5-Star Stocks Poised to Pop: GigaMedia

Based on the aggregated intelligence of 115,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, online gaming company GigaMedia (Nasdaq: GIGM  ) has earned a coveted five-star ranking. Our data has shown that five-star stocks outperform the market by a significant margin; conversely, one-star stocks have woefully lagged the market average.

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

GigaMedia facts

   

Headquarters (Founded)

Taipei, Taiwan (1997)

Market Cap

$351 million

Industry

Internet Software and Services

TTM Revenue

$197.8 million

Management

CEO Arthur Wang (since December 2003)

CFO Quincy Tang (since August 2008)

Return on Equity (average last three years)

22.3%

Competitors

Cryptologic (Nasdaq: CRYP  )

The9 Limited (Nasdaq: NCTY  )

CAPS members bullish on GIGM also bullish on

Apple (Nasdaq: AAPL  )

Ctrip.com (Nasdaq: CTRP  )

CAPS members bearish on GIGM also bearish on

GameStop (NYSE: GME  )

Baidu.com (Nasdaq: BIDU  )

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 1,904 of the 1,941 members who have rated GigaMedia -- some 98% -- believe the stock will outperform the S&P 500 going forward. These bulls include Wayferer2003 and sumbawa.

Late last month, Wayferer2003 noted that despite its slumping stock price, GigaMedia's "long-term growth prospects are still solid with no long-term debt, a sound balance sheet, net income up 11% and sales up 31% over last year."

A pitch from sumbawa two days later shares that contrarian spirit, elaborating on the trends still working the stock's favor:

[GigaMedia] has been sold off heavily this year like just about everything China (and Taiwan). But this company is healthy and growing quickly. Chinese gaming/gambling is not going away and will only grow. Strong free cash flow, rising margins and return on capital. Yet the current price seems to be pricing in 0% growth indefinitely. I'll "bet" their growth is higher.

What do you think about GigaMedia, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 115,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. GigaMedia and Baidu are Rule Breakers recommendations. GigaMedia is also a Global Gains pick. CryptoLogic and Ctrip are Motley Fool Hidden Gems selections. Apple and GameStop have been singled out by Stock Advisor. The Fool's disclosure policy always gets a perfect score.


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