Small cap power: CIMT

[David Randolph]

CIMT's trade reminds me of ANGN, do you remember that stock? Very low volume stock that I kept saying it would rise a lot, but on a technical breakdown or something I sold it. It took several months, but the stock indeed went up as I expected, but I didn't make any money from it, because I didn't have the courage of my convictions back then:



And because I want to learn from past mistakes, not keep repeating them, I say that I won't sell CIMT whatever the chart makes, I simply don't care. Now I have the advantage of knowing more about fundamental analysis, so I base my trades in long term financial information, and that information tells me CIMT will be a $29.19 stock three years from now.

I'll keep holding CIMT.

[Garoh]

Hi david

This stock still looks good technically and I can see good signs of a very soon explosion ....

just keep the good work 

[Se7en]

Interview with Danny Haran, President & CEO of Cimatron Limited(CIMT) is now online at the Wallstreetreporter website! (Windows Media Player required!)

http://www.wallstreetreporter.com/profile.php?id=23800#

direct link: http://www.wallstreetreporter.com/interview.php?id=23800&player=wma

[David Randolph]

Interview with Danny Haran, President & CEO of Cimatron Limited(CIMT) is now online at the Wallstreetreporter website! (Windows Media Player required!)

http://www.wallstreetreporter.com/profile.php?id=23800#

direct link: http://www.wallstreetreporter.com/interview.php?id=23800&player=wma

Thanks for posting the links to that interview Se7en (let me applaud you 5 times), it was interesting, even though of course we had no new financial details. Here are my highlights:

- The company has more than doubled its target market with the new products it launched recently;
- CIMT now has 20% of its work force and 7 offices in China;
- The company's main objective now is to grow revenues as it pushes its new products into the market. As the CEO said: "Time to execute".

On my model I have just 20% expected revenue CAGR, if it comes out more than that CIMT can go from being a spectacular pick to ... I don't have words to qualify the quality of this Main Portfolio's holding.

Just hold on to it through all the ups and downs, through all the days with almost no volume, and you'll be rewarded possibly like you've never been rewarded with any other stock.

[Garoh]

Very nice Interview 

I think this one will leave no doubts about the company great work ....

[berloga]

David, I have a question.
When you use your stock evaluation system you apply equal criteria to stocks of all companies, US-based and non-US based. I believe this is fair. But my question is, could big investors view more risk in investing in, say, Chinese stocks? I personally would not see such risk as I am sure Chinese government takes big role in the market speculation and should create favorable conditions for it. But what's your take on a big investor's attitude towards these type of stocks? Will they consider "undervalue" as a normal situation or not?

Thank you.

[David Randolph]

David, I have a question.
When you use your stock evaluation system you apply equal criteria to stocks of all companies, US-based and non-US based. I believe this is fair. But my question is, could big investors view more risk in investing in, say, Chinese stocks? I personally would not see such risk as I am sure Chinese government takes big role in the market speculation and should create favorable conditions for it. But what's your take on a big investor's attitude towards these type of stocks? Will they consider "undervalue" as a normal situation or not?

Thank you.

I believe foreign companies, especially companies from high growth economies like China or India, should trade at higher multiples than US economy related companies, because growth prospects are higher for foreign companies.

The Chinese government has nothing to do with it in my opinion, it's the earnings yield one expects to obtain holding shares that drives share prices higher or lower over the long term.

Over time, it won't matter all that much what is the origin of the company, because they're all working to be global anyway, what matters to big investors is the return on investment they expect to obtain buying shares.

Considering CIMT, it is an Israeli company, but it has global operations, in Europe, America, Asia and Oceania. In the CEO's interview just above we hear the company has local people leading local branches and sales efforts, not Israeli people, so they can better understand the culture and ways of doing things in each country.

CIMT is a $29.5 M market cap global software company, which is ready for strong growth and profitability. Sales in 2006 were $21.5 B. With two more successful quarters I think it wouldn't shock anybody if CIMT were a $150 M market cap. And that would mean $18.45 a share.

Curiously, my valuation model says the optimal selling price for CIMT is $18.70, so it comes pretty close.

I'll keep holding CIMT with strong hands.

[berloga]

I agree that Chinese government does not intervene, I meant to say it is in its interest of promoting a healthy environment for the growth of domestic business and hence foreign investors.

Looking at the 400% projected return for SILC and CIMT warms my hands a lot. It also gives peace of mind: so long nothing fundamentally changes for these two, we have to do 2/15 less work searching for stocks.

