With just a passing thought, Quantum Corp. (NYSE:QTM) doesn't seem to offer to much to near-term traders or long-term investors. When you take a step back and take a bigger look ay QTM, however, the stock's actually got a lot going in its favor, in the short run as well as the long run.
The near-term dilemma is simply the fact that QTM is overbought thanks to the 21% romp the stock's taken for the month so far. That sets up some profit-taking potential, and odds are we'll actually see that profit-taking potential materialize and pull shares back to a key support level... maybe even as low as the now-converged 100-day and 200-day moving average lines at $1.37. But, even for traders only worried about swing trades, the chances of a bounce after that dip are still quite strong now that the undertow is bullish; Quantum Corp. shares have been making higher lows and higher highs since October. Oh yeah, the stock's crossed back above all of its key moving average lines too.
The nearby daily chart tells the tale, but it's this weekly chart of QTM that really puts the budding rally into perspective. This stock's been beaten down since early 2011, but the last nine months have not only been the most bullish we've seen in nearly three years, the effort has snapped the falling resistance line that had been guiding it lower for so long.
Great, but as those familiar with the underlying company's reality will point out, it's not like Quantum Corp. has been knocking it out of the park on the earnings front. The top line's been shrinking since 2009 - from $681 million then to $587 million last year - and per-share profits has slumped from $0.02 then to a loss of $0.22 for 2012. If nothing's changed in the meantime, what's going to turn the ship around in the future? Well, as it turns out, the buyers who have been diving in since late last year and putting QTM shares on a bullish path know exactly what they're doing. Things have changed (including the data storage market).
Truth be told, Quantum struggled in recent years partially because it wasn't competitive, and partially because it was ahead of its time. Quantum's path was re-merged with the data storage market, and the company's well-armed this time around. Its Lattus object storage technology is finding a market, as consumers see the benefit and its ease of use. It's tape-based i6000 device is an award-winning technology. And, QTM is now being included in the circle of serious cloud-storage solutions providers. Point being, it's all coming together in the right way at the right time.
The forward-looking (2014) earnings forecast of $0.08 per share is stronger than the $0.05 expected this year, which is a complete turnaround from last year's $0.06 loss. But, those aren't unreasonable forecasts, given what Quantum Corp. has on the market right now.
Bottom line: Though nobody seems to care (or at least nobody's talking about it), QTM may be one of the market's best opportunities out there.
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