My end of year review of GIG
INTRO Here's my semi-annual exercise to see if I remember why I own the stocks I own, and so I can check back and see if their stories have changed. I post in case it helps others too.
GigPeak (was called GigOptix which was called Lumera which was spun off from MicroVision)
GIG (market cap was $0.111B mid2016 is $0.171B EOY2016)
GigPeak is a mini-conglomerate within a narrow high-tech niche. I know them most because of their very high speed electro-optical switches, the very things that are needed to translate electrical signals into optical signals and the reverse.
Electro-optical switches are one of those things that most folks prefer to ignore because life is easier that way. High speed electro-optical switches, however, are what make the high speed internet work, streaming easier, cloud services efficient, and generally enabling modern life. GigPeak has competitors, but as the speeds increase, GigPeak finds itself with less competition. A growing market, esoteric tech, some diversity through many tiny mergers and acquisitions, and the result is a company that is hard to understand in a possibly profitable field. Technology can be fickle because inventions happen, but at least for now I view the company favorably.
The company flirted with profitability two years ago, and has now achieved it. The financials are confused by the M&A activity. The technology confuses most non-technical people (and I only understand it a bit more than most, but am not an expert.) If they continue their growth trends and sustain profitability, they could pass from being an unknown with no profits to a well known if poorly understood growth stock.
I continue to Hold, and probably won't buy more because on good days it is already one of my largest holdings. I am remiss in not quantifying a proper valuation, though it is hard to imagine such a critical company being only worth a few hundred million, and currently it is valued at less than two hundred million. Simply getting up to a Price/Sales of 6 would be a 38% appreciation, something I think undervalues their growth and competitive position.
DISCLOSURE LTBH of LMRA since 2004. Holding because I have enough shares to positively impact my life, but not so many that I feel too exposed to risk.
(I've also collected links to the other discussion boards and my other stocks over on my blog trimbathcreative.wordpress.com |
