Seeking Alpha
View as an RSS Feed

Stan Piland  

View Stan Piland's Comments BY TICKER:
Latest comments  |  Highest rated
  • 7 Reasons To Get Behind Insiders On ShoreTel [View article]
    All the selling has been pursuant to 10b5-1 plans or option related; management still has most of their wealth in OCZ stock.

    Cash flow has been impacted by two things: first, they had to double capacity to meet demand...went very well. Second, last quarter they expanded their supply agreement with a major NAND flash supplier (MU I think) and developed their own wafer processing capability. This verticle integration boosts raw materials inventory, but has the potential to boost gross margins 3-400 bps.

    My model has them generating positive CF from operations in the F4Q (Feb). If enetrprise orders ramp as I expect beginning in F1Q, CF from Ops should be slightly negative in F1Q (higher inventories and Accounts Receivable) but ramps nicely in F2Q and beyond. Key driver for revs, margins, and cash flows is new Z-Drive R4 PCIe which is the only real competitor to FIO in the nascent SAN replacement market.
    Mar 26, 2012. 01:03 PM | 1 Like Like |Link to Comment
  • 7 Reasons To Get Behind Insiders On ShoreTel [View article]
    Hey Bret, nice note...will look at SHOR. Speaking of speculative names, did you ever look at that SSD company OCZ I mentioned? Stock has pulled back because buyers hoped for (1) quick announcement of new contracts, (2) preannouncement of F4Q upside, and (3) underwriter Credit Suisse initiating coverage...none have happened yet. Stock is 0.8X EV/Revs on C2013 revs. Should trade at 2.0-2.5X and revs are probably way too low.
    Mar 26, 2012. 11:31 AM | 1 Like Like |Link to Comment
  • Why I Am Out Of Valero Energy [View article]
    I think most people have gotten used to looking at refiners as trading vehicles...buy low, sell high, and repeat. But it was pointed out to me recently that the U.S. is now the second lowest-cost producer of petrochemicals behind Saudi Arabia. Moreover, there are at least 8 major capacity expansions underway in the petrochemical industry. And although the pace of shale oil & gas production growth has slowed recently, Citi recently noted that North America is and will remain the fastest-growing oil and gas producer in the world.

    This would appear to represent a major macro shift in the longer-term prospects for the refining industry. I have no position currently, but 10x earnings strikes me as pretty cheap for a business which appears poised for a significant improvement in its secular growth trajectory.
    Mar 25, 2012. 12:40 PM | 1 Like Like |Link to Comment
  • Challenging Targets Could Pay Off For Ziopharm Oncology [View article]
    Nice summary...thanks! The only thing I would add is ZIOP's affiliation with Randall J. Kirk, who owns over 20% of the stock and serves on the Board.

    Robert Langreth at Forbes has called RJ "the Smartest Biotech Investor" (2/22/2011). RJ founded New River Pharmaceuticals and sold it to Shire PLC. He developed Clinical Data and sold it to FRX. He is currently involved with Halozyme (http://bit.ly/xgxBiP) which is partnered with Roche and BAX. And he is the largest holder of ZIOP.

    I am not a scientist, and generally avoid development-stage biotech. But I make an exception for RJ's companies because he has a such great record.
    Mar 15, 2012. 12:28 PM | 1 Like Like |Link to Comment
  • Should Mitek Systems Acquire Top Image Systems? [View article]
    Not sure why folks think MITK is so expensive, but valuation is always tricky when a company is just starting to show a profit. They have most major banks under contract, and are continuing to sign more. They have great relationships with channel partners like FISV, JKHY, etc. And they have a well-established, patented suite of services, as well as new products yet to be launched. The product positioning, 3rd party relationships and bluechip customer base will take at least a year or two for any competitor to replicate, and I'm guessing user trials and system integration alone could take as much as a year.

    Rev growth is forecast at 100% in F2012, and 100% again in F2013. Eps in F2012 and F2013 is forecast to be 12 cents and 40 cents respectively. So calendar 2013 should be at least 50 cents...which translates to 24X C2013 eps for 100% growth. Don't forget, this business has huge gross margins, so a little sales growth goes a long way. And these estimates are likely conservative.

