NEW YORK ( TheStreet) -- Kulicke and Soffa Industries ( KLIC), Nanometrics ( NANO), Nova Measuring Instruments ( NVMI) and Rudolph Technologies ( RTEC) are among 10 semiconductor stocks trading at low P/Es and with substantial upside potential, according to analysts' 12-month price targets. The P/E for these stocks compares to the P/E values of the S&P 500 index and overall industry P/E, which are currently at 17 and 20, respectively.

The above mentioned companies cater to the semiconductor industry. Broadly, revenue growth of these companies hinges on the revenues and capital spending of the semiconductor industry. According to Gartner, semiconductor revenues declined year-over-year during 2008 and 2009 owing to the global slowdown.

However, during 2010, the semiconductor industry witnessed revenue growth of 32% to $300 billion from $228 billion in 2009, Gartner reports. The research company also forecasts semiconductor revenues would grow 6.2% to $319 billion during 2011. Industry analysts, including Gartner, expect demand for smartphones, media tablets, and automotive electronics to be key contributors to this growth.

Gartner also reports 137% increase in capital equipment spending during 2010 and has raised its 2011 spending forecast to 12.4% from 1% predicted during Dec. 2010. With the projected demand growth for semiconductor devices, semiconductor manufacturers will need to increase production capacity, which augurs well for these companies.

The stocks are stacked in terms of P/Es, lowest to highest.

10. Kulicke and Soffa Industries designs, manufactures and sells capital equipment and expendable tools used to assemble semiconductor devices, including integrated circuits (IC), high and low powered discrete devices, light-emitting diodes (LEDs), and power modules. Approximately, 97% of its revenue for first quarter of 2011 was generated from outside the U.S., primarily the Asia-Pacific region.

For first quarter of 2011, net revenue was reported at $148.9 million compared to $128.4 million for the same quarter in 2010, attributable to an 18.9% increase in equipment revenue. Higher equipment revenue was due to a 202% unit volume increase for its wedge bonders, partially offset by a 17.4% decline in ball bonder volume. Gross profit expanded 450 basis points to 48.4%, while operating margin increased 82 basis points to 14.8%.

However, net income declined marginally to $15.1 million from $15.8 million in the year-ago quarter, while net income per share remained flat at 21 cents. Analysts estimated earnings of 19 cents per share. Cash and cash equivalents stood at $197.6 million compared to $178.1 million, a sequential increase of 10.9%.

Going forward, the company expects revenue of $175-$195 million during the second quarter, or 14%-27% year-over-year increase. The wedge bonder business and improving outsourced semiconductor assembly and test providers (OSAT) volumes are expected to drive growth.

Of the five analysts covering the stock, 60% recommend a buy, while 20% recommend a sell. On average, analysts estimate 7.1% upside to $9.59 in value from current levels. The stock has already gained 21.6% during the past one year and is currently trading at a P/E as low as 4.6

9. inTEST ( INTT) designs, manufactures and markets mechanical, thermal and electrical products that semiconductor manufacturers use in conjunction with automatic test equipment (ATE) for testing ICs.

For fourth quarter of 2010, the company's revenue soared 20% to $10.1 million from $8.4 million in the same quarter of 2009. Gross margin improved to 47.4% from 37.5% in the same quarter last year. As a result, net income increased several times to $1.3 million or 13 cents per share from $142,000 or 1 cent per share. Analysts estimated earnings of 9 cents per share.

Full year revenue almost doubled to $46.2 million from $23.5 million a year earlier, driven by 133.8% increase in revenue from sales of mechanical products, 35.3% increase from sales of thermal products, and 188.9% increase in electrical products sales. Geographically, revenue from international customers more than doubled to $28.7 million, while U.S. revenue increased 73.8% to $17.5 million.

Subsequently, the company swung to net income of $7.3 million or 72 cents per share, as opposed to a loss of $4.8 million or 49 cents per share in 2009. Cash and cash equivalents surged to $6.9 million from $2.6 million, and the company remains debt-free.

