PC Connection, Inc. (NASDAQ:PCCC)

Income is a little low, but improving, with net profit as a percentage of sales in the upper 1.xx% range. Balance sheet is very strong though, with relatively good liquidity and the ability to pay all of their debt with current assets. Technology intermediaries should have room to grow as markets continually expand. No dividend though and treasury stock signals some internal uncertainty. Will re-evaluate in a year.

Cheap

PCCC experienced dramatic increases in both volume and price during the last two windows releases. Windows xp was released on October 25, 2001 and windows vista was released on Jan. 30 2007. PCCC's stock price increased from $6.15 on 9/27/01 to $17.73 on 12/7/01 and from $5.74 on 7/26/06 to $18.73 on 2/8/07. In addition to the pending release of Windows 7 - scheduled for October 22; many SMB's skipped the release of Windows Vista and will be insentivised to upgrade due to the increasing cost of ownership (TCO) of their aging inventory.

PCCC is also growing their service sector a higher margin business. Additionally, GovConnection a subsidiary of PCCC has recently been awarded the Microsoft Federal GSA LAR (Large Account Reseller) authorization which will help them grow their public sector business.

PCCC's recent price of $5.22 is well under book value of $8.50 and they are sitting on 67M in cash, 47% of their market cap of 141M. PCCC could be a two bagger over the next 6 mos and might even be a three bagger.

Good balance sheet, strong cash flow in a weak 1st quarter. It'll take some time but I think PCCC can right the ship.

cheap at this price

As with all my picks: A very attractive P/E, excellent EPS growth rate and high five year growth prospects.

CEO is a female: Patricia Gallup

right now this company is at a decent price because it lost all it's hype but this is the way that computers will be sold from now on......who wants to drive around and search for a computer when you can have it delivered to you door.

Favorable risk / reward profile
for comparative analysis and other stocks with favorable risk / reward profiles, view:

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Forecasts

Total revenues for the recently concluded quarter increased 4.7% to $398.2 million primarily supported by the growth in the small and medium sized business segments. However the net income doubled to $3.4 million with support from growth of the core business SMB segment where sales grew 6.8%. Of late much focus is for reviving the commercial accounts growth, which was on a decline over the years and improve its share of revenues. The company has had success in this venture with double digit growth in corporate outbound sales and adding new customers.

Sales to Public sector segment, government and education customers posted a modest growth mainly due to increased focus on profitability and capturing net agency sales. Continuous monitoring of operating cost and review of spending plans for the better allocation of resources has helped gross margin improve by 34 basis points to 12.5%. Inventory balances have improved and accounts receivables decreased due to improved collection efforts.

Notebooks and PDA’s grew 14% during the quarter; continue to be the largest selling product accounting for 19% of the sales and still remains a bright spot for 2007. Desktop and server sales account for 15% of the revenue share along with software and video imaging cornering 12% share each.

The company continues to invest in services initiative whose revenue has increased by 22% year on year. Apart from this it has also redesigned it business to business website that enables customers to receive quotes, place the orders, manages approvals and track shipments in a better way. Overall, the industry is in a consolidation phase and the management remains open to acquisition that would fit its culture and add new customer and talent base. Though the stock had a bad run in the recent past, things seems to changing with the recently announced results with bright chances of crossing the double digit in 2007.

Cawabonga!!!!

.. liking the numbers .. RE: PC Connection Powers Up: Fool by Numbers By Motley Fool Contributors
January 26, 2007

VL

Seems awfully expensive and has risen too much. Ready for a pull-back.

PCC has great management team. People love working there. The company has great partners in HP & IBM who want to see PCC succeed.

prices will drop but still above s&p500

Christmas is upon us

The IT sales will come back with a roar.