Cray Inc. (NASDAQ: CRAY) announced on 15th January that the German National Meteorological Service had awarded them a 23 million dollar contract for “two Cray XC30 supercomputers and two Cray Sonexion 1600 storage systems”. Currently, Cray’s stock prices are 18.42 dollars and the consensus recommendation on NASDAQ is to buy the company’s shares. The company is competing with the likes of Concurrent Computer Corporation (NASDAQ: CCUR), Hewlett-Packard Company (NYSE: HPQ), and Lexmark International, Inc. (NYSE: LXK). Some of its products are also competing with products by Apple and IBM.
Cray Inc. is based in Washington, and has facilities in Texas, Minnesota, and Wisconsin. The company boasts a global clientele and was previously awarded a 39 million dollar contract by the North-German Supercomputing Alliance (HLRN) in December 2012.
The company has also released preliminary 2012 financial results and has estimated $420 million in revenue. In 2013, the company expects revenues greater than 500 million dollars. The company will also present at the upcoming Stifel Nicolaus Technology Conference, and it can be safely predicted that stock prices will go up from then onwards.
The stock prices for Cray Inc. have remained stable for the last few months, and the company has come a long way from six dollars a share at its inception. The rate at which Cray is securing the German super computer market, we can predict a few more multimillion-dollar contracts in the near future.
Competitors such as LXK and HPQ have seen a consistent decline in the stock value, and Cray has held its own as compared to these companies. When we factor-in a general decline in computer industry, and consider the declining stock prices of Apple, Cray’s consistent performance becomes more significant.
One concern for potential shareholders can be that Cray has not announced major developmental projects recently, and even the company’s official website is quiet about products that are in the pipeline. Investors will be eagerly awaiting Brian Henry’s and Paul Hiemstra’s presentation at Stifel Nicolaus Technology Conference in San Francisco.
Henry is the executive vice president and Hiemstra is the director of treasury and investor relations; therefore, the presentation is of extreme importance and will most likely involve major announcements about the future direction of the company.
The presentation will be available to interested investors through live audio webcast, and can be accessed here. Cray Inc. is not looking to diversify its portfolio at the moment and specializes in super computers that can be used in a variety of industries. If current trends are indicative of anything, Cray will keep securing multimillion-dollar contracts in different regions of the world, and the stock prices will rise steadily.
We recommend buying and holding Cray Inc. stocks at the moment. We do not see exponential growth in the near future, but if you are a patient investor looking for a long term investment in 2013, Cray is the right choice for you.
Do you agree with our evaluation of Cray Inc.? Will you be buying, holding, selling, or monitoring Cray stocks? Send us your opinions through the comments section.
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