Dow Jones 10403.99 +17.62 11:05 am PST, November 10, 2004  NASDAQ 2039.35 -3.98 For info, visit access.smallcapnetwork.com S & P 500 1164.79 +0.71 Change your subscription status here Russell 2000 609.97 +3.33 VOLUME 04: ISSUE 90  Trading Alert: Informatica - Data In, Profits Out. What a lot of companies miss is that the proper manipulation of proprietary data can mean the difference between a winner and an also ran. Or worse. Informatica (NASDAQ: INFA) is a very cool technology company and leading producer of integration and business intelligence wizardry that helps customers improve efficiencies, cut costs and ultimately makes them more streamlined, profitable and responsive to employee and customer needs. Sound Boring? Hardly. For investors, the metrics of this company and the market look compelling to say the least. The shares appear to be gathering some traction following a sell off earlier this year. At what appears to be a bottom at $5.50 in September, the shares began their incline and hit $8 in October. A break above $8 would likely signal a new uptrend. If I could pick an entry point it would likely be a bit cheaper than current levels, say $7, but beginning accumulation here and buying on dips, if they occur, makes sense. Salient points: Market cap $650 million 2004 projected revenues (as at Dec) $217 million 2005 projected revenues $234 million. Cash on hand $234 million or $2.70 a share  No debt 82 percent of outstanding shares held by institutions Projected 5 yr annual growth rate 15 percent-plus Named 11th in 2004 (14th in 2003) of the 100 top business intelligence vendors by leading trade magazine DM Review--ahead of big boys EMC Corp, Computer Associates and PeopleSoft, as well as 85 others. Readers of DM Review--IT professionals, the folks who use and recommend systems to their companies-- voted Informatica the number 1 in data integration. Now that's an endorsement. In INFA's case, I'm more interested in the business, the sector and revenue growth than I am of earnings, although the projected numbers are reasonable. For fiscal 2005 the projected earnings are around 25 cents, which translates into a p/e of about 33 times against today's share price level of $7.50. The sector --business software and services--average p/e is projected at 26 times. But the magic is that when this sector cranks and companies' ramp up enterprise spending, the growth can be impressive. Data is forever and ever. We feel that INFA makes a great vehicle for exposure to a sector that has loads of growth potential. Data is the currency of business now, and the morphing into information that can improve sales, cut costs and the rest is no longer a luxury, it is essential. Without some form of data capture and manipulation, it's not too outrageous to say that a company will ultimately fail to prosper and grow. Or just fail. And data isn't only the province of the Wal-Marts anymore. Informatica did a deal recently with prestigious DePaul University. Check this out from a recent press release: Informatica software is helping university administrators retain enrolled students by identifying those who are eligible to re-register and uncovering why they have not. The school also intends to identify at-risk students through analysis of past grades. In the human resources arena, DePaul is using Informatica to integrate data from its PeopleSoft system in order to better understand teaching costs by degree program and college, identify course demands so it can act proactively in scheduling classes, and trend popular degrees in order to ramp up relevant instructional resources. And this example is just one of a huge number INFA has and will likely continue to win. Business is data. Data drives business. The best products that can make systems and procedures as well as sales and marketing better, win. Cash is Good I like cash, lots of cash. Especially when there's no debt. Each share of INFA has $2.71 or 36 percent of the current $7.50 price in cash. That means you can buy the business for around $4.80 when the cash is stripped out. Works for me; given the growth potential of both the company and the sector.  This is a quality company in a sector that, even though corporate spending vacillates, is likely to be a major winner over the medium to long term. While there is likely a trade in here should the shares breach $8, long-term investors will likely be happy with both the potential and share price performance. Data storage and business intelligence needs will just get bigger and more complicated. Thankfully, investing in the sector appears to be the easy part.   We Value Your Feedback Got comments, questions or suggestions? 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