hope that y'all have been doing well recently! Haven't had the chance to post in the past two weeks, but I'm coming back today to discuss a stock that I have placed on my watchlist for the past few months!
The stock in question is Micro-Mechanics (SGX: 5DD). A brief introduction about what Micro-Mechanics does. It designs, manufactures and markets high-precision parts and tools for the semiconductor and other high technology industries. It has five factories across the world, located in Singapore, Malaysia, China, Philippines and the USA, with direct sales presence in Taiwan and Europe.
Micro-Mechanics first caught my eye as I saw that it's dividend payout has never decreased over the past 10 years, while holding a healthy balance sheet. If it manages to maintain a $0.1 dividend payout this year, it would be offering a 5.32% yield at its current price, which is surprisingly good considering the stock's recent performance has it returning to pre-March crash levels. It is currently trading at 1.88, with a 52-week range of 1.32 - 2.00.
Micro-Mechanics has a distinct advantage, that is being in the semi-conductor industry. While Micro-Mechanics' current P/E ratio of 19 might be unappealing to some, I believe there is still further room for growth, considering how strong the semi-conductor industry as a whole rebounded well during the COVID-19 situation. This industry seems to be only looking upwards for the next few years to come, with the world being forced to digitalize at a much faster pace due to COVID.
An area for concern for me would be its dividend payout ratio, as it exceeded 100% during its' last fiscal year. With it's strong balance sheet, it does not seem like much of a concern for now, especially since it's 5-yr average of dividend-payout ratio is at 64.74%, but it could be something I look out for going forward.
Micro-Mechanics have been on my watchlist for quite some time, and I would definitely be looking for an entry once I manage to gather some liquidity. Till my next post, take care!
Stay Safe,
T
Hi T & O,
ReplyDeleteWhat would you say is a good entry price for 5DD?
James
Hey James,
Deletethank you for your reply! Personally, I foresee myself holding this stock for the long-term and hence entry price is not a deciding factor for me. But I do think that 1.77-1.8 would be a good entry based on my limited technical knowledge, as there seems to be a good support level there.
Cheers,
T