With inflation negligible, interest rates low, energy cheap and corporate profits set to rise, I still see plenty of opportunities out there. One of them is Cirrus Logic (CRUS), based in Austin, Texas, notes Mark Skousen, editor of Five Star Trader.
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Cirrus pioneered many of the great audio achievements in consumer electronics over the last three decades, from the first audio chips used in desktop PCs in the 1990s to digital headsets and other cutting-edge products today.
The company’s specialty is high-precision analog and digital signal processing components for the audio markets. You will find many of its products in your smartphone, headset, desktop speakers and voice-command electronics.
The company is a proven innovator, holding more than 1,000 patents that are key to more than 700 products serving tens of thousands of customers around the globe.
Cirrus is well positioned to capitalize on voice products across a wide range of categories. It is also a leader in voice biometrics, the new science of verifying speaking identity using speech recognition alone.
The numbers here are already excellent. In the most recent quarter, earnings soared 150% on a 41% increase in sales. The firm enjoys a 21% operating margin. And it has a strong balance sheet with plenty of cash and little debt.
Cirrus is on a roll. It just finished its third consecutive year of 25%+ revenue growth. And it significantly broadened its product portfolio to target many emerging markets that will fuel growth for years to come.
No wonder the stock is up 65% over the last 52 weeks. Yet this momentum stock still has plenty of upside potential. Plus, Cirrus still is quite cheap.
Cirrus currently sells for just 16 times trailing earnings versus 25 for the S&P 500. It also sells for just 13 times my earnings per share estimate for the next 12 months. So pick up Cirrus Logic at market. And place a sell stop at $54 for protection.
