Identifying potential outperformers is a crucial task for any investor with an objective of making a growth oriented portfolio. Advanced Micro Devices, Inc. (NYSE:AMD), Multimedia Games Holding Company Inc (NASDAQ:MGAM), and SHFL entertainment Inc (NASDAQ:SHFL) are stocks which are expected to fare better than the overall market in future. Here is why:
Advanced Micro Devices, Inc. (NYSE:AMD) is a very active stock with more than 20 million shares traded every day. AMD is a semiconductor company engaged in production and sale of computer microprocessors. The company, once a major and only competitor of Intel, fell to bad times and the shift towards handheld devices within computing world. As a result, its stock price has been reduced to a fraction of the double digit prices in 2007. However, there is a silver lining as the stock has gained more than 45 percent over the last month amid speculations that Intel is considering acquiring the company.
AMD Cutting Cost
Speculations apart, AMD has been making some progress in cutting costs and winning new business. The company will be reportedly providing its processors to the next generation gaming consoles of Microsoft (Xbox) and Sony (PlayStation 4) which partially explains the recent pop in share price. If the rumours about Advanced Micro Devices, Inc. (NYSE:AMD) supplying processors to Microsoft Corporation (NASDAQ:MSFT) are true then the company has placed itself in a very comfortable position. In terms of financial performance, AMD witnessed a decline of $500 million in revenues to $1.1 billion during the quarter ended March, however better cost controls caused loss to drop to $146 million from $590 million in the same period a year ago.
Gaming in good shape
Multimedia Games Holding Company Inc (NASDAQ:MGAM) designs and produces standalone and networked gaming terminals for casinos in North America along with state lottery operators. MGAM has a market cap of $711 million and has price earnings ratio of 22.8. On a forward basis, this multiple drops to 20.5 indicating continued improvements in financial performance. The company was able to perform better than market expectations in the latest quarter which has lead to an increase in the share price of the company. In the quarter ended March 31, the company posted top line of $46.5 million, up from $39.5 million in the same period a year ago. Net income also grew to $9.3 million, up sharply from $6.8 million from last year. This vastly improved performance has caused the stock to go up. So far from last year, the stock is up a whopping 88 percent. In the recent past, the company has been able to reduce its debt thus making it a more investor friendly company. Multimedia Games carries a positive outlook for the current year which is highlighted by upward revision of revenue and EBITDA projections for the full fiscal year.
Nevada based fellow gaming player SHFL entertainment Inc (NASDAQ:SHFL) is also in a similar position having appreciated 11 percent so far in 2013. The stock has garnered positive reviews from analysts and forward price earnings ratio of 17 explains why it is so. Currently, the stock trades at trailing 12 months’ ratio of 23.3. Probably the best thing about this company is that this is a debt free entity. Another positive with this company is a diversified geographic base. The company is not heavily dependent on the domestic market for revenues as more than half of sales are attributed to from outside the country. This was once again highlighted in the company’s first quarter ended January 31 when SHFL reported nearly a 5 percent growth in revenues despite a weak sentiment in Australia which was offset by revenue jump in Europe. While bottom-line witnessed a decline, it appeared a onetime phenomenon and not taking toll on annual report.
Overall, Multimedia Games is a fundamental call on improving financial performance while Advanced Micro Devices, Inc. (NYSE:AMD) may be in the initial stages of a turnaround.