Skywater (a small cap chip stock) just massively grew revenues by 37%, beat earnings, and raised guidance on gross margins aggressively.
It trades at a measly Price/Sales and EV/Revenue ratio of about 2 compared to the 7-8 you see with large cap chip companies with shrinking revenues.
The market mispricing is unreal. And that’s why it’s owned by the likes of DE Shaw (https://finance.yahoo.com/quote/SKYT/holders?p=SKYT) and held closely by insiders.
And the crazy thing is that only about 34% of the shares outstanding are freely floated – about 15.15 million shares. If retail investors pick up on this opportunity, they will send the stock soaring!
Here are some more details:
Skywater is a US based chip and foundry company. In 2016, Oxbridge a PE company bought them, improved efficiency, replaced management and IPO’d the company. They run a lean, EBITDA positive business even as the macro chip environment is awful.
They’ve been approved by the DoD to make chips and they have clients like Lockheed, NVIDIA, Analog Devices etc. They partner with Purdue University and state governments to set up new fans at low costs to shareholders and obviously they will benefit from CHIPS Act funding.
I have so much conviction that this company will do phenomenally over the next 3 years and it’s my favourite stock pick in the overvalued mess that is the NASDAQ!
I really hope my post will intrigue some of you to research and look into Skywater before it delivers! And hopefully start a discussion in this subreddit
It’s going to be a spectacular ride!
Full Disclosure: The market cap for this company is just shy of $500 million but I don’t think it will be by the end of the week. And yes, I obviously own shares!
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