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Microcap & Penny Stocks : KNTK - A Solid Company for Free
KNTK 36.69+0.5%Jan 9 9:30 AM EST
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To: Bexar who wrote (25)12/4/1997 8:22:00 PM
From: Shane M  Read Replies (1) of 43
 
Bexar and all,

Here's why I've decided to purchase KNTK, what looks to be a very good value stock and company.

1. Very strong balance sheet - lots of cash. If you take Cash and marketable securities and subtract out current liabilities you come up with around $4.00/share. The company will likely use this to purchase back shares should the price fall to around book value of around $7.30 per share. They are currently authorized to repurchase up to 350,000 shares. Assuming no catastrophe, this in my mind puts a fairly solid floor beneath the stock price.

2. Competitively, the company has some possible good news.

First, the company has some hope of winning back IBM business. Apparently IBM is not fully satisfied with the Hitachi printer that they selected to replace that of Kentek. I don't know the probibility of this occurring, but the opportunity is there.

Secondly, Xerox and Kodak printers that compete with those of Kentek's are considerably more expensive. In the higher end of the mid-range printer market Kentek still appears to be the most cost effective and reliable. Perhaps Xerox and Kodak can become future customers.

I realize both of these considerations might be seen as wishful thinking, but if any of these occur it can drive material increases in sales volume/EPS.

3. The KW60 (60ppm) is expected to begin shipping in late '98. I understand that this printer will drive considerably more consumable sales than the lower speed printers.

4. The positive comments in this thread from the printer repairmen.

In the ends I'm playing the odds on this one. It has several potential suprises that can happen that might propel a good jump in stock price.

On the down side, recent loss of sales volume is discouraging, but the company is still profitable with good margins and is still generating positive cashflow.

Let me know if I've missed the boat on this one.

Shane Milburn
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