This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Watch This Memory Maker: Under the Radar

SANTA ANA, Calif. ( TheStreet) -- STEC (STEC) appears to have had a phenomenal 2009, when its shares almost tripled and its revenue climbed an estimated 54%. In contrast, the Russell 2000, a small-cap index, gained 27% and revenues were down among tech companies, including IBM (IBM - Get Report) and Hewlett-Packard (HPQ - Get Report).

But everything was not rosy for Santa Ana, Calif.-based STEC.

The shares climbed almost ninefold to $41 by Sept. 10, before falling to $12 and losing more than $1.5 billion in market cap by December. The stock has rebounded, but investors are still scratching their heads and wondering what the heck is going on.

STEC, a maker of memory components for electronic storage devices used by businesses, is positioned to benefit as companies upgrade their computer networks. Investors have been bidding up the stock, anticipating massive growth when companies start to dole out cash to improve and expand their businesses.

That stance was dealt a big blow in November, when the company said its biggest client, EMC (EMC - Get Report), would be carrying over its inventory to 2010 and ordering fewer parts after slower-than-anticipated sales. This caused the company to cut its revenue forecast to $101 million to $103 million, or about $5 million less than analysts expected.

Was it justified for the company to lose three-quarters of its market cap because of a $5 million revision? Probably not, but it highlights the fact that growth potential is driving this stock. When its potential falls into question, the value of its stock drops.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
STEC $0.00 0.00%
EMC $26.48 0.00%
HPQ $33.16 0.00%
IBM $173.08 0.00%
AAPL $125.80 0.00%

Markets

DOW 17,928.20 -142.20 -0.79%
S&P 500 2,089.46 -25.03 -1.18%
NASDAQ 4,939.3270 -77.6020 -1.55%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs