Shareholders and would-be shareholders of Rambus
The company specializes in developing and licensing patented technologies for digital electronic products. It's also very experienced in suing others for patent infringement and other causes -- so much so that some have accused it of overdoing it.
Indeed, in the past year the company filed suits against chip designers and makers such as Broadcom, NVIDIA, Micron Technology
Shopping and growing
Aside from suing others, though, Rambus does also develop technologies, and it profits by licensing them. The company has been acquiring others to help broaden its scope, expanding into cryptography, for example, by buying Cryptography Research for $342 million. It also bought lighting and display technology from Imagine Designs. In partnership with General Electric
As long as the company isn't overpaying for its acquisitions, it's likely to boost its bottom line eventually. Its growth into new areas of operation is also promising, as is its ramped-up research and development spending -- though it still lags behind many peers in R&D spending.
Another important factor influencing the company's future is its licensing agreements. In 2011, the company announced patent licensing renewals from Toshiba and Panasonic. Those interested in Rambus may want to keep an eye out for additional agreements.
The future
It's also instructive to see what's expected of the company by Wall Street. Here are some numbers of interest:
Fiscal 2011 EPS Estimate |
($0.13) |
Fiscal 2012 EPS Estimate |
$0.06 |
Expected Annual Growth, Next 5 Years |
10% |
Forward P/E |
134 |
CAPS Rating (out of 5) |
** |
Source: Yahoo! Finance.
Based on these factors and numbers, Rambus seems a mixed bag as an investment candidate for 2012. There's plenty of cause for optimism, but right now its stock price doesn't seem like the biggest bargain. In addition, like it or not, Rambus' future is very tied to its legal fortunes.
This is not a stock for the weak-hearted or impatient. If you're really interested, dig deeper into it. But know, too, that there are plenty of compelling stocks out there.
Looking for promising investments? Here are " 5 Stocks with Explosive Potential " and " 4 Stocks as Cheap as They've Ever Been ."