SimpleTech, Inc. is a technology solutions provider offering products based on dynamic random access memory (DRAM), static random access memory (SRAM) and Flash memory technologies.
The Company offers its custom and standard memory solutions to original equipment manufacturers (OEMs) and aftermarket customers including value-added resellers (VARs), mail order customers, commercial and industrial distributors, and retailers.
I like the chart pattern of this company. It has broken $3 level in December '01. Then cleared $5.5 resistance in January '02. Volume chart shows accumulation. It has recently made a pullback from a recent 52-week high of $6.5.
Negative and positive facts about STEC I could think of so far:
1. Chart pattern is excellent (+).
2. Strong cash position (+).
3. DRAM prices going up (+).
4. Commodity business (-).
5. Tied to 4., profit margins are low (-).
6. There are signs that STEC is trying to venture into new technologies which can be higher margin, like the new acquisition Irvine Networks(+). Please read Note (1).
7. Signs of institutional buying. Big blocks moving (+).
8. Near new 52 week high (+).
9. Insiders buying. 54K shares bought last 6 months (+).
10. Better positioned compared to peers such as Sandisk (+). (Price to sales, current ratio, profitibility etc.)
11. Profitable!!! (++).
12. Owners hold a large position, 81% of the company (-) and (+). I do not think owners will try to dump into market. They know that this would plunge it. It would be like cutting a golden egg laying hen. A secondary offering is more likely. This would dilute the earnings (-). However with strong cash position, there is no need for that either. Positive because owners are motivated to keep the company going forward.
Please feel free to add to this list.
I am not suggesting anyone to chase this stock. However, I suggest you to do your own research, check the chart and buy the dips if you like it. I think by year end (that is if Nasdaq completes the turnaround) this company will hit double digits.
Good luck to all.
Rudy
Note (1) For the past two-and-a-half years, Irvine Networks has been developing innovative content processing technology for Web-based server platforms. The effort is in the final phase of developing a working prototype. The completed products, incorporating SimpleTech's patented memory stacking technology, will be inserted into Web-based servers to enable the transmission of files up to 500 times faster depending on the application.
PS: I am a TA person. So I actually do not care about fundamentals that much. |
