Veeco (VECO) could be a compelling opportunity being overlooked by markets right now. VECO had an unusual buy of 1500 April $34 calls for $440K on 12/18 and I think I have found out why, but first a little background.

VECO is a manufacturer of advanced semiconductor process equipment that solves an array of challenging materials engineering problems for customers. Its comprehensive collection of ion beam, laser annealing, metal organic chemical vapor deposition (“MOCVD”), chemical vapor deposition (“CVD”), advanced packaging lithography, single wafer wet processing, molecular beam epitaxy (“MBE”), and atomic layer deposition (“ALD”) technologies play an integral role in the fabrication of key devices that are enabling the 4th industrial revolution of all things connected. Such devices include leading advanced node application processors for AI chips, mobile devices, high-speed data communications, and radio frequency (“RF”) filters and power amplifiers for fifth generation (“5G”) networks and mobile electronics, photonics devices for 3D sensing, advanced displays, and thin film magnetic heads for hard disk drives in data storage.

VECO has a market cap of $1.48B and trades cheap at 15.8X Earnings, 14X EBITDA, 2.1X EV/Sales and 35.9X FCF with revenues seen rising 1% in FY25 and EPS seen down 1.25%, not too exciting for growth, but FY26 is forecasting a strong ramp back to double-digit growth and at 4.6X Cash with a strong balance sheet, shares are very cheap here.

Now, for the interesting part. I was checking out VECO’s earnings call from February and saw this:

“We sold a tool in our scientific segment for a research application to make the best-performing qubits for quantum computing. And MBE is a great R&D tool in that the customers can deposit many different materials on the periodic table and can be very high-purity and very high-performing films. And so, we just recently announced that we shipped one in the fourth quarter and we actually have a pretty large system that will be two systems, actually. One, I think is scheduled to ship at the end of 2024 and maybe one in early 2025 for a similar type research application. Quantum computing is really very much in the research phase and it’s probably not going to be any volume revenue for another five or so years, I would say. It’s really a kind of pathfinding activity.”

It seems to me VECO could get picked up as a Quantum Computing play, the concept of qubits, or quantum bits, emerged as a fundamental unit of quantum information, playing a crucial role in the development of quantum computing. Qubits are the fundamental building blocks of quantum computers, just as bits are for classical computers.