In this nascent recovery, some savvy players are already buying into tech stocks in anticipation of hefty gains. One such is Steve Werber, who says semiconductor equipment is the right place to be as capital spending starts to rev up. Co-manager of the Global Technology Fund at New York investment firm J. & W. Seligman, which oversees some $1 billion, Werber is betting on ASM International (ASMI ), a designer and maker of gear for producing chips. ASM, which competes with giants Applied Materials and Novellus Systems, has facilities in the U.S., Europe, Southeast Asia, and Japan. It focuses on equipment that turns out the larger next-generation 300mm wafers, which are slated to replace the current 200mm standard.
The industry's switch to bigger wafers requires new tools, and this presents an opportunity for ASM to sell new machines to big chipmakers. Werber says new ASM customers, because of the 300mm wafer, include IBM and Intel. ASM, he notes, is the fastest-growing chip-gear maker: Its fourth-quarter order growth was 22% above third-quarter figures. Although ASM is a small player, Werber favors it over Applied Materials: It's still undervalued, he says, despite a rise from 9.35 on Sept. 21 to 24 on Apr. 10. "What's important is that ASM is gaining market share," says Werber. He figures it will earn 15 cents a share in 2002 and $2 in 2003, when he sees industry spending on semiconductor equipment peaking. His price target is 40, based on 20 times projected 2003 earnings.
By Gene G. Marcial