This sector could have a half million job openings and opportunities for older workers


Although the coronavirus continues to rattle global markets and industries, some analysts expect to see greater demand for advanced manufacturing talent in the U.S. as the pandemic diminishes. That could create opportunities for older men and women, including white-collar professionals struggling to find jobs.

Before COVID-19, there were 500,000 manufacturing jobs open in the U.S., according to the National Association of Manufacturers (NAM). “We’re going to have a need very quickly to ramp up on hiring in those facilities that may have been shut down during the crisis or that need to expand operations,” said NAM president and CEO Jay Timmons in a recent press conference.


“The fact that one can get a certificate in about nine months and totally re-career into a nearly guaranteed job is an incredible opportunity for an older worker.”


— Nora Duncan, Connecticut state director of AARP

As manufacturers frantically try to keep up again with demand for essentials and lifesaving PPE (Personal Protective Equipment) for health care workers as cases rise across the country, their innovation and high-tech problem-solving could help dispel misconceptions that all manufacturing jobs are dirty and physically demanding, said Sara Tracey, project manager of workforce services for the Ohio Manufacturers’ Association in Akron, Ohio.

Manufacturing jobs and what they pay

Entry-level manufacturing jobs in industries such as aerospace, technology and defense include CNC operators, set-up technicians and programmers, as well as inspectors, higher-end assembly technicians and quality assurance.

The pay typically ranges between $35,000 and $65,000, including overtime and benefits, said Richard DuPont, director of community and campus relations for the Advanced Manufacturing Technology Center at Housatonic Community College in Bridgeport, Conn. More experienced professionals can earn upward of $95,000.

80% of older Americans can’t afford to retire – COVID-19 isn’t helping

In Ohio, manufacturers have been training and moving some workers into higher positions so the companies can hire and train new candidates for vacated ones, Tracey noted. Resources such as the Making Ohio website let people explore careers in manufacturing, including robotics, automation and 3-D printing.

Industrial maintenance is an important career pathway these days, as well, Tracey said. This sector is expecting more retirements in the near future, which will create jobs from “traditional machine mechanics to troubleshooting state-of-the-art electronic or robotic processes,” Tracey noted.

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Connecticut, among other states, now offers training programs with community colleges, state manufacturers and other organizations.

From banking to precision tools

This kind of training helped Allison Clemens-Roberts, who is over 50, find work after losing her clerical job in the pensions department of a Connecticut bank in 2017. A severance package gave her time to look for work, but she couldn’t find even temporary employment. She blames age discrimination by white-collar employers.

“There’s no way to hide how old you are. They can ask when you graduated from school,” Clemens-Roberts said.

But while she was out of work, Clemens-Roberts received a postcard from AARP offering a 25% tuition scholarship on advanced manufacturing programs at Goodwin University, a career-focused school in East Hartford, Conn.

She wasn’t interested until her husband Frank saw a TV commercial touting the benefits of Goodwin’s manufacturing and other programs.

“He said, ‘Why don’t you think about changing careers?’” Clemens-Roberts recalled.

So, with several months left on her severance, she enrolled in a full-time, six-month CNC (Computer Numerical Control) Machining, Metrology and Manufacturing Technology certification program. It would prepare her for a job working with automated machine tools which requires mathematical skills, attention to detail and critical thinking.

SectorWatch: 80% of older Americans can’t afford to retire – COVID-19 isn’t helping

Scholarships cut Clemens-Roberts’ tuition bill from $7,000 to $3,200. After a two-month paid internship at TOMZ, a manufacturer of precision components for major medical devices in Berlin, Conn., she was hired in April 2019. Six months later, TOMZ reimbursed Clemens-Roberts $1,500 for her education tab.

Clemens-Roberts said her family is now in a better financial position than when she was working in a bank, living paycheck-to-paycheck. Considered an essential worker, she has kept her full-time job through the pandemic, except for three days in March.

“I never thought I would go to college and participate in a graduation — in cap and gown,” Clemens-Roberts said. “That was a big surprise. And [actor] Danny Glover was the speaker. A bucket-list experience.”