Going forward, inTEST expects revenue to be $11-$12 million, and net income in the range of 11-15 cents per share. As of Dec. 2010, order backlog stood at $6.1 million compared to $4.6 million a year earlier. The company's stock has gained 110.7% during the past one year, while it trades at an attractive P/E of 4.9

8. Nanometrics is a provider of advanced, high-performance process control metrology systems used in the fabrication of semiconductors, high-brightness LEDs, data storage devices, solar photovoltaics, as well as by customers in the silicon wafer and data storage industries.

For fourth quarter of 2010, net revenue was $46.1 million, up 75.3% from $26.3 million in the year-ago quarter. Gross margin stood at 52.7%, expanding 200 basis points year-over-year, while operating margin increased 1,630 basis points to 18.8%. Subsequently, net income surged to $26.1 million or $1.12 per share as the company received income tax benefit of $17.7 million.

Full year 2010 revenue more than doubled to reach a record $188 million, driven by higher revenue from automated systems, integrated systems and materials characterization due to customers increased capital spending. The company swung to net income of $55.9 million or $2.43 per share, opposed to a loss of $16.3 million or 87 cents per share in 2009. The company has a strong cash balance of $66.5 million, up 52.7% year-over-year

Going forward, the company expects revenue of $56-$60 million during the first quarter of 2011, representing 50-60% year-over-year increase. Gross and operating margin is forecast at 54-55% and 24-27%, respectively. Lastly, net income is estimated to be 36-44 cents per share, implying an increase of 38%-69% over the prior year levels. As of Dec. 2010, the company had a backlog of $31.4 million compared to $8.1 million a year ago.

Of the five analysts covering the stock, 60% recommend a buy and the remaining rate a hold. There are no sell ratings on the stock. On average, analysts estimate 22.9% upside to $21.67 in value from current levels. The stock has already gained 77.7% during the past one year and is currently trading at a P/E of 5.5

7. TriQuint Semiconductor supplies modules, components and foundry services to communications companies. The company offers different radio frequency (RF) and other intermediate frequency products that address three markets: handsets, networks and military systems.

For fourth quarter of 2010, net revenue was $253.4 million, up 31.1% from $193.3 million in the year-ago quarter. Gross margin stood at 37.4%, up 160 basis points year-over-year, while operating margin increased 520 basis points to 14.7%. Subsequently, net income surged to $42.5 million or 25 cents per share from $17.5 million or 11 cents per share.

Full year 2010 revenue surged 34.3% to reach an all-time record $878.7 million, largely driven by the upsurge in revenue from the mobile devices market due to higher WCDMA and WLAN product revenue. Revenue from network products increased too, because of higher sales volume across all its markets. Overall, total revenue has more than doubled from 2006 levels, thereby elevating net income to $190.8 million or $1.17 per share, compared to $16.2 million or 11 cents per share in 2009. The company had a strong cash balance of $192.5 million, up 86% year-over-year.

As of Dec. 2010, the order backlog was $266.1 million compared to $125.2 million a year ago. During Dec. 2010, Samsung selected TriQuint's complete 3G RF front-end solution for its Samsung Galaxy Tab and its flagship smartphone series Galaxy S.

Going forward, the company expects first quarter 2011 revenue in the range of $215-$225 million, representing 22% year-over-year growth. Net income is estimated between 14-16 cents per share. Moreover, full-year revenue is forecast to grow by 20%.

Of the 12 analysts covering the stock, 58% recommend a buy and the remaining ratea hold. There are no sell ratings on the stock. On average, analysts estimate 34.6% upside to $16.30 in value from current levels. The stock gained 66.1% during the past one year and is currently trading at a P/E of 9.8

6. FSI International ( FSII) is a global supplier of surface conditioning equipment, and technology and support services for microelectronics manufacturing. The company's portfolio of batch and single-wafer cleaning products includes process technologies for immersion, sprays, vapor and CryoKinetics. FSI International has customers panning North America, Europe, Japan and the Asia-Pacific region.

During the second quarter ended Feb. 2011, revenue increased 62.5% to $30.7 million from $18.9 million owing to higher shipments to Europe related to improved spares and service and legacy products activity coupled with higher domestic shipments. Gross margin remained relatively flat at 42.4%. Net income surged to $4.9 million or 13 cents per share from $609,000 or 2 cents per share on the back of solid revenue growth. Analysts forecasted net income at 10 cents per share. At the end of Feb. 2011, the company had cash and cash equivalents of $31.8 million, a current ratio of 4.3 and no debt.

