Anytime a company makes an acquisition that complements its pre-existing business model, I tend to take a closer look at the acquiring company. That being said, and in the wake of its most recent announcement pertaining to close of its acquisition of Capella Microsystems, I wanted to highlight several reasons behind my decision to stay positive on shares of Vishay Intertechnology (VSH).

Company Overview

Headquartered in Malvern, Pennsylvania, Vishay Intertechnology Inc. manufactures and supplies discrete semiconductors and passive components in the United States, Europe, and Asia. The company operates in five segments: MOSFETs, Diodes, Optoelectronic Components, Resistors & Inductors, and Capacitors.

Vishay Launches the first Hi-Rel COTS Solid Tantalum Capacitor

In mid-November, the company introduced a new TANTAMOUNT^® Hi-Rel COTS series of surface-mount solid tantalum chip capacitors for military and avionics applications. According to its press release, “This first such device will feature a metal case and hermetic sealing to meet the requirements of MIL-STD-202, Method 112, Condition A, the Vishay Sprague T25 series offers low ESR down to 180 mΩ at +25 °C and 100 kHz and is available with surge current testing options in accordance with MIL-PRF-55365”.

When it comes to the successful development of any product, especially those that are aimed at improving US-based military munitions systems, one is compelled by the potential number of orders a company such as Vishay will receive as the result of this developmental milestone. If those numbers end up being quite favorable, there's a very good chance that both the company's long-term earnings as well as its long-term revenue growth could see considerable growth.

Completion of Capella Microsystems Acquisition

On Wednesday, December 31, and after buying out minority holders, Vishay has finished its $201.3M ($152M net of cash) acquisition of Taiwanese optical sensor maker Capella Microsystems. The deal, which had been funded through a mixture of cash on hand and $53M in credit facility borrowings, should complement Vishay’s pre-existing visible/infrared component offerings quite nicely, and play a key role in the company’s performance over the next 12-18 months.

Recent Trend Behavior

On Tuesday, shares of VSH, which currently possess a market cap of $2.11 billion, a forward P/E ratio of 12.97, and a dividend yield of 1.68% ($0.24), settled at a price of $14.28/share. Based on a closing price of $14.28/share, shares of VSH are trading 2.39% above their 20-day simple moving average, 3.78% above their 50-day simple moving average, and 1.73% below their 200-day simple moving average.

I strongly believe the company's trend behavior will show significant improvement over the next 6-12 months, especially in the wake of both its recent product launches and its ability to target and successfully acquire key assets that complement the strategic foundation already in place.  

Conclusion

For those of you who may be considering a position in Vishay, I strongly recommend keeping a close eye on the continued development of the company's product-based portfolio, as well as its ability to continue to seek out and engage in key acquisitions (whether in whole or in part) over the next 12-24 months, as each of these catalysts will continue to play a major role in the company's long-term growth.