My price target is 30 for ACTM.
I hope the EPS estimate for 98 is too low, and that the company can earn $1.40-1.50, which is more in line with historical profit margins. I expect ACTM could trade at 20 times forward earnings in the right market and sector environments. Also at 30, the market cap will be roughly one times trailing revenues, and maybe at a forward PSR of 0.85-0.90. I think if the stock goes above that level, with no change in the fundamental picture, I'll let someone else take it to 48 again.
I did shift some funds out of ACTM into PLXS, when both were the same stock price, in order to take the tax loss, and still maintain a domestic ECM turnaround story. This has worked out, since PLXS has out gained ACTM recently. I still hold more ACTM though.
The long term story for ACTM has been severely damaged by the problems last fall though. I am playing ACTM for the turnaround, and not for the long term growth story. Other ECM stocks like FLEXF, JBIL, DIIG, and SLR, are in better positions to see 30% and even 40% annual growth rates and deserve to trade at a significant premium to ACTM. I have the bulk of my ECM funds in those stocks.
Paul |
