5 Takeover Targets to Buy Before Wall Street Finds Out

Teradyne

Not surprisingly, with the poor performance semiconductor sales have had over the last couple of years, KLA-Tencor isn't the only chipmaker or supplier that's looking like a bargain. Another name is Teradyne (TER).

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Teradyne is in a similar business to KLAC. Its automation products show up on chipmakers' assembly lines, testing chips and analyzing performance before they leave the line. The firm's relatively new FLEX testing platform has been a popular system among chipmakers, and helped TER to reign in its costs. Instead of manufacturing the testbed in house, for instance, Teradyne opted to outsource the manufacturing and keep the capital needs of a manufacturing facility off of its plate. The early results are promising: profit margins have climbed to new highs and the firm's balance sheet has swelled with cash.

Today, Teradyne holds more than $840 million in cash and investments, offsetting $167 million in debt. The result is that, like KLAC, around 24% of TER's market capitalization is made up of cash. TER's smaller size makes it a more accessible target for a semiconductor firm that wants to use a tuck-in acquisition to enter the automated testing equipment market.

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