I have done some comparison work on Veeco Instruments (VECO) and Cree (CREE) (two leading LED plays). While CREE is great, the results suggest VECO has a LOT more upside potential from here.

• CREE has a market cap of $4.6 billion. This is 5x the June 2011 revenue estimate of $910 million. Revenue is expected to grow 22% next year. The June 2011 EPS estimate is $1.43…so the stock is trading at 31x earnings.
• VECO has a market cap of $800 million. This is just 1.5x the revenue estimate for next year (compared to 5x revenues for CREE). Revenues are expected to grow 45% next year (far higher than the 22% for CREE). If VECO were to trade at 5x revenues like CREE…the stock would be $80 per share. VECO EPS are expected to be $1.25 next year, so the PE is 19.6. If VECO were to trade at the same PE as CREE…the stock would trade at $39 (+60% from here).
• Comparing the valuations of CREE and VECO gives me a potential upside target for VECO of $50 next year…maybe more if they continue to beat estimates by such a wide margin.

Disclosure: Long VECO.

STEC Inc. (STEC) finally started a rebound on Tuesday after the same analyst who warned of competition last week - knocking the stock down $9 - raised estimates and said to buy.

More importantly, I emailed back and forth with my technology expert and here are his latest comments on STEC.

STEC ($29.15) - SSDs (solid state drives) are the next big advancement in computers. In STEC's earnings report last week, this is the highlight -

Shipments of our ZeusIOPS Solid-State drives ("SSD") into the Enterprise-Storage market grew to $57.7 million for the second quarter of 2009, an increase of approximately 375% from $12.1 million for the second quarter of 2008, and an increase of approximately 125% from $25.7 million for the first quarter of 2009.

Wednesday night Green Mountain (GMCR) reported sales jumped 60% and earnings surged 118% to 50 cents per share (38% better than already raised estimates). In addition, the company announced a massive distribution deal with Wal-Mart (WMT) to sell the Keurig Elite B40 Single-Cup Brewer and a variety of K-Cups. With a stunning 50% of the stock short (I cannot think of any company in America I would be so scared to be short) we will most likely see GMCR trade well into the $60's on Thursday. Analysts will all be raising estimates and targets Thursday morning for sure. Here is how I get to $100 for GMCR:

• GMCR is building an amazing recurring revenue business. Once a Keurig coffee machine is placed in homes, hotels and offices, the company has built in recurring sales for a long time.
• With a market cap of just $1.3 billion, this is still a small cap company compared to its potential.
• I am sure Mars would love to buy them out, but bet the company won't sell because it knows it is leading a revolution.
• The company expects to expand its K-Cup production from 2 mln per week to 8 mln per week by this fall. Who else do you know that is expanding production 4x?
• The company is making good progress on the grocery store front, as it is currently in 3,800, but the goal is to get to 15,000 locations.
• Once people buy a Keurig coffee machine, they are buyers of K-cups for a long time.
• This is an unreal OPEN ENDED situation in my mind. Open ended means the company can sell in so many more places and around the world for years to come. The years to come part is what gives stocks a much higher PE. I now think it can (will) earn $2.50 EPS next year (starting 9/09). Put a 40x multiple on this and the stock is $100 before the end of this year.
• My conviction level from 1-10 is 10. I do not post such conviction lightly.

Disclosure: Long GMCR.

The new media hysteria is swine flu. Despite the fact that nobody in the U.S. is seriously ill so far, the media are already making this a much bigger story than it needs to be. This will be in the headlines for the next couple of weeks even though it (like all these other flu things around the world) never turns out to be the disaster the media makes many fear.

The fact is, the regular annual flu has some stats that would make people freak out. Consider this from the Center for Disease Control website:

Universal Display Corp. (PANL) could be a good takeover candidate as the potential of OLED is just too huge for giant tech companies to ignore.

Samsung Mobile Display, a venture of Samsung Electronics, said on Sunday the global smart phone market was expected to grow to 500 million units in 2012 from 170 million in 2009 (huge for RIMM and AAPL). Smart phones would account for 29 per cent of the entire mobile phone market in 2012, compared with 14 per cent in 2009, Samsung Mobile Display predicted. It said growing smart phone sales and touchscreen adoptions would boost sales of organic light-emitting diode (OLED) displays, a small but fast-growing display segment.

This post is longer than usual because we need to talk about Amazon (AMZN) and my thesis that this company is on the verge of something huge and game changing (the stock action is starting to indicate it too I believe). I can now envision a day when we read most newspapers, magazines and books on an electronic /wireless device. In this case... Amazon's Kindle.

First off, most people want (and need) the mobility of reading books, magazines, and papers away from their computer..so this stuff won't go online. We read books, magazines and papers everywhere...planes, trains, parks, beaches, bed, bathroom, classrooms, offices, couch, etc. We want it in our hot little hand...the lighter and smaller (within reason) the better.

Oil up $11 in a single day. Bear Sterns (BSC) goes down 75% in 2 weeks, corn explodes on weather. Everything in the markets now happens in "Internet Time." This simply means that news that took days or weeks to get out to the masses and be reflected in asset prices (it doesn't matter whether it is stocks, corn, oil, mortgages, currency, steel, shipping rates, etc.) now gets passed around the globe via the news wires, the media and the Internet in an instant.

There are so many people sitting in front of a computer screen with so much money that price moves that used to take weeks now happen in hours or days. Despite the major market averages being down roughly 10% so far in 2008, there are still about 100 stocks up more than 100% (15 names are up more than 200%). Most of these are energy related.

Everyone seems to have an opinion on China - their people, the government, the economy and the markets.

After reading so much about it, I decided to invest the money and time (2 weeks) to go see it and feel it for myself.

Sohu (SOHU) is a leading Internet portal in China (similar to Yahoo (YHOO)). They also havevery popular online games that helped them report huge earnings two weeks ago (see conference call transcript). Revenues surged 156% and earnings exploded by 256% last quarter. They have beat analysts estimates by an increasing percentage each of the last 4 quarters (I can’t remember ever seeing that). The trend is that they have beat estimates by 15%, 19%, 25% and 48% over the last 4 quarters.