Why Xyratex Is Poised to Bounce Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, data storage specialist Xyratex (NASDAQ: XRTX  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Xyratex and see what CAPS investors are saying about the stock right now.

Xyratex facts

Headquarters (founded)

Havant, U.K. (1966)

Market Cap

$291.6 million

Industry

Computer storage and peripherals

Trailing-12-Month Revenue

$1.1 billion

Management

Interim CEO Ernest Sampias

CFO Richard Pearce

Return on Equity (average, past 3 years)

15.8%

Cash/Debt

$92.8 million / $0

Dividend Yield

2.8%

Competitors

Dot Hill Systems

EMC

Teradyne

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 93% of the 274 members who have rated Xyratex believe the stock will outperform the S&P 500 going forward.

Just last month, one of those bulls, All-Star Staka, offered a balanced take on the Xyratex opportunity:

Positive:
-Fundamentally cheap with much higher earnings potential, no debt, good dividend
-Activist investor will drive profitability, brings in a new CEO, even selling the company seems possible
-New ClusterStor family should drive future growth even if current core business is deflating

Negative:
-Weakness in core business limits the available time frame for the entrance into the new cluster storage business   

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, Xyratex may not be your top choice.

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