Stec ( STEC) makes the list because its solid-state storage product is believed to be the future for storage. Stec drives are more energy efficient, run with less heat and are more reliable than hard drives. No wonder Seagate Technology recently announced its own product in the space.

Solid-state drives still represent a small fraction of the entire disk drive market, estimated to be some $33 billion in sales. Stec is expected to make $1.61 per share in the current year ending in December. Analysts estimate a profit of $1.90 in 2010. I think that estimate of 18% growth is too conservative.

For some amazing reason, shares of Stec trade for just seven times 2009 estimates. As investors grow more comfortable with risk, that multiple is likely to expand, and it could double, or more, if the company beats expectations in 2010.

At the time of publication, Dlugosch was long SWHC.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider SWHC and HQS to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.
Jamie Dlugosch is the editor of Penny Stock Winners. He has over 20 years of experience in financial markets including investment banking, equity analysis and research and money management. In addition to being the Editor of Penny Stock Winners, he is also a Contributing Editor of InvestorPlace.com and founder and editor of The Rational Investor.

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