Three Boston tech buys

July 28, 2016 09:00 AM
The Industrials sector has been in the doldrums for some time, until recently. Let’s take a close look at one industry driving its recent upgrade. This week, the Electronics Machinery-Manufacturing industry sparked interest.

The Industrials sector has been in the doldrums for some time, until recently. Let’s take a close look at one industry driving its recent upgrade. This week, the Electronics Machinery-Manufacturing industry sparked interest. 

This 15-company strong high tech industry reached a high Zacks Industry Rank of #13 out of 265 (Top 5%), moving up 11 spots in the last week of May. In recent weeks, there have been 17 analyst upgrades vs.10 downgrades with an average positive revision of 13%.

Upon closer investigation, these smallish, mid- and small-cap companies have been around for 50 years or so. They have a myriad of little divisions and products. These companies evolved inside a knowledge-driven engineering industry born in the mid-1960s. Many are  located in high-tech exurbs just north of Boston. Silicon Valley in Northern California gets too much attention. Greater Boston has a pre-existing and thriving high tech engineering cluster.

Three companies investigated and ranked by Zacks keep headquarters located very close together, in the northern Boston suburbs of Andover, Billerica and Chelmsford.  These machinery/manufacturing firms are showing promise (see “Boston strong” Below).

(1) MKS Instruments (MKSI) offers a Zacks #1 Rank (Strong Buy) and a Zacks Value rating of B, driven by a PEG ratio of 1.05. The expected three- to five-year EPS growth rate is 15.67%. The EPS for 2016 is $2.20 a share. 

The corporate headquarters is in Andover, Mass. There are 27 product groups on their website. A variety of MKS sub-groups are found all over the globe in Austin, Tex.; Boulder Colo.; San Jose, Calif.; Wilmington, Mass; Telford, England; Malmo, Sweden; Berlin; Daejeon, South Korea; and Hellebaek, Denmark.

(2) Entegris (ENTG) is a Zacks #2 rank. The PEG ratio is 1.42. This is a mid-cap stock with a $1.8 billion market capitalization at the current $13 a share price. The expected three- to five-year EPS growth rate is 11%. The current year EPS looks to be $0.81 a share.

Entegris is located in Billerica, Mass. There are 11 product groups on their website. They were founded in 1966 and have 2800 employees in 28 worldwide locations.

(3) Brooks Automation (BRKS) offers a Zacks #2 rank, but a VGM score of C (Hold). The EPS for 2016 is $0.43 a share. The market capitalization is $633 million, making this $9 a share stock a small cap pick. There is a nice $4.33% dividend to collect. The next EPS reporting date is Aug. 4. The most recent EPS surprise was +75%.

They are based in Chelmsford, Mass.

About the Author

John Blank, Zacks Research