Money Matters - Simplified

5-Star Stocks Poised to Pop: Trident Microsystems

 Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, home entertainment chip specialist Trident Microsystems (Nasdaq: TRID) has earned a coveted five-star ranking.

 

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

Trident facts

   
Headquarters (Founded) Santa Clara, Calif. (1987)
Market Cap $314.8 million
Industry Semiconductors
Trailing-12-Month Revenue $325.06 million
Management

CEO Sylvia Couder (since 2007)

CFO Pete Mangan (since 2008)

Net Income Margin (Average, Past 3 Years) (39.6%)
Cash/Debt $102.6 million / $0
Competitors

Broadcom (Nasdaq: BRCM)

STMicroelectronics (NYSE: STM)

Zoran (Nasdaq: ZRAN)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 96% of the 514 members who have rated Trident believe the stock will outperform the S&P 500 going forward. These bulls include Acacia901 and my fellow Fools Anders Bylund (TMFZahrim), who is ranked in the top 5% of our community.

A couple of months ago, Acacia901 tapped Trident as a tantalizing takeover target: "Leading provider of processors for HDTV/3-D tvs. Cheap stock, limited downside. Will pop if [Trident] can turn a profit. Easy buyout target for better capitalized competitors."

Trident's dominance of the booming TV chip market continues to support its perfect five-star CAPS status. In fact, Trident's leading 13.5% share of the market easily tops that of publically traded competitors Broadcom (3.5%), Zoran (3.4%), and STMicroelectronics (3.2%).

Anders explains why Trident is a particularly timely opportunity, as well:
 

Fed by healthier sales and tight cost controls, Trident nearly broke free of the red ink in the September quarter and should become profitable again within the next quarter or two. The only analyst to offer estimates on this stock according to Yahoo! Finance doesn't seem to have updated his earnings targets for a while, but the trend looks crystal clear to me.

If Trident can keep its eye on the ball and keep improving its margins as chip sales continue to grow, this could be a multibagger in 2011.

What do you think about Trident, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

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