EMC Corporation (EMC) is our hot stock of the week and earns an Attractive rating. EMC develops and supports information infrastructure and virtual infrastructure technologies. Over the past five years, EMC has grown after-tax profit (NOPAT) by 18% compounded annually.

Over the same time frame, the company has increased its return on invested capital (ROIC) from 12% to 16%, and it currently ranks in the top quintile of all companies we cover with respect to ROIC. In 3Q14, EMC grew revenues by 9% year over year, and operating income by 4% year over year. Data storage and cloud usage are predicted by IDC to grow upwards of 20% annually through 2017 and EMC is positioned to take advantage of this growth.

Despite the future growth prospects, EMC is undervalued today. If we give EMC credit for a NOPAT growth rate of 13% compounded annually for the next decade, the stock is worth $50/share today –– a 78% upside. Given the company’s history of growing profits, bright future, and cheap valuation, EMC could be a potential portfolio star going into 2015.