After spending more than a year trapped between a two- and three-star rank, STEC (Nasdaq: STEC ) has impressed enough top-performing members of our 165,000-strong Motley Fool CAPS community to reach the four-star level. A total of 769 members have given their opinion on the storage device maker, with many offering analysis and commentary to explain their recent optimism.
It's easy to see why more CAPS members are becoming bullish on STEC's future. As solid state drives (SSD) gain more traction in the enterprise space, STEC could expand its footprint in the market.
The company has been fairly quiet on specifics regarding inventory overhang issues with its largest customer, EMC (NYSE: EMC ) . STEC assured investors that it resolved the situation in the second quarter, and says its other enterprise customers are adopting more of its products.
Speaking of large customers, some CAPS members particularly like STEC's aim to diversify its revenue. The marketing plan it launched earlier this year could help the company gain more business from customers such as Oracle (Nasdaq: ORCL ) and IBM (NYSE: IBM ) . Financials are looking better, too: Despite a drop from last year, STEC's second-quarter revenue showed a 58% improvement over the first quarter, and the company forecast a strong third quarter above Wall Street's estimates.
The SSD market will no doubt face heavier competition as more players seek a piece of the action. Micron (Nasdaq: MU ) recently shipped its first enterprise-class SSD, while Seagate (Nasdaq: STX ) unveiled its Pulsar drives last year, and is now teaming up with Samsung to target the enterprise market. Intel (Nasdaq: INTC ) and Hitachi are even entering the fray, with plans to launch the initial products of their enterprise SSD partnership in the second half of this year.
But since STEC holds a solid competitive position in enterprise SSDs, many CAPS members believe it can grow its market share and remain the industry leader. STEC has more products in development and a balance sheet free of debt, fueling many CAPS members' confidence in its ability to beat the market.
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