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Technology Stocks : SMIT (Schmitt Inds)likely to post 400% earnings gain YoY
SMIT 0.0155+3.3%Oct 14 2:00 PM EST
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To: Brian Meath who wrote ()4/23/1996 9:02:00 PM
From: olduser   of 276
 
You are correct: SMIT is a very well run company with very good growth prospects, strong
financial characteristics, and good management. I have owned the stock for nearly a year
and have followed it for three years.

The stock appears expensive based on trailing earnings, and on an industry relative basis.
However, based on SMIT's growth rate, the fact that it is taking share/creating a new niche,
the stock is not overbought, in my opinion. The technology SMIT acquired from TMA out of
Bozeman (sp), provides higher levels of speed at lower prices than competing products.
The issue that I believe will determine whether this stock is a buy for the next year vs. a
long-term investment (i.e 25 bagger over 4 years), will depend on the firm's technological
advantages, the competitive response, and SMIT's ability to fund growth internally.

The gross margins (at 65%+) are strong at this time. However, the competitve advantages of the
technology should determine the sustainability of gross margins. Questions: Will the firm do a
secondary offering to finance growth? Are there competing technologies that can circumvent
what appears to be a huge competitive advantage? Any technologically-oriented people who can
address the merits of SMIT's technology?
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