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Tickers in this Article: KYO, S, GOOG, AVX
For those unfamiliar with Japanese conglomerate Kyocera (NYSE:KYO), it got its start as the Kyoto Ceramic Co. Ltd in 1959. Specializing in fine ceramic parts, it changed its name to Kyocera (KYOto-CERAmic) in 1982 to reflect a business growing beyond its original purpose. Today, it's a $19 billion company with operations in every part of the world. Back in 1999, its stock traded above $200. I'll look at why it might be due to hit that mark again.

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Pieces of the Puzzle
Kyocera operates seven different segments: fine ceramic parts, semiconductor parts, applied ceramic products, electronic devices, telecommunications equipment, information equipment and other businesses. Diversification is the key here with no segment producing more than 25% of its overall revenue or less than 5%. You probably use many of its products on a daily basis. It makes components of cell phones, photocopiers, dental implants, solar panels, car parts, pens, optical lenses and more. It even owns it a golf resort in Kyoto. It's hard to keep this many balls in the air but Kyocera seems to be able to do it.

Current Financials
Kyocera announced third quarter results at the end of January and they were solid indeed. Revenues and operating profits for the first nine-months grew 24.4% and 215.1% respectively. Every one of its seven segments experienced increased revenues in the quarter. For the year ended March 30, 2011, it sees revenues increasing 17.3% with operating profits up 130.2%. That's a very palatable operating margin of 11.5%. In fact, it's one of its top three performances of the past decade. I see more good things in the future.

Future Growth
Three things stand out for me about Kyocera's future. First, it's releasing Echo with Sprint Nextel (NYSE:S), the first two-screen smartphone using Google's (Nasdaq:GOOG) Android platform that'll allow users to view email on one screen while simultaneously checking out a web page on the other. I'm not a technology expert but this seems like something smartphone owners would find helpful. Time will tell, but it sounds like a winner.

Second, it announced in January that it's building a second plant in the Czech Republic and expanding its Chinese plant to increase its solar panel production capacity worldwide. It plans to be producing 1-gigawatt worth of solar panels by 2013. Considering the world is increasing the use of renewable energy sources, this bodes well for the company.

Lastly, its 71%-owned subsidiary, AVX (NYSE:AVX), which makes electronics like cell phones and hearing aids, is doing extremely well. Its nine-month revenues to the end of December grew by 31.5% to $1.2 billion with operating profits up 117.2% to $247.4 million. It's acquisition of AVX is paying dividends literally and figuratively.

Valuation
As mentioned, Kyocera's stock traded above $200 in December 1999. Its revenues for the year ended March 2000 were ¥813 million with net income of ¥50.3 million. In 2010, its revenues and net income were ¥487 million and ¥54.7 million higher than a decade earlier. Yet its stock barely trades for more than book value and enterprise value is less than six times EBITDA. While it's fair to say that stock prices were precipitously high at the end of the last millennium and definitely out of whack, there appears to be a serious disconnect here and at some point investors will remedy this. When this happens is anyone's guess but it will happen. (This measure has a bad rap, but it's still a valuable tool when used appropriately. Check out EBITDA: Challenging The Calculation.)

Bottom Line
Kyocera will see $200 sooner rather than later, especially if it continues to grow at a double-digit pace.

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