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What is both surprising and encouraging about SMART Modular is the strength of its business headed into this seemingly difficult period. Its $219 million in fourth-quarter sales represents a healthy 119% year-over-year jump, and even a sequential 9% gain. The company also turned the year-ago period's break-even bottom line into GAAP earnings of $0.26 per share. That's nothing to sneeze at when the sky is falling on SMART Modular's head. Even the next-quarter outlook is reasonably strong in comparison to other industry players. Sales are supposed to follow roughly seasonal patterns, with perhaps a slight dip below that.
Why is SMART Modular doing all right while others suffer? It doesn't exactly follow their same well-traveled routes. Thanks to a substantial investment in manufacturing capacity in Brazil, the company is becoming a powerhouse in one of the famed BRIC countries, riding Brazil's relatively healthy economy to great results of its own.
The PC market down there seems to be doing well, and SMART Modular supplies memory modules to leading systems manufacturers Hewlett-Packard (NYSE: HPQ and Dell
Alongside partner and competitor STEC
You've seen the current growth rates happening here, yet the stock trades for less than 11 times trailing earnings. The storage industry as a whole is super-cheap, and SMART Modular could become one of the most exciting growth stories on the block in the next year or two. My outperform call on this stock in CAPS is currently hurting my all-star rating a bit, but this, too, shall pass. I'm in for the long haul. Maybe you should do the same.
Fool contributor Anders Bylund holds no position in any of the companies discussed here. Intel is a Motley Fool Inside Value selection. The Fool has written calls (Bull Call Spread) on Cisco Systems. Motley Fool Options has recommended buying calls on Intel. The Fool owns shares of Intel. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.