in home theater, dts is an also-ran to dolby, but it doesn't matter when it comes to high definition televisions. both are installed on every home theater system. so dts goes from a small market share to sharing 100% market share of the hd market as people buy hd systems.
also, dts is getting rid of its service business, which has been a drag on margin.
trades at a really high valuation, but growth over the next few years, as people adopt the hd standard, should be very fast. by 2008, analysts expect 54% growth (consensus of six analysts) and by 2009 nearly 70% (granted, that's just one analyst). these earnings are coming with a super high margin, since it doesn't cost dts anything when a new home theater system is sold.
lot of risk here, but it could pay off. definitely a long term holding, not short term.
$24.32 (04/12/07)
