Opportunity in Beaten Down Stock: OVTI

Omnivision Technologies (OVTI) : OmniVision designs, develops and markets high-performance, highly integrated and cost-efficient semiconductor image sensor devices. The Company's main products, image-sensing devices referred to as CameraChip image sensors, capture images electronically and are used in a number of consumer and commercial mass-market products -- most notable among them being camera phone.

Throughout 2003 the company had a nice run mainly because it was riding on the increasing popularity of camera phones at that time. The stock enjoyed a second phase of great run from November, 2005 to May, 2006 with introduction of some security technology products and high performance sensors. After that a series of earning disappoints made the stock to talk with the floor for about a year now. On March 1, the company said its third-quarter profit plummeted 86% due to stock-based compensation expenses. Quarterly revenue fell to $134.4 million from $137.7 million. But, along with those bleak news, the company also sent some positive signal by announcing that its board approved a stock buyback plan of up to $100 million in common shares.

Today the stock closed at $14.49, up 9c. The current P/E ratio is at a reasonable level of 17.25. We feel the stock may start another good run soon. The company recently introduced TrueFocus 3 Megapixel sensors (always on focus -- no autofocus lag) and also autofocus 5 Megapixel sensors for camera phones and other low cost digital wireless security solutions. These products are already in high demand and has good future. That should reflect in the earning reports of the company in next few quarters.

The company is also a possible take-over target. Any new rumor may push the stock up. If you buy this stock, keep a watch on the morning news everyday for any take over rumor so that you do not miss the opportunity of making a good profit. In case no rumor comes up, we believe holding the stock for a time-horizon of about a year would bring nice gain. Omnivision's basket of good technology products that are useful for average consumers as well as big industry houses certainly do not deserve to be overlooked for a long time.

Disclosure: We own Omnivision Technologies (OVTI) in our personal portfolio. You should do your own research before making any decisions. This blog, or its authors are not responsible or liable for any misstatements and/or losses you might sustain from the content provided.
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