Time To Bet On Cray Inc. (CRAY)

Gigantic companies like International Business Machines Corp. (NYSE:IBM) are in the game too. IBM’s most famous supercomputer is Watson. Currently, Watson’s main implications lie in the healthcare and finance industries. Finance is a very attractive field for supercomputing companies. Bank data grows an average of 20%-30% per year. In its earnings call, Cray was very pleased to announce that it had secured its first financial industry contract ever. IBM is such a behemoth that supercomputing is not a big part of it. The company is trading at 14.19 P/E and 11.21 forward P/E. IBM pays 1.85% dividend. While the valuations are attractive and the dividend is solid, International Business Machines Corp. (NYSE:IBM) is so massive that it would be hard for the stock to appreciate at a good pace. The stock has underperformed the S&P 500 this year, and I think that this trend will continue.

Conclusion

The world is changing fast, and it needs data and computing for this change. This trend would be crucial for specialized companies like Cray and Silicon Graphics. Cray is well positioned to profit from the world’s needs. It has zero debt. It has powerful products to suite consumer needs. The Big Data segment of Cray’s business is yet to evolve. In its earnings call, the management has stated that Big Data is only a fraction of Cray’s revenue, but they are working on it. In my opinion, the tide would lift all boats that are ready to swim. Cray is ready.

The article Time To Bet On Cray originally appeared on Fool.com and is written by Vladimir Zernov.

Vladimir is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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