Barron's Says Kyocera (KYO) Could Rise Over 30%

In this weekend Barron's, it had a bullish piece on Kyocera (NYSE: KYO) because of its diverse product mix and cash in the banks that will help it endure the soft economy and weaker exports.

Kyocera has encountered severe headwinds, including: slowing economy has cut demand for gadgets and components and a strong yen is reducing Kyocera's exports.

But Barron's thinks that Kyocera can thrive in these tough conditions. Kyocera is nicely positioned in solar panels, cellphones, office and telecommunications equipment. It has $9 billion in cash and nearly no debt. Actually, Kyocera's cash alone is worth $45 a share, meaning the market thinks the rest of the company is worth only $20 or so.

JPMorgan's Tokyo analyst Shoji Sato believes that the combined value of Kyocera's businesses, based on the implied market value of other companies in similar businesses is about $90 a share, a large from what KYO is trading at today.

Additionally, Barron's says Kyocera's stock is cheap by other metrics as well. It trades at just 0.88 times sales, versus 0.91 times for peers, and at 0.78 times book value, versus 1.03 times for peers.

Kyocera manufactures thousands of types of electronic components based on ceramic know-how, including semiconductors, photovoltaic solar panels, office equipment and popular consumer items like cellphones, digital cameras, flat-panel televisions and hyper-sharp ceramic kitchen knives.

Kyocera's key earnings driver is the company's solar business, which accounts for approximately 50% of per-share profits. Barrons said, "While skeptics say the strong yen will hurt solar sales in the key European market, others maintain that Kyocera's position as the world's fourth-largest solar-cell producer -- and the sheer potential of solar power as an attractive alternative-energy source -- reinforce the bull case for the stock."

President Kawamura says demand for solar energy is still strong, despite the global economic slowdown. That's so even in Europe, which accounts for 45% of the company's solar sales.

Kyocera is "a solid defensive play," says Peter Boardman, a managing director with Tradewinds Global Investors, which owns shares of the company. "We believe the stock has tremendous potential."

While Kyocera has risen from $45 to a recent $67, some say Kyocera may be worth more than $90 a share. More importantly, in this market, the cash on the balance sheet appears to set a firm floor under KYO.

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Kyocera Corporation (Kyocera) develops, produces and distributes various kinds of products for the telecommunications and information processing and environmental protection markets worldwide.

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