Wed May 25, 2005 8:59 am
Hi,
I am a little unsure of this company's movements myself and so did someresearch. My take on these kind of stocks is that everytime a stock such asthis becomes profitable like this one did last quarter, it can turn cornersquickly. Why these kind of stocks .... this company has revenue of 275 Mil.thats a lot given the Market cap is 129 MIL today. cash is 46 Mil (hell of alot of cash) debt 1.5 MIl. To give you a comparative analysis of differencein revenues, look at Click Commerce, CKCM the stock i recommended ashort.... market cap 240 Mil, cash 11 mil and revenue approximately 30 Mil.This one is profitable, different segment and all that but still thedifference is just dramatic. A lot of times revenue can't be directly usedin the equation e.g. in the case of a reseller (goods are not mine but I ama channel and so margins is all that matters.... study GTSI for thisexample). I haven't studied FC enough but doesn't look like it's doinganything like that.
Another thing, with outstanding shares this low any profitability willincrease the EPS dramatically. e.g. 19 cents profitability last quarter ascompared to 10 cents loss. Seven quarters of improving operational cost.Margins improved slightly from 56 to 60%.
Insider trading: Folks, one thing I have observed nearly always, Insiderscan sell at may be not the perfect times. That is, stock still may havepotential but almost all huge quantity buys, meaning not the pseudo smallbuys to fool investors, are almost always indicative of the stock'sperformance to improve. I remember the example of CarMax KMX where at 18, 6insiders bought (July - August 2004) and earnings had just missed, stock hadtaken a dramatic beating etc and I was completely flummoxed by these hugebuys. Stock went to I think 35 in less than 6 months and is trading at 26now.
J: How did you find this stock? Stock Screener? I have noticed almostinvariably that stocks that are expected to go up after the initial runupalmost never make any noise. Meaning, you won't see much news and you won'tsee it on CNBC until the guys who wanted to buy in, got in.Stock had quite a climb so I'll be skeptical to buy in but that is always abad reason :)I followed CKCM from 2.5, wanted to buy in and waited for a good entry pointand finally it is at 22 bucks today. So you can play safe and you should butyou never know what you'll miss out :)
Cheers,
Ahu
