You might not have noticed, but in the past few months Mindspeed Technologies Inc.’s stock has put together a nice run.
As of last week, shares of the Newport Beach-based networking chipmaker had doubled from their low in July. Sure, the shares still are on the cheap side at about $2.30 last week. But the run-up has lifted Mindspeed’s market value to about $230 million at recent check.
Mindspeed, which spun off from Newport Beach-based Conexant Systems Inc. in 2003, saw its shares poke along in July when it announced a quarterly loss of $9.5 million, versus a $20 million loss a year earlier.
The company also said it expected sales for the September quarter to come in 5% to 10% higher than the June quarter.
That started Mindspeed’s shares on their recent climb. Then the company revised its sales outlook for the recently ended quarter, saying sales could come in 8% to 12% higher than the June quarter.
The gain is the longest upward climb for Mindspeed since its shares debuted in late 2003.
A big reason for the growth is the voice over Internet protocol market, said Daniel Amir, a research analyst with W.R. Hambrecht & Co. in San Francisco. VoIP allows users to tap the Internet to make phone calls.
“VoIP continues to be the highlight of the story,” Amir wrote in a recent research note.
The VoIP market should see 10% growth quarterly, according to Amir.
Mindspeed “has continued to see market share gains in this segment,” Amir wrote.
Another driver, according to Amir: China, which makes up about 25% of Mindspeed’s sales.
Amir recently raised his price target on Mindspeed’s shares to $2.80 from $2. Amir also raised guidance for the quarter ended Sept. 30 to $30.6 million in sales, up from $29.9 million.
“While profitability is still a few quarters out, we believe that with this positive pre-announcement, the company is back on track to reaching its profitability goal by the middle of 2006,” Amir wrote.
On Sale Now
If you like your stocks cheap, you may want to check out a couple of Orange County technology companies.
Forbes.com’s “Streetwalker” recently fingered SimpleTech Inc. and TTM Technologies Inc., both of Santa Ana, as two of five stocks that trade for less than $10 with decent financials and attractive multiples.
Many investors shun stocks that trade in the single digits, thinking the low price might be a signal of poor quality. But the five stocks that made Forbes’ list all have posted profits in the past 12 months and have managed to expand sales annually by more than 5% for the past five years.
And there’s more: Analysts expect the earnings at the companies to expand at a 10% clip or more for the next three to five years. The stocks show trailing 12-month price-to-earnings multiples below their five-year averages, according to Forbes.
Take SimpleTech, a memory products maker that trades at nearly $5 a share. It has a trailing price-to-earning ratio of 19 and a projected earnings growth of 15%.
SimpleTech is slightly off its recent high of about $5.50 a share but has come up nicely from its 52-week low of $3.27 back in the early spring.
The company’s second-quarter income from continuing operations about doubled to $1.9 million from a year earlier. Revenue grew 24% to $70.3 million, beating expectations of $63 million to $66 million.
TTM, a circuit board maker, has traded at around $7.50. It has a trailing price-to-earnings ratio of 14 and expected future earnings growth of 20%.
The company struggled in its latest quarter as competition and falling prices squeezed the industry. In the quarter ended June 30, TTM reported a 7% sales decline from a year earlier to $57 million. TTM’s operating profit dropped by 56% to $4.8 million in the period.
But TTM got a stock upgrade in late August from Longbow Research analyst Shawn Harrison, to “neutral” from “sell.” Harrison cited stabilizing prices and higher expected demand for the upgrade, though he noted TTM wasn’t entirely out of the dark yet.
Both TTM and SimpleTech have market values of less than $300 million.
Ingram Bumps Neiman
Ingram Micro Inc. is joining a new club.
The Santa Ana-based distributor of technology products has replaced Neiman Marcus Group Inc. of Dallas on the Standard & Poor’s MidCap 400. The index includes stocks with midrange market values,typically $1 billion to $4 billion.
Ingram Micro has a market value of nearly $3 billion and annual sales of about $25 billion.
Neiman-Marcus left the index because it’s becoming part of a private equity consortium that’s lead by Ft. Worth, Texas-based Texas Pacific Group and New York’s Warburg Pincus LLC.
