SiRF Technology Holdings (SIRF): Locate the bullish 'flag'

Of all the conveniences made possible by semiconductor technology, the ability to find out just where we are is among the most intriguing. There is an outfit in San Jose, California that allows widely-owned electronic devices to incorporate "Portable Location Awareness."

SiRF Technology Holdings (NASDAQ: SIRF) provides global positioning system chip sets with embedded GPS software, for use in mobile consumer products and commercial applications. The firm's devices allow manufacturers to add navigation, mapping and tracking capabilities to their mobile phones, automotive electronic systems, personal digital assistants, notebook computers, recreational GPS handhelds and digital cameras. Garmin (NASDAQ: GRMN) is a leading customer.

The company pleased the Street last week, when it reported Q3 EPS of 29 cents and revenues of $91.2 million. Analysts had been looking for 22 cents and $85.7 million. Management also guided Q4 EPS to 31-33 cents (26 cent consensus), Q4 revenues to $99-$102 million ($98.3M consensus) and FY07 revenues to $328-$331 million ($321.83M consensus). RBC Capital Markets, Deutsche Securities, Dougherty & Company, Lehman Brothers and Stanford Research all subsequently reiterated "buy" ratings on the issue. The news popped SIRF shares into a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Altogether, brokers recommend the shares with nine "strong buys," nine "buys" and four "holds." Analysts see a 30% average annual growth rate, through the next five years. The SIRF Price to Book ratio (3.23), Sales Growth rate (43.24%) and EPS Growth rate (222.22%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. Over the past 52 weeks, the stock has traded between $16.20 and $34.15. A stop-loss of $23.50 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.