There’s “obviously age discrimination, among other things, at play” for job seekers over 50, said Nora Duncan, Connecticut state director of AARP. “The fact that one can get a certificate in about nine months and totally re-career into a nearly guaranteed job is an incredible opportunity for an older worker.”

While AARP helped Clemens-Roberts pay for the tuition initially, the internship helped her get hired as a machine operator.

Older and younger manufacturing workers helping each other

The search for skilled manufacturing labor across the country is creating opportunities for workers of all ages, said DuPont. And older and younger generations working together are assisting each other.

The older students help younger classmates with life skills, while younger students can help with technology,” said DuPont. “Together, they make excellent teams.”

Don’t miss: How will the robots see you through the pandemic?

Just ask Fernando Vega, 62, who is now a quality inspector at Forrest Machine, in Berlin, Conn. It makes precision-machined parts and other components for the aerospace and commercial industries. In the 1990s, he was a quality inspector before recessions and outsourcing forced him to consider other careers.

He tried working for a nonprofit and though Vega found the work rewarding, it wasn’t financially sustainable.

So, Vega went back to school in spring 2018 to study advanced manufacturing at Goodwin.

“I was in a class of 18, and at first everyone kept to themselves. But when it came time to read blueprints, there was some panic and I said, ‘Don’t panic, I’ll show you.’ The [younger] students helped me with trigonometry, and then we started to work together.”

Vega has worked at his manufacturing job throughout the pandemic. At one point, he was putting in 50 hours a week, but that was reduced to 40 hours plus overtime.

Vega recalled promising his mother that he would go to college. “But that was a long time ago,” he said. His mother never got to see him graduate but Vega feels he’s fulfilled his promise — not only to her, but also to himself. “I love my job,” he said.



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These 2 stocks will profit from transformative tech trends


The information technology sector has soared this year as the stock market has recovered from the doldrums of March, aided by massive government and central-bank stimulus. But the long-term cloud technology trend that has fed so much success for the largest tech companies can no longer be considered new and transformative.

Gerry Frigon, the chief investment officer at Taylor Frigon Capital Management, pointed to distributed computing as a critically important area for investors to think about. Another trend is probably already on your mind: the boom in working from home and the communication systems that make it possible.

He has two stock picks that he believes will capitalize on these trends: Tower Semiconductor
US:TSEM
and AudioCodes
US:AUDC.

Taylor Frigon Capital Management, based in San Luis Obispo, Calif., has about $280 million in assets under management. The firm’s Core Growth Strategy has performed very well against the broad market, as you can see below. The strategy focuses on finding innovative companies with excellent growth prospects that are “not yet well-recognized or fully valued.” Technology stocks made up 54% of the portfolio as of June 30, and five of the 10 largest holdings had market capitalizations of less than $5 billion.

Distributed computing, or the mobile edge cloud

The traditional cloud model of having computing done on a server run by Alphabet
US:GOOG
US:GOOGL
unit Google, Amazon.com
US:AMZN
or Microsoft
US:MSFT
won’t work quickly enough for the new array of hands-free devices, the Internet of Things (IoT) and automated vehicles, Frigon said during an interview.

He also said that the development of 5G networks is really about “the movement of the cloud to the edge.”

”The paradigm of the past 15 years will start to break down,” he said, citing George Guilder, the author of the book “Life after Google.”

With every automated vehicle becoming a mobile cloud, computing speed will be critical.

“The laws of physics limit what can be done at a distance because of latency problems — the speed of light,” Frigon said. Automated cars provide a perfect example of the need for distributed computing: “If a deer runs in front of your car, the processing has to be done instantaneously, or close to it. You don’t have time to go into the cloud to a Google data center.”

The same holds true for automated manufacturing.

Frigon named Tower Semiconductor as an example of a stock held within accounts that follows Taylor Frigon’s Core Growth Strategy. The Israeli-based company has a market capitalization of $2.4 billion and trades on the Nasdaq exchange.

Tower Semiconductor specializes in analog microchips, which can translate binary data (the ones and zeros processed by digital chips) into wave forms (including language) that people can understand. Frigon said the stock is a diversified way to play the mobile edge cloud trend.

