Elliot,
I agree with you on the importance of earnings, etc., but I look at this company as continuing their turnaround from a few years back. To me, the more important thing now is broadening their realistic client horizon, controlling costs, winning cudos from the industry (a stamp of approval for their products and service), and building relationships that will bring future growth. They have done, and continue to do all of these things. The day will come down the road when their client base is so large that earnings and revenue fluctuations will level out, as more and more revenues and earnings come from the dependable maintenance side of the business. If I was looking at IBM, CA, or any other broad based company, I'd probably put a lot more reliance on the earnings number. I find those kinds of companies hard to follow on news stories. Companies like GE come out with about a million press releases daily, and I find myself almost helpless in trying to figure out which ones really matter.
Now, here is something I find interesting. Last Friday, right before the close (maybe 3:55pm) somebody bought 10,000 shares on the ask price. Today, after hours (around 4:05pm or so) there were two blocks of 25,000 shares each go across at 20 3/4, or right up against the ask. I have the benefit of a Bloomberg terminal down the hall from my office, so I can check out the price/volume patterns anytime I wish. It is usually a pretty good sign when I see big money crawl into this stock, and it is easy to spot with a Bloomberg. When I see two 25K share blocks come in, I assume it is somebody who did their homework.
As for New D and analyst coverage, I am a little puzzled myself. However, as I tell those who ask me, Dahlia said we should "see something soon", in regards to analyst coverage. When I think about it in those terms, it does not surprise me at all that the coverage has not happened yet. Remember, New D has been pretty tight lipped about making projections in the past. Also, it was stated in a press release a couple of weeks back (the one announceing Dan Buytenhuys' promotion to North American company president) that Dahlia is going to spend more time interfacing with the investment analyst community, among other tasks. Many people took "soon" to mean a couple of weeks. I take it to mean just about whatever anybody interprets it to mean. It could mean several months, in the big scheme of things. My BET is that we will see something by year end. I tell you what, though: I don't know that I want coverage yet. I have a TRUCKLOAD of shares at an average price of $5.85, and would love to see it run up some more before coverage kicks in. I intend to hold this thing for probably another couple of years, at least, before selling any, to give them time to hit the level of being in the mature stage of their business. Remember, if an analyst comes out with a "strong buy" recommendation, then any future changes to the rating can only be down! This stock has done fine without the analysts. I'd love to see it keep doing fine without them, then move higher a little more after the analysts get up the nerve to finally make a call on it. |
