OmniVision Technologies, Inc. (OVTI): Small Cap Could be Traders’ Ticket to 46% Returns in Our Surveillance Society

While mobile phones and tablets are a substantial part of OmniVision’s business, its other segments are rapidly growing. These additional segments should have an increasingly positive impact on the company’s bottom line due to industry and societal trends.

The most exciting of the emerging markets for the company is the automotive sector. New automobile technology will require up to five cameras per vehicle. OmniVision Technologies, Inc. (NASDAQ:OVTI) has played a key role in this evolution by securing design wins at European and domestic auto manufacturers.

In addition, as I experienced with the camera ticket, security and surveillance use of the company’s products is rapidly increasing. Not to mention, the company has made aggressive acquisitions that should provide a competitive advantage.

The purchase of Aurora Systems in 2010 should help the company capitalize on trends in the emerging video-projection consumer market. And the acquisition of $65 million worth of image-sensor patents and patent applications from Eastman Kodak Company (OTCMKTS:EKDKQ) protect intellectual property and create barriers to entry for competitors.

Taking a look at the technical picture, OVTI just broke higher from a clear double-bottom on the daily chart. I like the stock on a breakout above $17.13.

Recommended Trade Setup

— Buy OVTI on a break above $17.13
— Set stop-loss at $14.50
— Set initial price target at $25 for a potential 46% gain in nine months

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