Look at PCU, David. We sold it in January when it had a glitch at $52. It is trading now at $83 and keeps creeping up. 60% profit gone on a technical fluctuation, just what Jesse would warn us not to do. I am not saying PCU could be the right choice, but we did not have your filter and analysis back then structured as they are now.

[Garoh]

We are touching the trend line support  at 3.66 .
We should see a good rebound tobreak today's high with good volume OR 

Looks like someone is trying to maintain the stock at these levels for sometime , are we heading to a new high soon ?? 

[David Randolph]

I agree that Chinese government does not intervene, I meant to say it is in its interest of promoting a healthy environment for the growth of domestic business and hence foreign investors.

Absolutely.

Looking at the 400% projected return for SILC and CIMT warms my hands a lot. It also gives peace of mind: so long nothing fundamentally changes for these two, we have to do 2/15 less work searching for stocks.

Yes, these two have amazing fundamental trends. They're also both very small caps, which probably means it is easier to find outstanding value around micro caps than when studying $500 M or more medium size caps. This is probably because inefficiency is higher at small and undiscovered stocks. For example, Yahoo Finance shows zero analysts covering SILC and CIMT.

Look at PCU, David. We sold it in January when it had a glitch at $52. It is trading now at $83 and keeps creeping up. 60% profit gone on a technical fluctuation, just what Jesse would warn us not to do. I am not saying PCU could be the right choice, but we did not have your filter and analysis back then structured as they are now.

Yes, PCU always looked like a very attractive holding, but my hands were weaker back then, I didn't know enough about fundamental analysis to have profound confidence in it. I mixed micro and macro analysis and lost faith in PCU because $copper was going down, remember? Had I listened to a sound microeconomic fundamental analysis and probably we would still be holding that great stock. Live and learn to get better at this game is my constant pursuit. I believe we're on the right track, even though there's still a lot to learn, of course.

We are touching the trend line support  at 3.66 .
We should see a good rebound tobreak today's high with good volume OR 

Looks like someone is trying to maintain the stock at these levels for sometime , are we heading to a new high soon ?? 

My take is you're too much short term oriented Garoh, looking at intraday quotes and trying to get tips for the future from short term fluctuations. As I've shown you on the ANGN example above, that course of action might lead us to sell because of boredom and ultimately miss the big move (but I love your posts anyway, please keep them coming, or I'll have to push harder on my imagination to have something interesting to write everyday about this stock).

I believe the right attitude is to buy CIMT and forget about it. The objective of this stock is to make us fall asleep and lose hope as probably there will be days where it won't trade one single share. The temptation to take a small profit or a small loss will be big, with so many "fast moving stocks" at the distance of a few clicks. CIMT has no enthusiasm, excitement, movement or entertainment to offer. What this great stock has to offer is top fundamental prospects that are very hard to find in the marketplace:



More than 100% share price compound annual growth rate expected for the next 3 years, giving me a final estimated share price of $29.19 (in December 2009).

I don't see any downside to my estimates, just upside to my revenue CAGR estimate, since I'm considering just 20% average annual revenue growth. But, of course, I'll keep studying the stock everyday and adjusting my estimates according to incoming fundamental information. Nobody knows the future, but it surely is reassuring to have an expectation of the future and knowing the exact impact of incoming information on that long term expectation.

I'll keep holding CIMT.

[David Randolph]

CIMT's 1st quarter results were out at May 17, both in 2005 and 2006, so probably we'll get Q1 2007 results also around that date.

Technically the stock seems to be getting ready for a rally.

I'll continue holding CIMT according to my long term valuation model instructions.

[David Randolph]

The previous updates tell the story on CIMT, I'll continue holding it for the long term.

[Garoh]

Good work david 

for the short term I think it should touch 3.50 soon 

I could be wrong 

Nice stock

Hi David

I mentioned before that it should touch 3.50 before the next nice jump and it did for 2 times yestreday ....

yestreday we saw some strength  , we have a limit for the downside here 

I have more confidence in this stock because of your good work and efforts to give the best details on your picks 

Please keep the great work 

[Ares]

Here's a shot of  CIMT's 15 minute chart.

The wolfewave pattern entry may have been hit already at $3.50 using the green line but the yellow line may still be a possibility.

The price is currently above the horizontal support (previous resistance),8ma, and the new (yellow) uptrend line.

So far, it is looking good for CIMT on the 15 minute chart.

The yellow uptrend line currently has the same angle of attack with the green uptrend line above it - a possible uptrend channel.

[njshiva]

The previous updates tell the story on CIMT, I'll continue holding it for the long term.

This stock reminds me of CVV. Low volume one hence couldnt hold on to it. Now I look back....damn  
This time I will hold on to cimt. Keep up the good work david.!!