A Cash-Rich $8 Stock To Ride The IPTV Wave

Cisco's (NASDAQ:CSCO) recent purchase of NDS Group for $5B was validation that video on demand is moving more to the cloud and TV as well as entertainment services will be delivered via the internet to multiple devices. This movement is accelerating at a breakneck pace. One company that seems well positioned either independently or as an acquisition for a larger player in this space is below.

SeaChange International (NASDAQ:SEAC) - "SeaChange International, Inc. develops, manufactures, and markets digital video systems worldwide. The company operates in three segments: Software, Servers and Storage, and Media Services." (Business Description from Yahoo Finance).

7 Reasons to pick up SEAC at $8 a share:

  1. The stock is selling at the bottom of its five-year valuation range based on P/E, P/B, P/CF and P/S.
  2. The company has a solid balance sheet with approximately 30% of its market capitalization in net cash.
  3. The stock is already being speculated as a likely acquisition target. The company has not replaced its president since she left in February, a curious move for a company if it wants to remain independent
  4. The company has grown revenue at a better than a 10% annual clip over the past five years despite the recession. It also sports a dirt cheap five-year projected PEG (.35)
  5. Its forward PE is just over 13 and analysts expect EPS to jump almost 40% this year
  6. The stock is cheap at just 22% over book value. It also spends 25% of revenue on R&D, which is impressive for a small firm.
  7. The stock looks like it has bottomed, is showing increasing technical strength and just crossed it 200-day moving average (See chart - click to enlarge)

Disclosure: I am long CSCO, SEAC.