IQE – it’s not ARM

There was a discussion on Stockopedia in early Oct about IQE: “another good growth stock?” ( Both IQE and ARM are in the semiconductor business. IQE is up 116% over 10 years, whilst ARM is up a monster 827%. IQE is obviously no slouch compared to the Footsie, but if you had bought IQE in late 2006, you would only be about even.

I owned some IQE in the past, and lost money on it. Nowadays I doubt it is the kind of company I would touch.

My reasoning is that, although revenues rose from £20.9m in 2005 to £112m in 2014, the share count has doubled. It spends far more on R&D than it receives as operating cashflows, and hence needs to keep asking the market for more money. As they say on Dragon’s Den: “for that reason, I’m out”. (Cyriak spoof:

It has never paid a dividend. Its mean ROCE according to Stockopedia is 6.4%. That is pretty poor, actually. It just can’t seem to get a sustainable lift-off.

It has a Stockopedia StockRank of 93, but I am still not keen.

The shares could do anything.

Conclusion: lots of sizzle, but no steak.


About mcturra2000

Computer programmer living in Scotland.
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