Follow the Signs

Written by GSCR Staff   
Thursday, 28 February 2013 08:22

While rising food prices hurt us as consumers, the subsequent side effect has been a boom in a majority of retail grocery and related consumer good stocks, especially since the start of 2013.  Let’s hope our featured stock today helps John and Jane consumer offset some the costs feeding the family by making some money.

Insignia Systems, Inc. (NASDAQ – ISIG - $1.90) develops and sells in-store media solutions, programs, and services to retailers and consumer goods manufacturers.  The company offers a national account-specific-in-store shelf-edge advertising program called POPSign, its Point-of-Purchase Services (POPS) product that delivers vital product information to consumers.  Additionally, the Company offers Stylus software which allows retailers to create signs, labels, and posters by manually entering the information or by importing information from a database; and laser printable cardstock and vinyl labels, including adhesive and non-adhesive supplies in various colors, sizes, and weights to retailers for their in-store signage and shelf-edge product information needs.  Insignia’s customer base includes 13,000 chain retail supermarkets, 1,700 mass merchants, 7,000 dollar stores, and 200 major consumer goods manufacturers including General Mills (NYSE – GIS), Kellogg Company (NYSE - K), Kraft (NASDAQ - KRFT), Nestlé, Armour-Eckrich and Ocean Spray.

Yesterday ISIG announced its 4Q12 and FY12 financial results after the market closed.  The major highlight is that the Company has been profitable for two straight quarters after a rough start last year and still has over $20 million in cash to put to use in 2013.  Gross profit margin increased sequentially from 42.1% to 44% from 3Q12 to 4Q12, which is a major positive.  Looking ahead, with 600 new stores in the mix and strong sales visibility for 1Q13, prospects appear bright.  ISIG hit 52-week high of $2.32 about a year ago.  We look for the stock to climb past the $2.50 level in 1H13.

Have a great day!

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. 

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