Ausdauer, we meet again. An interesting article on SSTI follows. I've been looking at SSTI for its estimated '00 earnings. Should I buy in?
Friday, March 19, 1999 ·
"The financial equivalent of the Hindenburg disaster is on the horizon for Internet stocks," says Warren Buffett devotee Richard Young. Though he agrees that the potential for online commerce is enormous, he cites estimates that the Internet will account for no more than five percent of retail sales five years from now. "None of the Internet names are investments," Young says. "They are gambles. Most will fall by the wayside."
Instead, Young recommends a number of "reasonably priced (a relative term)" technology leaders.
Flash Memory Regaining its Shine (SSTI)
The market research firm Dataquest recently predicted that the worldwide flash memory market will grow from $2.62 billion in 1998 to more than $5 billion in 1999. Flash memory serves the same purpose as a computer's hard drive, although data is stored electronically rather than mechanically. The technology is used in a host of applications, from computer products like PCs to consumer products like video games, DVD machines, digital cameras and cellular phones.
With players like Intel, Advanced Micro Devices, STM Microelectronics and Atmel, competition among flash memory providers is intense. But special situations advisor Jonathan Steinberg says Silicon Storage Technology (SSTI) carved out a special niche by focusing on high volume, low density flash memory. "SSTI competes very effectively in this space, offering customers highly functional, application-specific flash memory," Steinberg says, adding satisfied customers include Analog Devices, IBM, Samsung and Sanyo.
SSTI lost money with just $67 million in 1998 revenues (2.62% of the market). But Steinberg notes that in 1997 and 1998 the firm grew unit shipments three times faster than others in the industry, and he believes this will continue. He sees an end to three years of price contraction for flash memory as the global semiconductor oversupply abates while "robust" demand increases. Steinberg predicts SSTI will return to profitability in Q4 1999 and post $0.80 per share earnings in 2000. "As investors begin to recognize the turnaround at SSTI, the stock should trade toward SSR's 12-month price target of $12, or 15x the 2000 earnings estimate." SSTI now trades near $3.
For more on Jonathan Steinberg's recommendation see "This Month's Recommendation," April 1999, Individual Investor's Special Situations Report. Jonathan Steinberg provides one undervalued stock per month poised for substantial growth and profit. For a 30-day free trial go to: Individual Investor's Special Situations Report.
The INVESTools Advisory is written by John Brobst, Editorial Director, INVESTools.com.
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Craig
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