GSI’s recent earning release was impressive: revenue was up 100% compared to the same period last year. The stock is trading at 20x P/E. The balance sheet is strong, with net cash of $2M. GSI generated positive cash flow but no capital returns yet (no dividends). There is no analyst coverage on the name. GSI has seen some revenue decline in the past (indicating some cyclicality in the underlying business). But over a five year trend things look better. Overall, GSI is interesting to put on a watchlist but the size and liquidity risk level here is quite high. Investors need to be mindful before committing capital as long-term holding. We would be waiting to see if management continues to execute well. It is priced well, and insiders own 13%. Cash flow has only been positive in 3 of the past 10 years. We would be OK owning it as part of a small cap 'basket' with a small position with other names, but on its own we think it remains risky.
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