Going forward, the company expects third quarter orders to approach $40 million compared to $23.1 million in the second quarter. Moreover, revenue is estimated to exceed $30 million, while net income is expected at $4.5-$5.5 million.

Of the four analysts covering the stock, 50% recommend a buy, while 25% recommend a hold. On average, analysts estimate 38.6% upside to $6.13 in value from current levels. The stock was recently upgraded from a neutral to a buy with a price target of $5.75 at Dougherty & Co. It has already gained 18.2% during the past one year and is currently trading at a P/E of 10.5

5. Nova Measuring Instruments is a designer, developer and producer of integrated process control metrology systems and sells metrology used in the manufacture of semiconductors worldwide, either directly or through process equipment manufacturers. The company's revenues grew at a CAGR of 12.4% during the past five years.

During the fiscal year ended 2010, total revenue more than doubled to $86.6 million from $39.3 million a year earlier, driven by increased capital spending across the industry, market share gains and higher utilization rates at customers' manufacturing sites. Gross margin expanded 1,000 basis points to 54.7%, while operating margin increased 1,890 basis points to 25.2%. As a result, net income rose to $22.2 million or 86 cents per share from $2.6 million or 13 cents per share in 2009.

On the balance sheet side, cash and cash equivalents soared to $25.4 million from $9.9 million, current ratio stood at 4.1 and the company remains debt-free. Nova recently opened a new facility in South Korea to provide sales support to local customers support as well as development of tailored application solutions, thereby expanding its presence in the country.

The company received three orders worth $12 million for its integrated and standalone metrology tools, originating mostly from China-based customers. Furthermore, the company expects multi-million dollar orders from incumbents and other customers, leading to record quarterly bookings in the first quarter of 2011.

Based on the company's guidance for first quarter of 2011, revenue is expected to range between $27.5 million and $29.5 million, representing 72%-84% year-over-year increase. Net margin is expected to be 25%-28%.

All the four analysts covering the stock recommend a buy. There are no sell ratings on the stock. On average, analysts expect an upside of 44.3% to $13.33 in value from current levels. The stock has already gained 60% during the past one year, while it trades at a P/E of 10.7

4. Ultra Clean Holdings is a developer and supplier of critical subsystems for the semiconductor capital equipment, flat panel, medical, energy, and research industries. The company offers an integrated outsourced solution for gas delivery systems and other subassemblies, improved design-to-delivery cycle times, component neutral design and manufacturing and component testing capabilities.

Net revenue for 2010 fourth quarter rose 65.3% year-over-year to $120.3 million, reflecting a recovery in semiconductor equipment demand since the overall slowdown in the industry. Subsequently, net income grew 56.2% to $3.9 million or 17 cents per share from $2.5 million or 11 cents per share in the year-ago quarter.

For full year ended Dec. 2010, revenue surged 177.4% to $443.1 million from $159.8 million in 2009. Moreover, the company swung to net income of $20.1 million or 87 cents per share as opposed to a loss of $20 million or 94 cents per share a year ago. Cash and cash equivalents stood at $34.6 million, up 30% year-over-year, while current ratio improved to 2.68 from 2.16.

Going forward, the company expects revenue in the range of $119 million to $124 million, with earnings per share in the range of $0.19 to $0.23 during the first quarter of 2011. Revenue and earnings represent year-over-year growth of 21%-26% and 12%-35%, respectively.

Of the four analysts covering the stock, 25% recommend a buy, while 50% recommend a hold. On average, analysts estimate 41.1% upside to $14.33 in value from current levels. The stock gained 28.4% during the past one year and is currently trading at a P/E of 11.5

3. Rudolph Technologies designs, develops and manufactures high-performance process control defect inspection, metrology, and process control software solutions used by semiconductor device manufacturers. During 2010, the company derived 65.7% of its revenue from Asia, 11.1% from Europe and the remaining from the US.

Revenue for 2010 fourth quarter came in at $54 million, increasing 87% from $28.9 million registered in the fourth quarter of the prior year. Gross margin widened to 54% from 40.4% in the earlier year quarter. Similarly, operating margin stood at a positive 20.3% compared to a negative 22% in the year-ago quarter. Subsequently, the company reported net income of $9.6 million or 30 cents per share compared to a loss of $6.1 million or 20 cents per share.

