We can pound the table and discuss revenue growth and market share all we want. But let's not discount that this is still a very profitable business. It was no accident that management was able to advance gross margin in the May quarter by 170 basis points to reach 60.1%. This led to a net income of $253 million, which grew 4% year over year. Essentially, management knows its products and understands what it takes to drive cash flow.
To that end, given that the total available market for Big Data is projected to grow to as high as $17 billion by 2016, I believe that investors should get in on this stock now since it is just at the cusp of its growth spurt. The current market now stands at just $6 billion.
What's more, Given NetApp's strength in Fabric-Attached Storage and its E-series line of products, the company's excellent strategy and design will continue to appeal to the enterprise.
Along those lines, while enterprise spending has been soft in the first half of the year, I don't believe that businesses can afford to starve themselves for very long -- not if they want to stay in the game. I don't believe CIOs of these companies care about managing their own data storage. I expected NetApp to see a significant chunk of this business.
Accordingly, I would be a buyer here ahead of earnings. On the basis of free-cash-flow growth and margins, I expect this stock will be at $50 by the end of the year.
At the time of publication, the author held no position in any of the stocks mentioned
This article was written by an independent contributor, separate from TheStreet's regular news coverage.