August 25, 2010
– Comments (4) |
RELATED TICKERS: GHM
The price of GHM is getting into ridiculous territory again. I would advise any patient money sitting around sidelined to strongly consider backing up the truck.
Dear Ikki, could you explain why? I see earning estimates flat for next year -missed in the last quarter -missable in the next.
I don't see from my initial look at the company anything to be excited about. They're down 77% on YOY revenue, the dividend is sad (why even bother to have one at 0.6%?), the ROA & ROE are half of what I like to see and the profit margin is not exactly something to write home about. In my opinion they need to drop down to their book value before I'd be interested and that would mean a reduction of half of their current price.
I want to know what you think makes this company such a winner. What kind of information have you uncovered while doing your DD?
I'm not talking about for a trade, I'm talking about long term. The company has enough backlog to cover a good year of revenue; they've acquired the US Navy as a customer, which is going to be a cash cow as both the Navy and GHM seem happy with the arrangement; they have no debt and a whopping mound of cash; and they occupy a little niche with their patents and their engineering talent.
Sure, they're levered to the global energy market, and no one knows when that's going to be. That's why you buy them when they're cheap - i.e., now - and just forget about them.
+1 for the headline