During 2010, total revenue surged 148.3% to $195.3 million from $78.7 million a year earlier, driven by higher revenue from systems and software, specifically inspection and metrology. Overall, revenue growth is attributable to improving economic conditions leading to increased capital spending in the semiconductor industry. Net income stood at $27 million or 86 cents per share as against a loss of $29.6 million or 96 cents per share in 2009.

The company has cash and cash equivalents of $71.1 million compared to $57.8 million a year ago, a current ratio of 6.96 and no debt.

Of the five analysts covering the stock, 80% recommend a buy, while the remaining rate a hold. There are no sell ratings on the stock. On average, analysts estimate 22% upside to $13.33 in value from current levels. The stock gained 21.4% during the past one year and is currently trading at a P/E of 11.6

2. Amtech Systems supplies horizontal diffusion furnace systems used for solar (photovoltaic) cell and semiconductor manufacturing. Within the solar industry, it provides diffusion and automation equipment to solar cell manufacturers. Within the semiconductor industry, Amtech provides equipment to manufacturers of analog, power, automotive and microcontroller chips with geometries greater than 0.3 micron.

For 2011 first quarter, total revenue more than tripled to $53.7 million from $15.5 million in the year-ago quarter owing to higher sales to the solar industry. As of Dec. 2010, backlog stood at $172.9 million compared to $74.4 million a year ago. Moreover, new orders booked during the quarter increased more than 130% to $137 million as compared to $59.4 million in the year-ago quarter.

Gross margin increased 600 basis points to 36% from 30%, while operating margin increased to 14% from 1%. Net income multiplied to $5 million or 54 cents per share from $80,000 or 1-cent per share during first quarter of 2010. Analysts estimated earnings of 37 cents per share. Cash and cash equivalents at the end of Dec. 2010 came in at $53.2 million.

Amtech recently announced acquiring 55% of China-based ion implant technology company, Kingstone Technology, for $5.5 million in the form of cash and stock, and $4 million in the form of a contingent promissory note. The acquisition enables Amtech establish a technology beachhead in a strategically key region of the world, increase its technology expertise, and pave the way for future opportunities for its solar business.

Going forward, the company expects revenue in the range of $55-$60 million during the second quarter, tripling year-over-year. Full year 2011 revenue is estimated to exceed $230 million.

Of the five analysts covering the stock, 80% recommend a buy, while the remaining rate a hold. There are no sell ratings on the stock. Zacks Investment Research reiterated an outperform rating for the stock. On average, analysts estimate 26.1% upside to $31.88 in value from current levels. It has already gained a whopping 156.3% during the past one year and is currently trading at a P/E of 16

1. Photronics manufactures photomasks that are high-precision photographic quartz plates containing microscopic images of electronic circuits. Photomasks are a key element in the manufacture of semiconductors and flat panel displays (FPDs), and are used as masters to transfer circuit patterns onto semiconductor wafers and flat panel substrates during the fabrication of ICs and a variety of FPDs.

Net revenue during first quarter of 2011 rose 23% to $120.8 million from the comparable quarter of 2010, driven by higher IC and FPD photomask sales, resulting from increased high-end unit demand which typically has higher average selling prices. Net income came in at $12.1 million or 20 cents per share compared to $213,000 or zero cents per share in the same quarter last year. Sales across Asia, Europe, and North America increased 29.4%, 13.1% and 12.5%, respectively.

Going forward, majority of the company's revenue growth is expected to come from the Asian markets, as customers optimize their use of manufacturing foundries located outside North America and Europe. Additional revenue growth is anticipated in North America as the company benefits from advanced technology that it may utilize under its technology license with Micron.

Of the five analysts covering the stock, 60% recommend a buy, while 20% recommend a hold. On average, analysts estimate an 18.5% upside to $10.33 in value from current levels. The gained 66.4% during the past one year and is currently trading at a P/E of 16.5.

>>To see these stocks in action, visit the 10 Low P/E Semiconductor Stocks With Upside portfolio on Stockpickr.

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