Not Over the HILL

Written by GSCR Staff   
Thursday, 13 June 2013 08:12

In keeping with the youth and technology theme in Monday’s Goldman Guide we looked for an inexpensive technology stock pick for today’s Market Monitor to possible add to the satellite part of your portfolio.

Dot Hill Systems Corporation (NASDAQ – HILL - $2.07) is in the software and hardware storage system business for small and mid-range storage markets with customers around the world.  While this component of the technology industry does not have the some of the sex appeal of electronic gadgets or social media, it is a necessary and growing market.  The company’s storage solutions consist of integrated hardware, firmware, and software products employing a modular system that allows end-users to add various protocol, performance, capacity, or data protection schemes.

Recently, Dot Hill was named to the UBM Tech Channel’s CRN 2013 Virtualization 50 for the third year in a row.  The annual listing showcases the companies with the most innovative virtualization solutions on the market today.  Dot Hill’s marquee product is the AssuredSAN, a high level SAN (Storage Area Network), which is a networked storage and data management solution that provides high performance and large disk array capacities for various environments, including fiber channel, Internet small computer systems interface, and serial attached SCSI storage markets.  Additionally, the company offers RAID (Redundant Array of Independent Disks) adapters and stacks for Windows and Linux based servers.

There are mixed signals for HILL in the short term technical analysis, but a definite shift to a bullish indicator in the intermediate and long term.  On the earnings side the firm is expected to turn to profitability from an EPS perspective in 3Q13 or 4Q13 to finish the year in the black with $0.14 EPS expected in 2014.  Revenue growth is expected to be 15% over the next two years as well.

We think the stock can move to the $3 range later in the year, especially if earnings reports show the expected EPS turn around.

Have a great day.

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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