Is Photronics (PLAB) a Smart Long-term Buy?

Heartland Value Fund recently released its third-quarter investor letter – a copy of which is available for download here. The fund posted a return of 6.6% for the quarter, outperforming its benchmark, the Russell 2000 Value Index which returned 2.6% in the same quarter. You should check out Heartland’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.

In the Q3 2020 Investor Letter, Heartland Advisors highlighted a few stocks and Photronics Inc (NASDAQ:PLAB) is one of them. Photronics Inc (NASDAQ:PLAB) is a semiconductor manufacturing company. Year-to-date, Photronics Inc (NASDAQ:PLAB) stock lost 30% and on December 21st it had a closing price of $11.02. Here is what Heartland Advisors said:

“Information Technology (IT) was a source of strength for the portfolio during the period, and we added to one of our holdings as shares pulled back.

We featured Photronics Inc. (PLAB), an industry leading, global manufacturer of photomasks used to transfer circuit patterns onto semiconductor wafers and flat panel displays, in our June Commentary. Since then, the company reported better than expected earnings, but shares faltered as the company forecasted a temporary softening in demand due to COVID-19.

Despite the pause in forecasted growth, we remain steadfast in our belief that Photronics is set to reap the benefits of several years of growth investments. Along with an expected jump in sales, margins should expand as capital improvements wind down leaving the company well situated to generate robust cash flow going forward. We also view the business’ strong financial position, with almost $3 a share in net cash, as a competitive advantage that provides management the flexibility to buy back shares as they see fit.”

In Q2 2020, the number of bullish hedge fund positions on Photronics Inc (NASDAQ:PLAB) stock decreased by about 5% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in Photronics’s growth potential. Our calculations showed that Photronics Inc (NASDAQ:PLAB) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.