There are just two top U.S. providers -- OmniVision (OVTI:Nasdaq - news - research - Cramer's Take) and Micron Technology (MU:NYSE - news - research - Cramer's Take) -- and both are a lot more attractive today than they were a month ago before the broad market selloff. Betting on Camera Phones OmniVision slid almost 30% in a week and a half in the middle of May and has since recovered a bit, which is pretty amusing in a twisted way, since over that time its business prospects actually improved. OmniVision's main product is an image-sensing device called the CameraChip. The formal name for the baseline technology is "complementary metal oxide semiconductor," or CMOS. But all you really need to know is that it's a piece of metal and glass that puts a lot of high-performance camera functionality in a tiny package. OmniVision sells these to a long list of customers, who put them in everything from low-cost plastic cell phones, video games and surveillance systems to chic titanium-body --------------------------------------------------- Omnivision will report earnings for its fiscal fourth quarter on June 15, and I think it will come in slightly above consensus at 39 cents a share on $126 million in revenue. Shares should get a lift when the company updates its earnings guidance for the second half of the year and explains how the surprising strength of sales growth has led to much more robust cash flow than skeptics believed possible. It's already sitting on $5.72 a share in cash. Subtract out that cash, and the stock trades at the low, low price-to-earnings multiple of 15 times 2007 estimates. That's about 25% lower than comparable high-tech manufacturers, most of which are not facing OmniVision's great prospects. There are new competitive threats from the likes of Samsung and Toshiba overseas, and Micron here, but that's still too steep a discount. OmniVision is making great strides in the automotive and security arenas with low-cost image sensors as well, but its bread and butter in new sales comes from all the advertising you've seen by carriers such as Verizon Communications (VZ:NYSE - news - research - Cramer's Take) to encourage consumers to upgrade call-only phones into ones that take pictures or show videos. There's also been a successful push to encourage folks with low-resolution camera phones to upgrade to 1-megapixel models with enhanced quality, such as the Motorola RAZR and Samsung Blade. And next on the horizon will be a holiday promotion to hype people into wanting 2-megapixel camera phones that easily take the place of a conventional digital camera -- a product for which OmniVision is the leading low-cost provider. More Than a Memory Play The biggest impediment to OmniVision's growth is Micron, which is the industry's 800-pound gorilla with about 35% of the market. Long known primarily as the leading maker of random access memory, or RAM, for personal computers, Micron a few years ago branched out into more profitable products such as image sensors. By the middle of next year, Micron will have four new fabrication plants making both image sensors and flash memory. ------------------------------------------------ As the mix tilts toward image sensors, Micron's gross margins will get a huge boost as RAM chips bring margins into the mid-teens, while image sensors garner upward of 40%. Although an increase in product would appear, on the surface, to threaten the profitability of the industry, it is only expected to meet demand from all the cameras, mobile handsets, cars, video consoles and security devices that are creepily keeping an eye on us. Micron does not just make cheap sensors. It recently rolled out the world's smallest 8-megapixel image sensor, a very high-quality device that is expected to revolutionize the business due to its low cost. Micron will also benefit from the rollout of the new Windows Vista operating system by Microsoft later this year and next, as the sophisticated software is expected to lead consumers to buy a lot more memory: 1 to 2 gigabytes of RAM is expected to become a standard, up from 512 megabytes, or about a fourfold increase. If you believe, as I do, that Micron can earn as much as $1.40 in 2007 from all these efforts, it is going for a forward price/earnings multiple of just 12, which is laughable for a company growing in excess of 20%. Multiply that number by a more reasonable P/E, such as 20, and you get a potential price of $26, or about 60% higher than the current quote. Excuse me if I say it would be a snap to profit from these two companies. You don't need to pick one. Take them both, and shoot for the sky