This week the Beige Book noted that while labor market conditions generally improved, several districts noted restrained hiring while many reported a rise in temp staffing. Also, it mentioned that employers in several districts cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff. For example, the KC Fed said firms continued to report changes in health care policy and fiscal uncertainty as reasons for delayed hiring. Wage pressures were minimal in most areas, but contacts reported some upward pressure for several skilled positions as a result of higher demand.
Despite the heavily anticipated snowstorm this week in Washington, The House of Representatives was able to pass a continuing resolution to fund government operations through the current fiscal year which ends on September 30. The vote was not close. There were 267 votes for the bill (including 53 Democrats) and 151 votes against. Now, the bill goes to the Senate, where some extensive changes are being planned. House leaders are arguing for quick Senate passage, and against any changes. Both a deliberative pace and a good many changes are likely for the bill once the Senate has it. If the bill can go through, many stocks that have been negatively grouped with sequester cuts will benefit from the bill passing. One of those companies is Quantum Corp (NYSE: QTM).
Quantum has several defense contracts, and would certainly benefit if the bill passes the Senate. QTM is a manufacturer of storage products such as DLTtape drives and media cartridges. The company is also a global expert in big data management and data protection. Along with defense contracts, QTM recently announced that Framestore has chosen Quantum’s Stornext file system for its high performance workflow and digital content archive. Framestore uses a variety of edit and finish tools, including Apple (NASDAQ: AAPL) final cut Pro. The company intends to uses Quantum’s products to replicate assets automatically between its UK and NY facilities. Framestore’s Andy Howard, head of engineering stated that “two or three years ago people tended to work in isolation on projects, but now its all about collaboration and huge numbers of files being shared by everyone.”
Having the ability to share files securely is extremely cost effective for many companies. QTM offers a secure way for folks internally to share data, which is in high demand by many corporations. The business model will benefit from the current economic environment, and the necessities of retaining secure data. Data security and hacking from various groups both domestic and abroad have been a problem, and QTM offers security and sharing to its clients. This growing problem has alerted many companies to invest in this sector, and QTM stands to benefit.
The stock is currently trading at about $1.21 per share. Technically the stock has some nice upward potential, as it is expected to rise over the next few months. The stock is way off its 52-week high of $2.71 on March 26, 2012, and hovering just above its 52-week low of $1.00. At this entry point, investors may want to take a chance and add this growth story to their portfolio.