SOTD: SIRF Technology

[parttimepro]

This is half a brag post and half a genuine question. I recommended SIRF back here (http://forumserver.twoplustwo.com/showflat.php?Cat=&Board=stocks&Number=1776905&Foru m=All_Forums&Words=sirf&Searchpage=0&Limit=25&Main =1776905&Search=true&where=bodysub&Name=&daterange =1&newerval=0&newertype=&olderval=1&oldertype=m&bo dyprev=#Post1776905) in February, and since then it's gone up 60%. (The other one I recommended is down 5-10%). It was stupid cheap at 11 or 12, but now it's getting a little expensive.

Here's some background: SIRF designs chips for GPS systems. It is a partial supplier for the OnStar vehicle system, and will likely start supplying for cell phone GPS systems. It has no debt and 100M in cash. A large portion of the stock was held by Connexant, which is or was selling it off to pay off its own debts. Thus the price may be artificially low due to this constant pressure.

Any thoughts? I think SIRF is well positioned to benefit greatly (5x revenues) if GPS ever becomes a standard cell phone accessory. At 30 P/E, some of that growth is priced in already, but this one could have quite a ways to go.

[James Boston]

I just glanced at a few things:

P/E is too high, so growth potential is probably factored in like you said.

P/S is the worst among it's competitors, and about 4x the industry, so they're priced well above what they're earning.

I think their future clientel is a decisive factor in what they're worth, and I don't think I'm clued in enough to accurately guess that. In February, it probably was a good buy, and it may still be. But as you pointed out, growth is already factored into their price, and I wouldn't feel good buying it.

[AceHigh]

I like this stock, p/e is about the same as competitors. What does growth look like for next year? I see forward p/e isn't that much lower than current p/e, that's the only thing that concerns me.

If the company can continue to grow at a rate close to the last 2 years it should be a good stock to buy.