In advance of Q4 reporting, CIBC analysts Daniel Gelbtuch and Rick Shafer outline their view on the digital media universe:
Top Growth Picks: Our top two growth picks are Trident (TRID; +41% since late October) and M-Systems (FLSH; +8% since early November). To us, TRID is still the best way to play the white-hot LCD-TV market (set to double in CY06), while FLSH is best positioned to benefit from the intensifying "NAND in handsets" revolution.
Special Situation: Our "special situation" names are Cirrus Logic (CRUS; +18% since mid-October) and Lexar (LEXR; +3.5% since late Oct.). CRUS' analog mixed-signal transformation should continue to unlock value in CY06. With operations in the black, investors can now focus on LEXR's compelling 2H06 IP litigation prospects.
Long Term Retirement: Our long term "retirement account" pick is Saifun (SFUN; +30% since late December), a leading developer of next-gen flash memory manufacturing architectures. With numerous licensees in SFUN's quiver, and a few more on the way, CY06 will be a key licensee transition & development period.