    By comparison, TNGO (different SaaS business, but comparable competitive position) trades at 32X C2013 numbers, and rev growth is only forecast to be 17%. FTNT trades at 44X C2013 estimates and is projected to grow revs 18%, and it has a lot of competition. Against that backdrop, I think MITK is worth 35-40X C2013 estimates or $18-20. Hope that helps.
    Mar 12, 2012. 05:09 PM | 1 Like Like |Link to Comment
  • OCZ Technology: Reading Between The Lines [View article]
    Nice article, and I agree. Regarding gross margin, final sales of legacy DRAM products cost them between 50-80 basis points, which should not recur in the 4Q. Also, they just doubled capacity over the past couple quarters. With new capacity up to speed and enterprise products representing a larger portion of the mix, GM should continue to rise...I expect a 25% GM in 4Q.

    Also, with the new Wells Fargo credit facility, it is unlikely they will need to float a secondary to support their current growth trajectory. The only reason OCZ might float a secondary will be to fund working capital for two or more transformational enterprise orders...which is a distinct possibility, but would be a major positive.

    The stock trades at .7 X Ev/Revs on calendar 2012 estimates vs over 8X for FIO. OCZ is worth at least 2-3X EV/Revs, which puts my target well over $20.
    Jan 10, 2012. 07:17 PM | 1 Like Like |Link to Comment
  • 2 Undervalued Storage Device Makers To Pick Up Now [View article]
    Agree, I like SNDK. Also like WDC, but STX has a much better yield and more exposure to solid state drives (SSDs.) But the landscape is shifting in data storage. The driver for SNDK is NAND flash-based SSD adoption in both the consumer and enterprise markets.
    My favorite SSD producer is OCZ Technology, which makes a full range of consumer and enterprise SSDs and associated controllers. OCZ's MLC-NAND based drives have improved reliability and speed dramatically. But most important, they have reduced costs to the level where deployment has begun to accelerate exponentially. Yet the stock is only trading at .7X EV/Revs on Cal 2012 estimates. I think it should trade at 2-3X, which equates to $20-$30 vs $8.00 today. OCZ reports tonight, which should be a catalyst for higher share prices.
    Jan 9, 2012. 09:26 AM | 1 Like Like |Link to Comment
  • Look For Large Gains From Solid State Drives Storage Wars [View article]
    Yes, but if the numbers are right and investors recognize it, it should be a 3 bagger from here by summer... :-). Check out my posts on this in Nov and last spring. This is a great story! And they have delivered, the market has not figure it out yet.
    Jan 5, 2012. 08:27 PM | 1 Like Like |Link to Comment
  • Look For Large Gains From Solid State Drives Storage Wars [View article]
    Nice article, and welcome aboard OCZ. I am a huge fan, and I think valuations are way too cheap. Regarding margins, OCZ's gross margins are lower than comps because (1) they have been capacity constrained and (2) they have a higher level of lower margin consumer SSDs in the product mix. They completed a major capacity expansion last quarter, which eases capacity constrains somewhat. And the new Z-Drive R4 PCIe, which competes directly with FIO, sports a 50%-plus gross margin, is still much lower priced than FIO's flagship ioDive Duo, and has recieved favorable reviews compared with the ioDrive Duo. Management is targeting 30-40% gross margins as enterprise class SSDs become a greater percentage of the mix, but I don't think anyone is building them into current estimates.

    Regarding valuation, remember a Feb fiscal year is practically last year! My calendarized numbers forecast roughly $340 mil in C2011 revs and $498 mil in C2012. (These are in line with street estimates.) That puts OCZ EV/revs at about 0.71X C2012 revs on today's close, which is ridiculous. Given superior products, spectacular growth and excellent execution, the stock should trade at at least 2-3X C2012 revs, which equates to $20-$30. Disclosure: I am long a boatload of OCZ.
    Jan 5, 2012. 06:27 PM | 1 Like Like |Link to Comment
  • Mitek Systems: The Perfect Storm In Leading Edge Technology [View article]
    Thank for the article. I love finding companies like this! I agree wholeheartedly that the technology is far ahead of competitors and has a large nascent market. I own it in pretty good size, and am continuing to buy dips. It appears to me that growth in their business has reached an inflection point where growth will accelerate rapidly for at least a year or so, and it will remain robust for 3-5 more years. This is one where the potential for a takeover is actually a risk, because the upside should be better over time as a standalone company.

