SMTX

[David Randolph]

SMTC Corporation (SMTX). The Group's principal activities are to provide advanced electronic manufacturing services to the electronic industry and original equipment manufacturers worldwide. The Group's services include product designing, procurement, prototyping, assembly, test, comprehensive supply chain management, packaging, global distribution and after-sale support. These services are provided through eight manufacturing and technology centers located in the United States, Canada, Europe and Mexico. The Group has relationships with over 50 Original equipment manufacturers. The customers include IBM and Alcatel.

Of course, what attracted me in the first place to SMTX wasn't the financials, but the chart, take a  look at this advance phase:



Did it rose 200% in a few days? Great, investors are perceiving a big difference between the market value of the stock and its fundamental value.

Even if I had a lot of time I wouldn't go very deep into the company's financials. I like to see value at first glance, if I had to dig a lot to see the value, others will have to do that too to buy the stock, and that way it would be harder to gather bullish steam.

At first glance, what do I see?

I see sales for the second quarter of about $57M, extrapolating that for a full year I get about $228M in sales and a market cap, at current prices, of 14.6 million shares*$3.17 = $46.28M, so the price to sales ratio is about 0.2.

Maybe something's wrong with this math, but considering the chart, maybe not ... earnings have also rebounded, from a big loss in the first quarter to a small profit in the second quarter.

Looking at the long term chart, I know where this advance phase will probably stop and where I'll be looking to sell my position:



About $6 looks fine. I'm buying SMTX at today's open for the 3 Stocks on Fire Portfolio.

(This recommendation was made by David Randolph from 3 Stocks on Fire, and he will update this analysis everyday after the close until he sells the stock. 3 Stocks on Fire is a Community of stock traders and investors. Our 3067 members exchange trading ideas and strategies on our message boards everyday. We welcome you as a new member of the 3 Stocks on Fire Community, please take 10 seconds to register and receive our free newsletter)

[Shahar93]

In @ 3.00.
Great pick David!

[snowcat]

From Yahoo:

One to watch:  SMTX SMTC Corp follow-up (2.72 +0.48) -Update-   
 
Haven't done any due dilligence on this one, just saw that stock spiked and momo guys started talking about it. This is what appears to be moving it: "SMTX was $0.87 2 weeks ago and reached $3 this week, with a correction today to $2.24. SMTX is no ORDINARY small float stock (6 MM share float) here's why: -SMTX achieved $3.7 MM POSITIVE CASH FLOW in last quarter and published guidance for IMPROVED RESULTS THE REST OF THE YEAR. Thats over $15 MM annualized cash flow!! If SMTX traded at a typical 10 x cash flow it would be an $11 stock... SMTX has over $250 MILLION in annual sales and trades at a Price/Sales ratio of 0.08 compared to 0.54 INDUSTRY AVERAGE and has a tiny 6 MM float. 2.5 MM of the 6 MM float is institutional owned, so the "available" float is 3.5 MM."   

[Amarens]

David, great pick!

Was looking at this one over the weekend for a longer time investment, but didn't have time till now to look again. Great for all getting in at opening  . Nice development so far. Not sure to get in right now still at app. $ 3,59 or await the day a little. Can't really explain the fast development from opening today.

Any opinions on that? Would really like to hear. Any others still considering to get in now?

Look forward to some discussion.

Amarens

[la-onda]

again wonderful pick (unfortunaltey I was fully invested)

[Pete]

Saw it late... so missed the opportunity to buy it.   Now I will wait for a pull back ( if it comes) to get in.
P

[starfire]

Today will be the 10th consequtive trading day for SMTX to close above $1 and hence will regain NASDAQ compliance, paving the way for more money inflows from institutional investors. Applying industry P/S of 0.5, this stock should fundamentally be valued at $7.50 - $10.00, provided of course it gets by the resistance points. It will be a good long term play also!

[ncham]

Dang! I was in at 2.8 and out at 3.2 on friday. I took it off my screen this morning when it dipped under 3. Might buy back in if it pulls back.

[richarda97]

Bought in today and looking for a continued run. It sure seems to me that it has legs.

[TVandenbosch]

In @ 3.10, out @3.75 yesterday.
Will look at buying again on a dip today.

[David Randolph]

Thanks for your comments on SMTX, I learn from them. Yes, SMTX is no ordinary low float stock being pumped (wait a minute, low float means nothing, low market cap is the correct thing to say and consider).

This stock was just too cheap and it is correcting its undervaluation in rage. I don't see this fundamentally and technically backed advance stop anywhere south of the first important resistance level, which will come only at values above $6.

Actually I enjoyed the last minute dip yesterday, this means SMTX can open higher today without any gap up. Maybe it will fall on profit taking, but candlesticks and volume numbers don't suggest that outcome for the short term.

I wish to take profits at $6, about 100% above my purchase price and it will take a lot of downside to shake me out of this stock, just for the simple fact that any sell off will be met by demand from bargain hunters, given the very attractive valuation measured by the P/S Ratio.

[la-onda]

In @ 3.16, nice and healthy pullback

chart:

[wael_wa]

Today will be the 10th consequtive trading day for SMTX to close above $1 and hence will regain NASDAQ compliance, paving the way for more money inflows from institutional investors. Applying industry P/S of 0.5, this stock should fundamentally be valued at $7.50 - $10.00, provided of course it gets by the resistance points. It will be a good long term play also!

good price target

please can you chcek this stock

i think this Triple Bottom

[nikao]

gonna watch the action tomorrow..

the stock has gone up in 2 days and then consolidating in 2 days two times before and this time (third time) it again did go up in 2 days, so Im expecting another consolidating day tomorrow to get another upday on thursday

[David Randolph]

I said it would be hard to shake me out of this stock, but of course, not impossible, when it is needed I throw down the towel like everybody else.

I've made a simple trading plan to follow (the hard part is to have the discipline to always follow it), so I don't have to do much thinking now. I like to consider and weigh everything before I buy the stock, and then let the market judge the trade.

The plan is to sell with a profit around the $6 plus long term resistance level. To serve as a safety net, I have an ascending trendline, which for today will be standing at $2.49 (rising $0.14 everyday, so it is very steep)