I mentioned previously that I really like sales acceleration on the Income Statement. It often translates to analysts underestimating on forecasts and a stock potentially surprising to the upside with momentum and rallies. Well, here's something interesting.

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PureStorage ($PSTG) is a hardware and software provider for flash storage in data-centre applications. Apparently, the addressable market has been growing rapidly for flash-based storage, and these guys are some of the best in the game, providing a marriage of hardware and software that performs optimally, and efficiently; above the competition.

Gartner recorded them as an outright leader in the Primary Storage space in 2021.

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As it happens, sales have been on an accelerating trend over the last few quarters:

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Note the Q4 seasonality as contracts are loaded around Christmas. On a YoY % basis, the last four quarters have recorded:

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Either way, sequential growth between the latest Q4 and Q1, was less negative than it has been historically, and the growth rates are pointing up again. And on valuation:

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Source: Koyfin

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A P/FCF of 15.6x going by the Last Twelve Month figure. I mean, really? That's it? I'm assuming that cash will moderate, but the company is still delivering on a balance of growth and cash together.

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While there's some cyclicality to such a business, there's also a semblance of niche industry leadership, and a secular growth trend to follow. This looks outright undervalued for what it ought to be. To add to that, have a look at the latest sales surprises vs. consensus:

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Source: Koyfin

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In cases of sales acceleration, both management and analysts tend to be conservative in their forecasts. In fact, the forecasts almost always hug the guide, adding virtually no value for short-term catalyst traders. This information disparity could be an opportunity!

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It's worth investigating and I'll be diving deep into this one. Initial due diligence has been positive. Storage and flash, especially for data centres, is something that I believe is NOT going to slow down substantially even in a recession. This is central, critical stuff for the modern enterprise.