| An SI Board Since November 1996 |
| Posts |
SubjectMarks |
Bans |
Symbol |
| 347 |
11 |
0
|
STII |
|
Several months ago I discovered this small telecommunications company with a rich mix of cutting-edge technology, good patent base and solid core business which would enable them to be at the right place at the right time. The future, in the telecommunications industry belongs to the companies which can deliver cost-effective high-bandwidth solutions over existing phone lines and via wireless. I think Stanford Telecomm is well positioned to deliver the punch through wireless and conventional cable lines. What was once a predominantly Government contract dependent, Stanford has transformed itself in to a communication solution developer for commercial clients. Reliance on Government business is now down considerably over the last 3 years.
Over the last few weeks, since the company released 3Q financials, the stock took a pounding - closed today at 29.5, down from a high of about 53 in October, and an all time high of 64 set in May. Consencus is that a few momentum funds may have lightened-up on STII due to the fact that the company just met the earnings estimates. Another factor that might have concerned those funds with a "shallow" research is that the backlog was flat going in to the 4th quarter. With 4th Qarter historically being the slowest, they may not have seen any "momentum" in the near term. In the process, they have created a great buying opportunity, IMHO.
Other factors to consider: About 20% of the shares (of 6.5 mil) are owned by the management, which, in my opinion is very conservative, yet visionary to steer the company in the right direction. Another 35% of the shares are owned by Kopp Investment Advisors. Mr. Lee Kopp, the president (?) of KIA is known to be a long term investor in tech. stocks and hence such a heavy concentration of ownership by one single party may not be a negative factor for the stock.
Given the outlook for worldwide wireless telephony, satellite communications in general, PCS and high bandwidth solution providers, I think of Stanford Telecom as an excellent long term play in this filed. While the trailing PE ratio measure may make STII look expensive at 25 times trailing earnings, it doen't account for any of future growth potential. Should the company strategy pay-off with accelerated revenue and earnings growth, the stock has the potential to hit $100 in two years.
I am heavily invested in this stock and hence my opinion may be biased. Do your own research before buying or selling. I am willing to listen to the opinions of the others - long and short of it!
Good luck to all.
-Mohan
P.S. You can review the company profile, key products and strategic business partnerships in the next note.
|
|
|
