3SOF

Profile: WPCS International Incorporated, a design-build engineering company, focuses on the implementation requirements of communications infrastructure worldwide. The company provides its engineering capabilities, including wireless communication, specialty construction, and electrical power to the public services, healthcare, energy, and corporate enterprise markets worldwide. WPCS International was founded in 2002 and is headquartered in Exton, Pennsylvania.
Website: http://www.wpcs.com/
Market Cap: 17.5$M

Trading Thesis:

- Mid-term position trade, based mostly on Fundamentals.

- Trading way below it's book value per share (currently at 8.53$), this is a profitable company that is generating ~100M€ of revenues every year (awesome price/sales ratio).
- Current estimates point for a forward EPS of 0.32$ FY10 and 0.49$ FY11, so with the stock currently trading at 2.75$ it trades at just 8.5X FY10 earnings and 5.6X FY11 earnings, the sector trades with this multiple above 20X.
- The company is small, but most of it's revenues come from big companies and state agencies, the balance is clean with half of it's market cap in cash and no dilution issues.
- In the past, the stock reacted when new contracts were made, we are just starting the year I expect a series of new contracts inflow soon.

The stock has been falling since September with no apparent reason except the lack of new press releases, I expect a turnaround soon, volume is picking up and the stock is oversold.
At current levels the downside is low taking in consideration it's fundamentals and low multilpes, so I believe we are on great risk/potential ratio.


Trading Plan:
Buy at the open, stop @ 2.45 and limit sell @ 4.15