|Written by GSCR Staff|
|Friday, 19 December 2014 07:44|
‘Tis the season for reflection on 2014, and in particular our Market Monitor picks. Today we will focus on a 2014 loser that we believe will turn into a 2015 winner.
Back in early March we featured RadiSys Corporation (NASDAQ – RSYS - $2.36) at $4.33. Doing the quick math, the stock is down over 45%. We whiffed on this one for this year, but believe this one could be a great rebound story for 2015. Here is a quick review on the Company that provides wireless infrastructure solutions for the telecom, aerospace, and defense markets in North America, Europe, the Middle East, and Africa.
The Company offers advanced telecommunications computing architecture product family that includes a suite of integrated, application ready, and software-rich hardware products, such as carrier blades, chassis, disk modules, line cards, and processing and switch modules for computing/switching, deep packet inspection, digital signal processing, and platform software applications. It also provides media resource function products comprising multimedia processing platforms for audio and video conferencing, voice over long-term evolution, voice over IP, video over IP, OEM, and enterprise customers, as well as IP multimedia subsystem telecommunication service providers and solution developers. In addition, the Company offers Computer-on-Module Express products, which are designed for applications that require a standard processor and memory subsystem, and modular flexibility to retain key design-level IP on a separate carrier board; and rack mount servers primarily for medical imaging and diagnostic, test and measurement, and aerospace and defense submarkets. Further, it provides Trillium software that enables the communication for telecommunications networks, including mobile and fixed line networks. Additionally, the Company offers end-to-end infrastructure solutions to manage and control the data flow within existing and next-generation wireless communications networks, as well as to provide voice, video, and image manipulation capabilities for network providers.
RadiSys returned to the black when it reported 3Q14 financial results in early November. The forward P/E is now at 12, well below the industry average of 23. The Company continues to churn out new and improved products and services and is well funded and capitalized to continue, with nearly $32 million in cash on hand and only $28 million in debt as of the end of 3Q14. A gross margin of 29% versus an industry average of 27% indicates the Company is optimizing its price point. Finally, a short float of 1.15% indicates that going long is now the trend for RSYS.
The overall growth in the technology sector should help RSYS in 2015. The average volume of shares has increased to nearly 120,000 per day over the last week since the stock hit a relative bottom of $2.10. An accumulation phase could be here. We think the RSYS is a $5 stock by the end of 2015
Have a great weekend!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
This Market Monitor blog was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research, which typically highlights small cap companies, and Goldman Opportunity Research, which features micro cap companies in a sponsored research format. Thus, the Select product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports.
Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.
It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.
The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.
This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.
ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.
For more information, visit our Disclaimer: www.goldmanresearch.com