Silicon Motion (SIMO) is a small-cap fabless semiconductor company that develops three major products:
- Mobile Storage (68% of net sales)
- Mobile Communications Products (28% of net sales)
- Multimedia/Mobile Graphics Products (4% of net sales)
While the company has seen extremely nice revenue and profit growth over the last several years, the stock now trades at extremely cheap valuations on a P/S, P/E, and PEG basis. The company also has a very clean balance sheet ($146M in cash, no debt), which further adds to the value proposition of the stock at the ~$14/share level ($451M market capitalization).
There are a number of reasons that the stock could be trading as cheaply as it does:
- Market inefficiency misprices