MoSys Inc (NASDAQ:MOSY), is a US$9.52M small-cap, which operates in the tech hardware industry based in United States. The past two decades have experienced unprecedented changes in technology, and the next decade looks equally drastic. While mobile and cloud computing become ubiquitous, there is a new wave of advancement emerging from innovations such as machine learning, robotics and augmented reality. Tech analysts are forecasting for the entire hardware tech industry, a positive double-digit growth of 27.77% in the upcoming year , and an optimistic near-term growth of 26.38% over the next couple of years. This rate is more than double the growth rate of the US stock market as a whole. Should your portfolio be overweight in the tech sector at the moment? Today, I will analyse the industry outlook, and also determine whether MoSys is a laggard or leader relative to its tech sector peers. Check out our latest analysis for MoSys
What’s the catalyst for MoSys’s sector growth?
US-based mega-competitors have been, and continue to be, the key drivers of industry growth. Many tech companies are repositioning themselves by focusing on high-growth areas such as IBM’s artificial intelligence play in Watson and Adobe’s shift to marketing its product for cloud computing. Over the past year, the industry saw growth in the teens, beating the US market growth of 9.86%. MoSys lags the pack with its lower growth rate of 3.53% over the past year, which indicates the company will be growing at a slower pace than its tech hardware peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 81.94% in the upcoming year. This future growth may make MoSys a more expensive stock relative to its peers.
Is MoSys and the sector relatively cheap?
The tech hardware sector’s PE is currently hovering around 23.17x, relatively similar to the rest of the US stock market PE of 18.81x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. Furthermore, the industry returned a similar 12.29% on equities compared to the market’s 10.48%. Since MoSys’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge MoSys’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:MoSys’s industry-beating future is a positive for investors. If MoSys has been on your watchlist for a while, now may be the time to enter into the stock, if you like its growth prospects and are not highly concentrated in the tech industry. However, before you make a decision on the stock, I suggest you look at MoSys’s fundamentals in order to build a holistic investment thesis.
- 1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- 2. Historical Track Record: What has MOSY’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of MoSys? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!