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Editor's notes: PSEM sits at a turning point, argues Helix Investment Research. As revenue starts to grow again and the company shifts to higher-margin business, there could be up to 40% upside.

From its historical financials, Pericom Semiconductor (PSEM) is unlikely to inspire confidence in most investors. To be sure, the company consistently generates positive operating cash flow, but those figures have been volatile, and of more concern are the company's declining sales, which fell from over $166 million in fiscal 2011 to less than $130 million in fiscal 2013 (Pericom's fiscal year ends in June). However, amidst a global recovery in the semiconductor industry, Pericom is poised to break this trend. And with a truly pristine balance sheet, and a stock trading below book value, we see upside potential of 38% as Pericom returns to growth and makes a decision on its ample cash balances. Unless otherwise noted,...

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