy that has them leveraging the house in Monterey or the Hamptons so they can buy a few thousand extra shares. Former semiconductor darling Advanced Micro Devices (AMD:NYSE) is getting whipped like a government mule so why should we recommend Ultratech, a company whose name sounds like it was created during a Budweiser-fueled conversation ("Dude, let's create an ultra cool technology company." "Awesome, why don't we call it Ultratech?" "Right on dude!")?

Like some of our more recent picks, Ultratech has finally reached profitability and exceeded expectations for the first quarter of 2008. While $.08 a share wouldn't excite most investors, it is far better than the $0.14 per share they lost during the same quarter in 2007.

And after eading their press releases, we get the impression that Ultratech realizes that if it keeps its costs in line, it does not need to dramatically increase its sales to have a consistent positive EPS. While this is another concept that most high school students who have taken a business course would understand, we are amazed at the number of companies who use the excuse, "we need to be bigger to compete more effectively and turn a profit." Seeing Ultratech stating in their first quarter announcement that they are "proud of their continued improvements to profitability" makes our hearts swell while opening our investment accounts to their stock.

So forget the name (companies spend millions in naming exercises that go either nowhere or result in a name that is even worse than previous one) and forget the Web site. Who wants to read corporate bios anyways? As long as the company continues to make a profit, let Ultratech be the ugly step-sister who doesn't get the attention or respect. We'll take profits over beauty any day of the week.

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