What I like about VSAT is not just the products they are selling now, but those they are capable of developing. VSAT has a nice business with their military products, 90% of sales in 1997. Net income in the last quarter grew 58% (the eps growth was lower, due to more shares outstanding). Cash flow turned positive last year, and the balance sheet is very strong. New orders have been booked for the future.
Even more exciting is the development of technologies which may have viable commercial applications in the future. In a way, VSAT is like 2 companies in one - the steady defense business, plus the "future" commercial applications. I feel one can nearly justify the current share price with the defense business alone, so the commercial side is almost "free". It also has huge potential, IMO. While I wouldn't expect the price to run much above $20 in the short term, if/when these commercial applications become viable the stock could go a lot higher, to a price impossible to estimate at this time. Of course, as the company points out, these developmental technologies may amount to nothing. Even so, VSAT would still have the defense business, which is steady and profitable. |
