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It seems that no matter what GT Advanced Technologies (Nasdaq: GTAT ) does, the market won't give the stock any sort of sustained rally. A big buyback hasn't helped, and even a P/E ratio under 7 isn't a good enough value to keep the stock from within striking distance of a 52-week low.
So I'll take a step back from the day to day and ask: Is GT Advanced Technologies a buy at this price?
A look under the hood
At its core, GT Advanced Technologies is an equipment and solutions provider of sapphire and silicon crystalline growth systems. The company competes with other equipment makers, such as Aixtron (Nasdaq: AIXG ) and Veeco Instruments (Nasdaq: VECO ) , to provide equipment that makes raw materials for the solar and LED markets, primarily in China.
The solar market, in particular, has driven the company's growth in recent years but has become a weakness recently. Manufacturers have bought so many polysilicon reactors and PV crystallization growth furnaces that the market is oversaturated with supply. In the short term, that poses a challenge for GT Advanced Technologies' ability to make sales into this market.
In LEDs, the company is a newcomer to a highly competitive market with multiple technological options. But GT has built a $908 million sapphire backlog extremely quickly in this market. This could be the market that pushes GTAT's stock forward.
Technology for the future
Taking the next leap forward is always key in highly competitive markets like solar, and GT is making strides to keep up. The company's MonoCast Technology, now available to customers, will make solar cells that are as efficient as monocrystalline cells but cost as much as multicrystalline.
The next step is advancing the company's Cz technology, which will be a huge leap forward when phosphorous-doped cells are made. When launched, this could be a leap forward in solar efficiency, while maintaining low costs. When this technology is launched, customers including Yingli Green Energy (NYSE: YGE ) and Trina Solar (NYSE: TSL ) will be clamoring to get their hands on it, because efficiency is the biggest differentiator in solar right now.
A strong balance sheet
While GT is struggling to increase sales in these oversaturated markets, it isn't as if the company is on the brink of collapse. Revenue was down 42% to $153.0 million in the last quarter, but the company managed a $0.12 profit per share. The company also had $303.1 million in cash and no debt as of last quarter. That cash is currently being put to work by buying $100 million of stock, which will reduce share count by about 10%.
The current lull in demand should be short lived for GT Advanced Technologies, and since the company is still in a strong financial position and making a profit, I think now is a great time to buy. I'm going to keep my outperform CAPScall on GT and think it will pay off given a long enough time frame.
Interested in reading more about GT Advanced Technologies? Add it to My Watchlist, and My Watchlist will find all of our Foolish analysis on this stock.