Q: Closed at 2.33 yesterday, then shortly after the company releases a prelim for Q3 of better than expected results than previously announced. They gave numbers that told an obvious story of improvement in all aspects. I consider this a load up scenario. I know your position is generally conservative but in this case isn't this a rare opportunity to buy in cheap with them giving you a glimpse of what is to come.
5i Research Answer:
The news should take some pressure off the stock, as investors were fearing a slowdown. EBITDA is forecasted at $39M to $41M now, vs estimates of $37.5M. Note it is not a huge increase, but certainly fundamentals are still decent. At 5X earnings and a small dividend, one can certainly argue it is cheap. But we still might see tax loss selling, and one quarter does not quite make a trend. In a better market backdrop we think it could recover quite well, but we are not quite in that type of market right now. We think it will be higher a year from now, but can still bounce around, perhaps violently, between now and then.