Garret, it doesn't make any sense to me.
The value is there.
But the street doesn't like bad surprises, and this company delivered that last quarter.
So punishment goes to extremes...
At the 37 high, stock was way ahead of itself.
Now at 9s, it is way undervalued.
Doesn't mean it can't go lower tho.
Todays deal for $2 million probably won't do much.
Doubt if anything will until new numbers come out.
But the news is good.
PDM is where the growth is.
All the copy-cats confirms that.
With nearly $400 million in sales and a market cap of less than $350 million, this thing is selling for less than sales.
...and it is profitable. Very much so.
I hesitate to say I bought more in low 9s and 10s, but I did.
My perception is changed, tho.
I no longer expect 30s, 40s or such.
But from single digits, this thing has great potential.
The company has flaws, but who hasn't.
Biggest problems are not what William keeps hyping.
Instead they are potential dilution over time and expected acquisitions.
Acquisitons can benefit over time, but as you know, stock price falls for acquiring companies in this market.
An expected $100 million will be spent on acquisitions, probably over the next 6-12 months.
It remains to be seen how profitable those will be.
My rating of the company's acquisitions to date is 50/50.
...and be aware that my viewpoint is very biased. I'm not close to the action.
SDRC does have the benefit of being the premier provider of products in many of its fields. This gives them leverage in structuring deals. Other companies WANT to be acquired by them. That makes these "Friendly take-overs" less costly.
But if the company disappoints again, this will be a $7 stock, because no one will trust management.
In fact, $7 might not hold because of all the institutional ownership.
When, and if they start dumping, this sucker will tank in a hurry.
On the other hand, the float seems to be lessening.
Strong hands replacing weak one.
At least I thought so.
But volume seemed to run it down yesterday, so maybe I'm wrong.
I do think the excessive selling (of everything) had something to do with many funds closing out their year at the end of August. Some still haven't. So we face tax-loss selling all the way til January, which will be a depressant until then.
I think Asia will prove to be a positive, not a negative for this company.
And that CAD is perhaps a declining product in spite of the number of companies still needing to convert from paper.
3-D CAD is indeed a growth area, but competition will limit growth prospects there (not kill it. just slow the rate of growth.).
No new contracts or rumors that I know of (beyond todays).
Good luck,
Jerry |
