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Omnivision (NASDAQ:OVTI) is down to 22.50 as I write this and I believe it is a real buying opportunity here. The earnings and guidance were both great and the market for these products will only increase as things like lane changing censors, adaptive cruise control, rear cameras etc. become more mainstream.

I see the automotive market as being the growth driver for Omnivision. Additionally, they are making higher mega-pixel cameras for cell phones with auto-focus, zoom and flash features. This will also add to the company's growth.

At these prices, with OVTI trading at a mere 14 times earnings, I wouldn't be surprised if a company like Micron (NASDAQ:MU) buys Omnivision. Micron is a much larger company and also has products that compete with Omnivision. At 17 times next year's earnings, it is a lot more expensive than Omnivision too. Bears would argue that Omnivision's margins are shrinking. However, this is due to a change in product mix towards lower margin items.

Garmin (NASDAQ:GRMN), another tech company I like, has also changed their product mix and are selling more lower end products than they were before. However, as in Garmin's case, Omnivision will make up the lower margins with higher volumes.

I think this stock is quite undervalued for a company that's growing at 20-25% and just reported annual earnings of $1.56 per share. With the current growth rate and earnings, the stock warrants a price of $35.

Source: Seeing Opportunity in Omnivision (OVTI)