Four of the five sell-side analysts covering Tower Semiconductor rate the shares a buy or the equivalent, with a consensus price target of $25.03, according to FactSet. That implies 14% upside potential over the next 12 months, based on the closing price of $22.01 on July 21. Analysts expect the company’s sales this year to increase only 3% from 2019, but for 2021, they expect sales to rise by 8%. The company earned a dollar a share in 2019. Analysts expect earnings per share to increase to $1.03 in 2020 and to shoot up to $1.49 in 2021.

Work and communicate at home

It’s understandable if you think first of Zoom Video Communications
US:ZM
as the play for this trend. After all the stock has risen 314% this year, and sales during its fiscal first quarter ended April 30 were up 169% from a year earlier.

But Frigon suggests AudioCodes. The company provides equipment and services used in voice and video communications over the internet, and counts Zoom Video Communications and Microsoft among its customers. It, too, is based in Israel, is traded on Nasdaq and has a market cap of $1.2 billion.

The company hasn’t yet reported its second-quarter results. For the first quarter, sales were up 12% from a year earlier.

Frigon said he had been holding AudioCodes shares for some time before the COVID-19 crisis because he thought remote working would be a growing trend. “Now it’s on steroids,” he said, adding that AudioCodes’ shares are still “reasonably priced.”

Four Wall Street analysts cover AudioCodes, according to FactSet, with three “buy” ratings and a consensus price target of $41.50 — 6% above the closing price of $39.01 on July 21. Analysts expect a 9% increase in sales this year, followed by a 10% increase in 2021. EPS are expected to increase from 89 cents in 2019 to $1.05 this year and $1.28 in 2021.

Revisiting two stock picks from 2019

Back in February 2019, Frigon named Nvidia
US:NVDA
and QuickLogic as good long-term investments in the semiconductor sector. Here’s how the two stocks have performed since that article was published:


FactSet

That’s an incredible disparity.

Nvidia has been tremendously successful, and Frigon believes the company will remain a key player as much of the mobile cloud will be “driven by its technology.” He also pointed to its market value in excess of $250 billion — unusually large for the firm’s Core Growth Strategy. “To say we still own it gives you some idea of how highly we think of Nvidia,” he said.

Analysts still love Nvidia, with 31 out of 40 rating the shares a “buy.” However, the consensus price target of $406.82 is below the closing price of $413.14 at the close on July 21. The analysts expect Nvidia’s sales to increase by 34% this fiscal year (which ends in January 2021), followed by a 17% increase in the following fiscal year. Per-share earnings are expected to increase from $5.79 last fiscal year to $8.17 in the fiscal year and $9.86 in the following fiscal year.

Frigon called QuikLogic “a real hard-luck story,” because its suppliers in China were affected by the trade disagreement with the U.S. and hurt by the COVID-19 pandemic. The company said it completed an $8.1 million offering of common shares on July 21. Its market capitalization is now only $37 million, but Frigon believes the company is still “right in the sweet spot with respect to what is happening with IoT and low power, high efficiency chips that make possible hands-free and voice-enabled devices.”

“We are very patient with our companies, as long as we think the are on the right side of the paradigm shift. For us to wait years for things to happen is not necessarily a problem. It is one of the reasons we have been able to do what we do.”

Two out of three analysts polled by FactSet agree with Frigon, with “buy” ratings and a consensus price target of $6.17, pointing to 75% upside potential from the closing price of $3.52 on July 21. Sales are expected to increase 23% this year, followed by an expected 80% increase in 2021. The company lost $1.60 a share last year. For 2020, the analysts expect a loss of 79 cents a share, followed by a loss of 1 cent a share in 2021.

Biggest holdings

Here are the 10 largest holdings (out of 47) in accounts following the Taylor Frigon Core Growth Strategy, as of June 30:

Company

Ticker

Industry

% of portfolio

Total return – 2020 through July 21

Vapotherm Inc.

US:VAPO Medical Specialties

5.1%

294%

Compugen Ltd.

US:CGEN Biotechnology

4.7%

169%

Kornit Digital Ltd.

US:KRNT Industrial Machinery

4.0%

61%

Fiverr International Ltd.

