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5 Small-Cap Growth Stocks With Zero Debt

Stocks in this article: ISSINSPTRCRRUEDORM

Integrated Silicon Solutions

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Integrated Silicon Solutions (ISSI) is a specialty memory chip manufacturer that focuses on products for the communications, consumer products, automotive, industrial, medical and military end user. The company designs products in the U.S. and then outsources production to the Far East, much like Apple (AAPL) does. Customers include a huge cross section of the companies in the S&P 500 and global large-capitalization tech companies.

Nearly 4% of the stock is sold short, with the short ratio hovering around 11. This high level of short interest, I believe, is due to a near-500-basis-point decline in gross margins for the fiscal year ended September 2011. This occurred despite revenue climbing nearly 8% for that year.

The company recently reported first-quarter 2012 results that disappointed on the top and bottom lines. Perhaps the shorts saw that coming. But the stock did not react as the shorts expected; it held its ground. To me, this means that there is so much negativity in the stock that any positive news will propel it higher.

With Integrated Silicon Solutions selling at about 8 times earnings with about $3 per share in net cash, and with my expectations for an improving tech market for 2012, the stock can surprise to the upside in the future.

Integrated Silicon Solutions shows up on a list of 10 Stocks for a Multi-Cap Portfolio. For more on semiconductor stocks check out Goldman Sachs' 7 Semiconductor Picks.

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