Mega Gains from Megapixels?

01/09/2004 12:00 am EST

Focus:

Jim Collins

Chairman and CEO, Insight Capital Research & Management, Inc.

As a momentum investor, Jim Collins is unafraid to "buy high and sell higher." He has an uncanny knack for finding rapidly growing small- and mid-cap stocks poised to continue their outperformance. His top pick for 2003, Coach, rose 124%. His new pick is a digital camera play.

"OmniVision Technologies (OVTI NASDAQ) primarily develops image sensors for consumer electronics applications, such as digital cameras and cell-phone cameras. We like OmniVision because they are one of the only suppliers of two-megapixel CMOS image sensors and they are already shipping a next-generation three-megapixel device with smaller pixel size. OmniVision employs approximately 170 people and its headquarters are located in Sunnyvale, California.

"OmniVision also has strong fundamentals and growth prospects. At present, the company is forecast to earn $1.33 per share, a 118% increase in a year-over-year comparison, on revenues of $238 million in fiscal 2004, an increase of 116% on a year-over-year comparison. In 2005, estimates forecast more growth, as earnings are expected to hit $1.80 per share on revenues of $352 million. The long-term, five-year growth rate is 35%.

"OmniVision’s operating results may vary significantly from quarter to quarter and depend on a number of factors related to how the business is managed. These factors include the company’s ability to manage product transitions, the mix of products sold and the distribution channels through which they are sold, and the availability of production capacity at the semiconductor foundries that manufacture their products."

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