GIGAMEDIA LTD ORD Company Overview

GigaMedia Limited (GigaMedia) is a holding company that develops and licenses entertainment software and provides application services, owns and operates an online games portal and provides broadband Internet access services through its subsidiaries. GigaMedia’s entertainment software business is operated through its subsidiary, Cambridge Entertainment Software Limited. Its Taiwan online casual games business is operated through Hoshin GigaMedia Center, Inc. (Hoshin GigaMedia). Its Hong Kong and People’s Republic of China online casual games business is operated through FunTown World Limited (FunTown). Its Taiwan broadband Internet service provider businesses are operated through its subsidiary, Hoshin GigaMedia, which focuses on consumer users, and Koos Broadband Telecom Co., Ltd., which focuses on corporate users. In May 2006, the Company sold its ADSL business to Webs-TV International Corporation

I issued a buy alert earlier this week on GIGM saying we should try to buy some shares on a pullback near the 200ma or around 12.45 for a solid entry. As my “crystal ball” enlightens me of buy points, i used my jedi mind powers from the depths of mount doom to force price to dip to a low of 12.40 during todays session to give a chance to buy before a rally followed to end the day up 2.85% closing at 12.98 , i filled a position as stated 12.45 From a technical analysis standpoint this chart pattern is looking great as the 3 month down trend has been broken sparked by a bullish earnings call and now as of todays close price broke out of a bullish pennant continuation pattern suggesting further trending in favor of the bulls.

Fundamentally as of todays closing price GIGM is looking very attractive and undervalued. Currently GIGM is trading at just 24x earnings while the industry is set at 33x earnings, along with a low forwards PE of just 15.09x GIGM has much room to run into the future to catch up with its growth in revenues and income. GIGM expects to report EPS of .86 for 2008 giving them a fair value price for 08′ of [.86eps X 33x industry average PE = 28.91 aka 122% gain from todays close] making GIGM look dirt cheap at these prices. I’m issuing a “STRONG BUY” with a short term price target of $15-$16/share.

FOLLOW UP ANALYSIS AND PUBLIC DISCUSSION HERE AT THE GIGM MESSAGE BOARD  TOPIC

This entry was posted on Friday, August 24th, 2007 at 11:28 pm and is filed under Small Cap Stock Picks. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.