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I am more of a traditional value investor and tend to ignore growth opportunities in the absence of unusually low valuation multiples. This analysis is more suitable to growth investors who are willing to pay a premium for rapid and sustained revenue growth. We can use the Screener.co stock screener to find technology companies, traded on US exchanges, with >$100M of annual revenue that have 20+% 10-year compound revenue growth rates, and normalized P/E ratios of less than 20. To do this, we use the following criteria:

Field

op

Criteria

Sector

=

"Technology"

Total Revenue(NYSE:A)

>

100000000

Country Located In

!=

"China"

Exchange Traded On

!=

"Over The Counter"

Revenue, Primary-10 Year CAGR

>

0.2

P/E Normalized-most recent fiscal year

<

20

We can then rank the results by YoY revenue growth in the most recent year and exclude any companies with <20% YoY revenue growth. That leaves 11 companies as of 4/21/2011:

Symbol

Company Name

(NASDAQ:BRCM)

Broadcom Corporation

(NASDAQ:SNDK)

SanDisk Corporation

(NASDAQ:EBIX)

Ebix, Inc.

(RIMM)

Research In Motion Limited (USA)

(NASDAQ:CMTL)

Comtech Telecomm. Corp.

I(DCC)

InterDigital, Inc.

(NASDAQ:MPWR)

Monolithic Power Systems, Inc.

(NASDAQ:TSYS)

TeleCommunication Systems, Inc.

(NASDAQ:MANT)

ManTech International Corporation

(NASDAQ:MRVL)

Marvell Technology Group Ltd.

(NASDAQ:GOOG)

Google Inc.

Broadcom (BRCM) has a YoY revenue growth rate of 52% and a 20% 10-year revenue CAGR while trading at only a 18.7 normalized P/E ratio. It is a semiconductor company that is focused on networking and communications applications. Despite the cyclicality of the semiconductor market and a slight dip in revenue in 2009, the company was profitable that year and has recorded substantial revenue growth during the recovery. In my opinion, wireless communications technology will be more resilient, even in a downtown, as the effects of cyclicality will be at least partially offset by the long-term growth trend of the global wireless communications space.

Sandisk (SNDK) has a YoY revenue growth rate of 35%, a 23% and a 10-year revenue CAGR while trading at only a 8.9 P/E ratio. It actually did not experience an annual YoY revenue dip between 2008 and 2010 despite data storage market's cyclicality. This is because demand for its flash storage, that can be integrated in smaller devices and can perform reads much faster than disk-based storage devices, has continued to grow. Sandisk also has a strong balance sheet as well.

Ebix (EBIX) is a software and technology vendor to insurance companies. They have a YoY revenue growth rate of 35%, 10-year revenue CAGR of an impressive 27%, and are trading at a 15 P/E ratio. While the company is relatively small (only $132M of revenue in the last annual period), its net margins are very high and their effective tax rate in the past three years was very low. If they had to pay a more "normal" tax rate, these numbers would probably look different and the effective P/E ratio would be higher (to the point where it probably would not hit this screen).

We covered Research In Motion (RIMM) as recently as 4/18, and it still looks cheap at a sub-5 EV/EBITDA ratio. It grew revenue 33% YoY and has a whopping 57% 10-year revenue CAGR as it grew rapidly with the smartphone market. Its P/E ratio is a mere 8.6.

Comtech Telecomm (CMTL) is another communications equipment company. Notice a theme: many of the high growth companies over the last ten years benefited from the global cell-phone market, which is one of the fastest growing markets over that period. It has a 33% YoY revenue growth rate, 28% 10-year revenue CAGR, and a P/E ratio of only 13. However, looking at the analyst estimates on Yahoo Finance, the year ending in July 2012 is expected to produce a substantial drop in revenue and earnings. I guess we are a little late to this growth story.

InterDigital (NASDAQ:IDCC) is an IP licensing company for the wireless communications industry. I don't like these IP licensing companies in software and services (they are much more acceptable in the life sciences). So, despite having a 33% YoY revenue growth rate, 28% 10-year revenue CAGR, and 13 P/E ratio, I will not touch it.

Monolithic Power Systems (MPWR) is a semiconductor company that has 33% YoY revenue growth, a 45% 10-year revenue CAGR, and a 16.8 PE ratio. Having YoY growth below its 10-year CAGR means its growth is slowing and that is something we may want to screen out in a future analysis. In fact, the analysts are projecting a drop in revenue this year according to Yahoo Finance.

TeleCommunication Systems (TSYS) is a secure mobile communication company. It had 30% YoY revenue growth, a 21% 10-year revenue CAGR, and a 14.4 P/E ratio. It has $136M of long-term debt relative to a market cap of ~$230M and negative net tangible assets, though.

ManTech International (MANT) is a technology company focused on national security applications. It has a 29% YoY revenue growth rate, 21% 10-year revenue CAGR, and 12.6 P/E ratio. Given that its fortunes are tied to government defense budgets, it is unlikely that its market will expand over the next 10 years at anywhere near the rate it grew in the last 10 years (it has been almost 10 full years since 9/11). In fact, deficit reduction measures may actually cause its market to shrink.

Marvell Technology (MRVL) is a semiconductor company that has a 29% YoY revenue growth rate, 38% 10-year revenue CAGR, and a mere 11.8 P/E ratio. It also has a very strong balance sheet, with over $3.3B of net tangible assets (including $2.9B of cash and short term investments) relative to a total market cap of ~$10B.

Google (GOOG) is, well, Google. It has a 24% YoY revenue growth rate, amazing 108% 10-year revenue CAGR and 20 P/E ratio. While the stock suffered in the aftermath of the most recent earnings report, where earnings reflected an increase in compensation-related expenses, the top line growth has continued to impress.

Source: 11 Fast Growing Technology Companies With Reasonable P/E Ratios