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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (9427)	12/27/1999 11:35:00 PM
From: Paul Senior	Read Replies (2) of 78530

Thread, to bring us into the popular telecom. arena, I bring to your attention a value stock more of the GARP class or relative value class. That stock is: ECI Communications, ECIL stocksheet.com Revs moving up every year since '93. EPS increasing too. Relatively little LTD. In the past several years ECIL has been a consistent 20%+ ROE'r. Trailing P/E is 27, but with forward P/E of 13. Some negatives: 1) An Israeli stock. With all that political risk and accounting, finance, business differences. 2) An analyst who has said the stock suffers because they have no business presence in the US. 3) Stock has already moved up in past few sessions from 24 to about 30. Some positives: 1.) ECIL is almost a $1B dollar (in sales) company with 4000 employees. If there is a contingent of employees working on new technology - and with 4000 employees in a tech business, I know there is- so there is a possibility that some successes could lead to spinoffs or subsidiaries that could catch investors' fancy. At least one manufacturing operation is being outsourced to SCI Systems. I conclude from this that that ECIL is focusing on its core strength (which I assume is technology development). 2) A security/firewall corp. spinoff has been announced. 3) 30% of the company is owned by another Israeli company, KOR. KOR is controlled by a member of the Bronfman family. The Bronfmans are well known, successful Canadian investors. KOR purchased over 1M shares of ECIL for $37/sh in mid '99 (I'm reporting this from memory- may have facts slightly wrong here). ECIL buyers now ($30+ per sh) get stock cheaper than the Bronfmans' KOR last purchase. Seems to me ECIL offers a growing business at a reasonable price when compared to its financials and to its peer companies. Plus there is chance for some very good extra price appreciation if ECIL technologists or marketeers can deliver some good products. I'm nibbling at current price. FWIW.

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