Published:
January 5, 2009
The
correct answer is 
(A.) Sigma Designs (SIGM)
Sigma Designs makes the
integrated System-on-a-Chip (SoC)
semiconductors that power portable
media players and Blu-Ray systems.
The firm's specialty is in the
Internet Protocol Television (IPTV)
market, which allows users to view
television programming through an
Internet connection. The firm's
sales have skyrocketed, soaring from
$33 million in 2006, to $91 million
in 2007, to $258 million this year
-- a surge of +680% in just two
years. Over the same span, earnings
have shot up more than 36-fold.
Plus, Sigma has just been named #7
on Fortune's "100
Fastest-Growing Companies" list.
As you might expect, SIGM shares
have rallied accordingly -- turning
in a gain of +116% last year alone.
Since the end of 2007, the company
has posted five consecutive
triple-digit quarterly sales
increases -- with growth rates
ranging from as low as +111% to as
high as +198%. As you might expect,
that growth has slackened lately
amid the current downturn. In fact,
management is forecasting a milder
gain of +58% in the upcoming quarter
-- still a pace that most companies
would love to see. The numbers look
even better when you adjust them for
R&D spending. If we add back Sigma's
$1.09 per share in R&D spending last
year to the $2.46 per share in
actual profits, then the adjusted
total is $3.55 (what the company
actually made before R&D
expenditures). At the current price
of
$10.10, the shares can be had
for less than 3 times R&D-adjusted
earnings. SIGM is a great example of
how strides in research and
development are what propel
companies into stars and keep even
the most mature companies a step
ahead of the competition.
With that in mind, StreetAuthority
editor Nathan Slaughter recently
compiled a list of innovative
companies that are most likely to
keep churning out successful new
products, thanks to their heavy
research and development spending.
From wireless equipment to
pharmaceuticals, communications to
video games, Nathan's picks, which
appear in the latest issue of his
Half-Priced Stocks newsletter,
all have price-appreciation
potential from +28% to as much as
+118%! To learn the names of these
stocks, and to learn more about the
Half-Priced Stocks
newsletter,
please visit this link.
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