Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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| Edgewater
Technology (EDGW) -- An Undiscovered Micro-Cap Stock That is Now
Trading Near its Cash Value |
Published: May 23, 2005
In my weekly premium
newsletter -- Undiscovered
Micro-Cap Gems -- my goal is to introduce readers to a variety of
promising micro-cap investing ideas that they may wish to consider for
their portfolios. In doing so, I generally look for small, neglected
companies that have been overlooked by conventional Wall Street sources.
I also look for undervalued firms that are trading at a steep discount
to their intrinsic value. Many of these individual investment ideas have
the potential to deliver triple-digit percentage gains in the years
ahead.
Below you'll find an
in-depth look at one such investing idea that I introduced my readers to
last weekend. To gain access to dozens of similar investing ideas
each and every week, you'll need to subscribe to my Undiscovered
Micro-Cap Gems service. In the meantime, I sincerely hope you enjoy
today's sneak peak at one of my most recent micro-cap investing ideas...
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Edgewater Technology (EDGW, $4.36)
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Edgewater
Technology (EDGW)
Sector = Technology
Industry = Computer Services
Market Capitalization = $44.9 million
Enterprise Value = $12.2 million
2004 Revenues = $25.3 million
2004 Gross Profit = $9.7 million
2004 Revenue Growth = +1.1%
Insider Ownership = 4.9%
Institutional Ownership = 59.1%
Insider Activity (TTM) = Positive
Enterprise Value/EBITDA = N/A |
Edgewater is a successful
management consulting firm that focuses on the implementation of
technology solutions. The company, formerly known as StaffMark, provides
a broad range of IT consulting services primarily to middle market
customers. Its client base spans across many industries and sectors, and
includes such notable firms as American Express (AXP) and Merrill Lynch
(MER). Many companies seek outside help from consulting firms such as
Edgewater because of their deep industry knowledge, their technical
expertise, and their external, objective perspective. EDGW has
successfully penetrated this competitive field by focusing on providing
premium IT services.
Last month, EDGW released positive first-quarter results. Net revenues
climbed +30.5% to $8.3 million, up from $6.4 million a year ago.
Furthermore, gross margins expanded by 250 basis points to 42.7%,
helping gross profits jump by +48% to $3.8 million. Cash flows also
showed strong improvement, as operating activities generated $1.4
million, reversing an outflow from last year's first quarter. Overall, I
was pleased with the results, as they demonstrated the effectiveness of
the company's strategic decision to shift into premium IT service
offerings. I'm also optimistic about the firm's results in the coming
quarters, as I believe EDGW is on track to post continued revenue and
profit growth.
Aside from posting impressive financial results, Edgewater also
maintains a healthy balance sheet. The company has more than $32 million
in cash on the books, or $3.18 per share, with no long-term debt. By
comparison, the stock only trades at $4.36 per share, so cash
equivalents represent three-fourths of the firm's market cap. Currently,
the shares are trading at a Price/Free Cash Flow ratio of just 18, which
compares favorably to the industry average of 43. In addition, the
firm's enterprise value is only $1.17 per share, so these common
valuation ratios look even more attractive when enterprise value is used
in the calculation.
Finally, insider trading activity has been positive in EDGW stock over
the last two months. In April, CEO Shirley Singleton made a modest
purchase of 1,000 shares. Over the last two weeks, another director has
made a series of purchases totaling 5,000 shares. The company has also
attracted the attention of several successful institutional value
investors, including Fuller & Thaler Asset Management, Axa, Gabelli,
and Vanguard. These insider transactions reinforce my opinion that
Edgewater is a cash-rich, profitable operation with solid growth
prospects.
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Important Note: The above article
was merely a small excerpt from a recent issue we sent to subscribers of
our premium value investing service -- Margin-of-Safety
Investing. In each issue of that newsletter, editors Nathan
Slaughter and Paul Tracy deliver an in-depth look at a variety of other deeply discounted
stocks that should provide investors with a solid margin of safety at
current prices. To receive your copy of our most recent issue of Margin-of-Safety
Investing, as well as other guidance similar to this twice per
month, you'll need to subscribe to this publication. To learn more,
please visit:
https://www.streetauthority.com/subscribe-msi.asp
Thanks for reading!
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Nathan Slaughter
Editor
Half-Priced Stocks, The ETF Authority
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in-depth guidance on today's leading value opportunities, plus educational guidance, please subscribe to
Nathan Slaughter's premium value investing newsletter --
Half-Priced
Stocks |
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