I’m looking for 3 big announcements within the next 30-40 days per the last investor conference; Zbox appears to be a 3rd party product that will be sold by Zagg, a new “game” changing product, and of course NASDAQ listing. In terms of the price, I do think we will see a bump up on all the forthcoming news.
However, I just can’t help but think the overall market is inflated currently and we may see a general downturn in the next couple of months. Our political leaders may be calling a bottom of the economy here but we can’t ignore the facts of unemployment (approaching 10%), savings rates are now increasing which impacts consumer spending, tighter credit, foreclosures still to come through 2011, and finally continual de-leveraging of credit card/commercial debt (with correlating defaults).
Zagg has done well despite the market’s overall hiccups, however, that’s not to say it will not be impacted going forward since the price is still trading at higher trailing P/E levels. It will take a steady mind to ignore the volatility to come and just trust that Zagg’s future earnings power is what will point us upward.
GAXC is a cash cow that is selling at only 4x EBITDA and 5x free cash flow (factors in maintenance capex). A friend of mine (iancassel.com) notified me about this company and I took a position in it at .69 only two weeks ago (current price: .87). They have over 4,000 atm’s nationwide and are becoming masters at cutting costs and improving the bottom line. Next year they expect organic growth within the ATM industry as well as leveraging their current customer relationships by entering the DVD Kiosk business (redbox dvd concept). The value of the atm business alone exceeds $1 per share, however, with growth estimates into next year this company has a lot of upside.
The balance sheet is a snapshot of the company’s assets and how they are financed at any one-point in time. As a general exercise in valuing a company, it is important to look at its liquidity, the debt and equity composition, and quality of the underlying assets.
Some simple math can tell you very quickly if the company has a strong financial standing or if there may be serious risks ahead if the company ends up with losses in the future.
For liquidity, the current ratio (total current assets divided by total current liabilities) is very helpful in seeing how well the company can pay its obligation due in the next 12 months. A current ratio of 2 or higher is what I like to see in my investments. That way, I know the company is in good standings in case a line of credit is not renewed and requires immediate payoff, or they have a cushion in case they want to pay their accounts payable or current bills entirely. Another liquidity measure commonly used among value investors is total current assets minus total liabilities. This gives the investor an idea whether or not they can pay off debt if they so desire and assumes the long- term assets are paid for free and clear.
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