Anyone entertaining suspicions that growth investing is not risky investing need look no further than Motley Fool Rule Breakers recommendation IPG Photonics (Nasdaq: IPGP ) to be freed of that illusion. As markets turned bright red on Monday, few stocks turned more scarlet than this maker of fiber lasers. On no discernible news, the stock tumbled nearly 9% -- more than four times worse than the average Nasdaq victim.
I was anything but complimentary to IPG when I last wrote about the company, on the occasion of its fourth-quarter earnings report. And my opinion of its disclosure practices hasn't improved. One full week after I criticized management for failing to give a full accounting of its cash flows for the year, IPG still has not filed its 10-K and cash flow statement.
That said, an 8% drop on no news awakens the inner value hound in me, cynic that I am. So as we continue to wait for management to get up to speed on its disclosure obligations, let's make the best of our enforced patience.
Has Mr. Market's hissy fit presented us with a buying opportunity? In the table below are the stats on IPG and a few similar players in the laser industry. I've omitted giants such as Cisco and Corning because their businesses include, but do not focus on, lasers.
|
Stock
|
P/E
|
Price-to-
Free Cash Flow
|
Projected
Growth Rate
|
|
IPG Photonics
|
24
|
negative*
|
29%
|
|
II-VI (NASDAQ:IIVI)
|
18
|
31
|
20%
|
|
Rofin-Sinar (NASDAQ:RSTI)
|
20
|
21
|
19%
|
|
Excel Technology (NASDAQ:XLTC)
|
17
|
15
|
16%
|
|
Coherent (NASDAQ:COHR)
|
91
|
30
|
10%
|
*Based on the past four reported quarters, for which statements have been provided.
From a pure PEG perspective, IPG looks pretty darn attractive at today's price. If we're to believe the analysts, IPG has the brightest growth prospects of any company in this sector, and so Rule Breakers has picked the best bargain of the bunch for us. There's also something to be said for II-VI and Rofin-Sinar, however. Another Fool publication, Motley Fool Hidden Gems, spotlights both of these companies as cheap, and their PEGs support this view.
Foolish takeaway
The problem I have with all three picks, however, is that they're generating less free cash flow than they report as net income under GAAP. I prefer things the other way around -- I like companies generating more free cash flows than meet the eye. From that perspective, Rofin-Sinar looks like the best Motley Fool-endorsed stock, and Excel looks like the best bargain overall.
Want a second opinion? Check out what the CAPS community has to say about these five companies. What you'll find is that, by and large, investors think you should buy them all -- except Coherent. And on that last point, I agree wholeheartedly.
RSS Headlines
Fool UK