    Although MITK has only recently turned profitable, I am forecasting calenderized earnings to grow from 7 cents in C11 to 36 cents in C12 and at least 55 cents in C13. So we're trading at 20 X C13 earnings for over 100% growth and no competition....stock is at least a double over 1-2 years!

    I would be curious if someone has heard a short "story" on MITK. Are they shorting it on valuation alone? That can be economic suicide with a company like this!
    Oct 23, 2011. 05:41 PM | 1 Like Like |Link to Comment
  • OCZ Technology Is Poised To At Least Double From Here [View article]
    Thanks for this article. I thought the quarter was fine, and it demostrates that the company continues gain traction in the enerprise market. No wonder, since they have the best products at lowest price in the industry.

    I share the view that OCZ is an enticing takeover candidate, and have heard some scuttlebutt that MU would make sense as a strategic buyer. However I view this as a risk, rather than an opportunity, because any offer would probably only be in the $8-10 range.

    As an independent company however, OCZ is a best-of-breed pure play on the fastest growing segment of technology. A 1X EV/Rev multiple on C12 numbers would put the stock price between $9 and $10, and I think the stock is worth that NOW! In a year or two,given OCZ's excellent execution and rapid growth, this should be a $15-20 stock.
    Oct 6, 2011. 05:51 PM | 1 Like Like |Link to Comment
  • The Fed Can't Print Jobs: Automation Trends Driving 8 Growth Stocks [View article]
    What a strange article!

    The automation trends of which you speak are not new, and in fact have been ongoing since the dawn of the industrial age. They have affected employment and output in every industry, and the result has been an astounding and historical improvement in global (and U.S.) living standards.

    Look at the history: a hundred years ago, farmers used horse-drawn plows. And skeptics decried the fall of the small family farm as automation became widely adopted. But improved farm productivity has fed the world and kept the Malthusian dilemma at bay. Fifty years ago Ma Bell employed hoards of operators who individually connected each call; routers and switches now perform this function in milliseconds at minute fractions of the cost, forming the most basic infrastructure of the wired world. The list of industries and jobs which have fallen to innovation is almost endless!

    But the new industries have brought new jobs, and living standards have been elevated by improved output. Consider that thirty years ago. There were only three TV stations, home air conditioning was a luxury, and the concept of a personal computer seemed like science fiction. Doing things better has created more jobs, not less. And if you have any question about that, consider that barely three years ago, the U.S. was not only at full employment, but employed 12 million illegal aliens to boot!

    The term you are describing is productivity growth, and without it the alternative is economic stagnation. So I have no positions in the companies you listed, although I only recently covered a short on GS. And I think the future of WMT can be foretold by the history of SHLD. But in general, my most successful long-term investments have been long the innovation leaders, and most of these companies would seem to qualify.
    May 22, 2011. 11:07 AM | 1 Like Like |Link to Comment
  • What Might Gold Mania Look Like When It Arrives? [View article]
    Awesome graphics!! Same applies to food and energy...although I suspect they won't be using the term "bubble" when it's $20 corn and $400 oil will they?...
    May 8, 2011. 09:52 PM | 1 Like Like |Link to Comment
  • Why I'm Long General Dynamics: Robust Financial Metrics, Low Valuation [View article]
    Thanks for responding.
    At present I have only indirect exposure throughcarbon fiber producer Hexcel (HXL-$18.19). But while defense is a key market, HXL's main driver is commercial aerospace (BA and Airbus) and wind. I know a bit about the industry though...once worked at NOC's Newport News Shipbuilding in my hometown...a competitor to Electric Boat in submarines. Your call may be a touch early, but I think it's a good call.
    Oct 26, 2010. 03:34 PM | 1 Like Like |Link to Comment
  • Why I'm Long General Dynamics: Robust Financial Metrics, Low Valuation [View article]
    Nice article! I have been thinking about doing some work on defense companies, but have not yet gotten to it. Sentiment has been awful on the sector, given expectations of a sharp contraction in U.S. defense spending. But it seems to me the sector can benefit from an expected arms race resulting from the U.S. withdrawing military protection from its numerous smaller allies. In that regard, the recent $60 billion Saudi arms deal is likely the tip of the iceburg. Maybe I need to move this up the priority list. Thanks.
    Oct 26, 2010. 01:47 PM | 1 Like Like |Link to Comment
COMMENTS STATS
165 Comments
124 Likes