Thoughts on NVE Corp (ticker nve)

[malloyj]

I have been using the rule #1 tools for just over 4 months with pretty good results, but recently began using Justin excel sheet (excellent work Justin) to re-evaluate all of the stocks in my portfolio. One stock keeps coming up to me as a very strong rule#1 stock, NVE. Would love to see others investigate it and give me their opinion on this company.
Thanks
malloyj

[Gunnski]

Malloyi. I took a look at NVEC the chip maker. I hope that is the biz you were re: to.

I have a MOS of $36.35. Current price $32.08.

I just wonder about a moat w/ Intel et al. in the woods.

The numbers look good. Nice sales. Rueters has it as "Outperform".

Just some thoughts.

[malloyj]

Yes that is the correct company. My mistake in my initial post, NVEC is the ticker not NVE. NVEC uses a process for many different applications called spintronics, where electron spin is used versus electron transfer. It looks like they have a number of patent protections on their products.
I also had a good MOS using my MSN #'s and Phil Towne's on-line tools as well as using Justin Excel formula which uses more conservative numbers. Being new I wanted to get some feedback from more experience Rule #1 investors.

Thanks for the feedback.

[Gunnski]

Hey no troubles. I got a hit on a similar ticker that was a Pharm. Co. I just wanted to make sure.

I used MSN & Phil's site too. I used earnings (5 Yr.) of 18.30 and the default 2x's 18.3, as the other number was in the 60+ range. To high. EPS of 1.51 via the Co. report. $36.35 popped out on Phil's calculator.

Hope that helps. Good luck!

[talktojules]

Have you checked out it's Management and Moat?

How is their management? Bad news travel faster than good. I found this regarding a class action lawsuit: http://securities.stanford.edu/1035/NVEC_01/. I guess shareholders wanted to charge the board members with violating federal security law. The case appears to have been dismissed so I don't know if it should be given any credence.

Lastly, here's a list of companies that also deal with MRAM:
Cypress Semiconductor Corporation (CY)
Freescale Semiconductor (FSL)
Motorola Inc. (MOT)
IBM Corp. (IBM)

However, NVEC has patented key parts of this technology, so anyone wanting to use the technology will need a licensing agreement. Also, do you know when their patent ends? It's a small company, so it may not be able to realize the full potential of MRAM because of it's high production cost. However, they seem to have a firm foothold in the medical technology industry.

All in all, the numbers look pretty good. I just think you need to look into the management and moat a little more before you buy.

Cheers,

Julie

[malloyj]

Julie,

Thanks for those insightful thoughts and questions. I will look deeper into those areas and see what comes up. Thanks for your feedback.
JKM