IPG Photonics Corporation (IPGP): A Laser Company With Staggering Growth Potential

Page 1 of 2

IPG PhotonicsThe common reason for distressed earnings is, “higher labor costs.”  Yes, humans have an upper hand in discretionary tasks, but recurring industrial tasks like welding, etching and cutting can be automated. But precision holds the key, and robotic arms are no good if they are not equipped with proper tools. As technology advances and designs get more sophisticated, fiber optic lasers are not only cost effective but also save time. This presents a bullish case for fiber optic laser industry, and here are a few reasons why I love IPG Photonics Corporation (NASDAQ:IPGP).

The Company

IPG Photonics Corporation (NASDAQ:IPGP) is the leading manufacturer of fiber optic laser, and offers a wide range of fiber amplifiers and diode lasers. The company has three laser segments, low power (1W to 99W), medium power (100W to 999W) and high power (1kW to 50kW). Over the last 5 years, its shares have appreciated by nearly 250%, primarily due to mass production capabilities and timely deliveries. Fiber lasers don’t require consumables. This reduces the operating costs of cutting and welding dramatically and makes the laser technology an economically viable replacement for gas cutters and conventional welding machines.

Expanding Horizons

IPG Photonics recently launched its kilowatt class lasers that deliver nearly 200% better beam quality with almost double MTBF (Mean Time Before Failure). These lasers offer 33% wall-plug efficiency against the previous 30% and enhanced its warranty cover to 3 years. Its management told that it would be launching new products and entering new markets in 2013.

Last week, Eastman Chemical showcased perhaps its most innovative offering, developed by IPG Photonics. The new technology enables consumers to welding clear-to-clear polymers using fiber lasers, which are invisible to the human eye. IPG Photonics continues to impress and some of its upcoming launches include UV fiber lasers, ultra short pulse lasers and megawatt class lasers.

The laser company with a market cap in excess of $3 billion, recorded a staggering 36% increase in sales from its operations in Asia. The company hired experienced general managers with technical expertise, for each China, Japan and Korea. Its management believes that emerging nations hold the key to its growth, and expects an even better FY13.

Its order backlog stood at $203 million, down from $207.3 million last year. In the recent earnings call, its management told that there was a sudden rush of orders in January and incoming order remain strong. “It appears that customers were holding orders until the new year because there has been a strong stream of incoming orders in January that has so far offset the softness from Q4.”

Its cash and cash equivalents stand at $384.1 million, which alone contributes to more than 10% of its enterprise value. It quarterly inventory was worth $139.6 million, which was up by 19.4% on a year-over-year basis.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!