3 Stocks That Could Ride Fusion-io’s Heat Wave

by Anthony John Agnello | June 10, 2011 1:49 pm

Investors knee-deep in companies like IBM (NYSE:IBM[1]), Dell (NASDAQ:DELL[2]), Hewlett-Packard (NASDAQ:HPQ[3]) and others got a new IPO to salivate over this week with Fusion-io (NYSE:FIO[4]). Shares in that company opened at $19, but have recently jumped above $24.

Those PC and computer chip manufacturers listed above are just a few of Fusion-io’s clients. The creates creates solid-state flash memory drives, a more energy efficient (though higher cost) computer memory alternative to traditional hard disk drives.

Multiple trends are fueling growth in demand for Fusion’s products. Companies like Facebook and Apple (NASDAQ:AAPL[5]) use Fusion’s solid-state drives for their highly trafficked servers. Smaller flash drives are also the storage solution of choice in Apple’s iPhone and similar devices, but Fusion doesn’t make those flash cards.

But with the market’s eye on flash memory, which stocks deserve investors’ attention?

Intel (NASDAQ:INTC[6])

Intel is one of the world’s leading manufacturers of solid-state drives since they began developing them in 2008. Although Apple buys its iPhone and iPad flash drives from a number of companies including, Asian giants like Toshiba and Samsung, Intel has been one of its long-term providers as well. The new “Ultrabook[7]” laptop that Intel is developing to compete with the iPad and MacBook Air should keep the company’s flash drive business booming.

Micron (NYSE:MU[8])

Intel doesn’t develop its solid-state drives alone. The company partnered with Boise, Idaho-based Micron in 2010 to develop a series of faster drives, a partnership that continues to this day. Although the stock might seem like little more than a promising daytrading opportunity to some investors, there’s potential growth on the horizon. Research firm Lazard Capital issued a buy rating on Micron on Thursday, saying that it expects demand in the company’s products to pick up in 2012. The stock is now around $8.50 — Lazard’s price target is $15.

OCZ Technology (NASDAQ:OCZ[9])

OCZ has been a growing player in the solid-state drive business since it went public in 2006. The company has spent much of the past two years acquiring other companies – it bought a huge amount of intellectual property from Solid Data in 2010 and acquired Indilinx outright in March. Rumors of OCZ as a potential take-over target began circulating on Wednesday[10].

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello[11] and become a fan of InvestorPlace on Facebook.[12]

  1. IBM: http://studio-5.financialcontent.com/investplace/quote?Symbol=IBM
  2. DELL: http://studio-5.financialcontent.com/investplace/quote?Symbol=DELL
  3. HPQ: http://studio-5.financialcontent.com/investplace/quote?Symbol=HPQ
  4. FIO: http://studio-5.financialcontent.com/investplace/quote?Symbol=FIO
  5. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  6. INTC: http://studio-5.financialcontent.com/investplace/quote?Symbol=INTC
  7. Ultrabook: https://investorplace.com/43530/apple-inc-rumors-nasdaq-aapl-iphone-steve-jobs/
  8. MU: http://studio-5.financialcontent.com/investplace/quote?Symbol=MU
  9. OCZ: http://studio-5.financialcontent.com/investplace/quote?Symbol=OCZ
  10. Wednesday: http://pr-usa.net/index.php?option=com_content&task=view&id=762977&Itemid=34
  11. @ajohnagnello: http://twitter.com/#%21/ajohnagnello
  12. InvestorPlace on Facebook.: http://www.facebook.com/pages/InvestorPlace/178906405484848

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