US:FVRR Data Processing Services

3.0%

260%

Nvidia Corporation

US:NVDA Semiconductors

3.0%

76%

Carvana Co. Class A

US:CVNA Specialty Stores

3.0%

58%

Repay Holdings Corp. Class A

US:RPAY Commercial Services

2.9%

62%

Wix.com Ltd.

US:WIX Information Technology Services

2.9%

125%

Twilio Inc. Class A

US:TWLO Software

2.7%

165%

Monolithic Power Systems Inc.

US:MPWR Semiconductors

2.6%

40%

 Sources: Taylor Frigon Capital Management, FactSet

Strategy performance

Here’s how the Taylor Frigon Core Growth Strategy has performed, after fees, against the S&P 500 index
US:SPX
and two other S&P indexes over various periods through June 30:

Total return – 2020

Average return – 3 years

Average return – 5 years

Average return – 10 years

Since inception (Jan. 19, 2007)

Taylor Frigon Core Growth Strategy

23.6%

20.7%

16.8%

15.3%

11.2%

S&P 500 index

-3.1%

10.7%

10.7%

14.0%

8.2%

S&P 400 Mid Cap Index

-12.8%

2.4%

5.2%

11.3%

7.7%

S&P Small Cap 600 Index

-17.9%

0.6%

4.5%

11.2%

7.1%

Source: Taylor Frigon Capital Management, verified by Ashland Partners LP from inception through 12/31/2015 and ACA Performance Services LLC from 1/1/2016 though 12/31/2019.

Don’t miss:This index ETF is beating the S&P 500 by excluding ‘losers’



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Micron earnings show spike in memory sales, forecast suggests more of the same


Micron Technology Inc. shares jumped in after-hours trading Monday after the memory-chip maker said sales surged in the third quarter and are expected to remain strong in the final period of its fiscal year amid the COVID-19 pandemic.

Micron
MU,
+1.35%

forecast adjusted fiscal fourth-quarter earnings of 95 cents to $1.15 a share on revenue of $5.75 billion to $6.25 billion, which would be a big gain from a year ago when the company reported earnings of 56 cents a share on revenue of $4.87 billion.

Analysts surveyed by FactSet, on average, were predicting fourth-quarter earnings of 79 cents a share on sales of $5.46 billion, according to FactSet.

Shares gained more than 5% in after-hours trading, following a 1.4% gain in the regular session to close at $49.15.

“As we look ahead at the second half, of course, you know, given the total COVID environment and uncertainties around COVID around the globe, we basically have limited visibility,” said Sanjay Mehrotra, Micron’s chief executive, on a conference call.

“Yet, we do believe that cloud demand in the second half of the calendar year will continue to be healthy for us,” Mehrotra said.

Micron specializes in DRAM and NAND memory chips. DRAM, or dynamic random access memory, is the type of memory commonly used in PCs and servers, while NAND chips are the flash memory chips used in USB drives and smaller devices, such as digital cameras. While the COVID-19 pandemic has been cited as fueling a boost in memory-chip sales, many analysts suspect that may have oversupplied the market, which could bode poorly for the second half of the year — but not according to Micron’s forecast.

The company reported fiscal third-quarter net income of $803 million, or 71 cents a share, compared with $840 million, or 74 cents a share, in the year-ago period. Adjusted earnings were 82 cents a share, compared with $1.05 a share in the year-ago period. Revenue rose to $5.44 billion from $4.79 billion in the year-ago quarter.

Analysts had forecast adjusted earnings of 75 cents a share on revenue of $5.27 billion.

Micron had already informed investors that it would outperform its original expectations. In late May, Micron forecast adjusted earnings of 75 cents to 80 cents a share and revenue of $5.2 billion to $5.4 billion, up from its forecast of 40 cents to 70 cents a share on revenue of $4.6 billion to $5.2 billion back in March.

For the year, Micron shares are off about 10%, while the PHLX Semiconductor Index
SOX,
+1.14%

SOX,
+1.14%

is up 4%. Meanwhile, the S&P 500 index
SPX,
+1.46%

is down 6%, and the tech-heavy Nasdaq Composite Index
COMP,
+1.19%

is up 9%.



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