We have some new IRA money to invest and wonder if this is a good place dispite some red flags: 1. A key executive who is Chairman/CEO/president/secretary is 73. Will he be retiring soon? 2. According to Reuters, earnings per share & revenue growth are low for industry. 3. Most recent quarter wasn't too hot
Good results, particularly the 28% increase in the high margin royalty business. Seems Econolite's pending court dispute with ISNS about overcharging hasn't affected their relationship. Underlying results weren't as good as at first sight though. Operating income increased only 8% over 05 and actually decreased 30% from 05q4, due to significantly increased G&M costs. G&M increased 230k over 05q4. I guess the result of new hires, which will hopefully stay at this level. They did however predict a 30% rise in R&D for 06 over 05, so maybe that is also still to come. On the plus side, the royalty fee with the University of Minnesota should cease in July, saving approx. 100k per quarter, and the tax rate will be 32% as opposed to 33.4% in 05. Good to see Accounts receivable get back down to normal levels, adding 1m to cash flow. As I see it this company is an absolute gem, if anyone knows of any other co. out there with similar profit margins, consistent top-line growth, stable customer base (i.e. gov.) and lower valuation then please let me know!!
ISNS is an OK company but I wouldn't put IRA money here. This is too iffy an investment. If your portfolio is less than $0.5 million, go elsewhere.
I would recommend DELL, KMX, MSFT, or MMM if you want a large company; NILE, QSII, STRZ, or TLF if you want a smaller company and a little more risk. Try TCLP (safe) or MMA (a bit risky) if you want relatively high dividends along with a reasonable possibility of capital gains.
However, the best investment of all these days is oil and gas. Oil is at $71/barrel and is headed up. Look to any of APA, DVN, COP, or even XOM. MRO is good but a little overpriced now. Side plays might include PPP or FRO. Read up on Hubbert's Peak if you don't already know the situation. A lot of people will disagree with this assessment but I'm absolutely convinced we're entering a new era of high O&G prices. I'm about 10% in O&G stocks and may go a bit higher.
Other areas that are good investments for the long-term now (with my choice picks): banks (FITB, BBX, BCS, JPM, WFC), newspapers (NYT, TRB, WPO), title insurance companies (FAF, FNF), payday loan companies (AEA, QCCO), and hotel companies (IHR, HOT, HST).
Whatever you buy, watch your timing. The market is now in the process of entering a bear market. Many stocks will be priced substantially lower in 6-12 months. If you buy now, be prepared to hold on and don't sell when people are panicking in 2007. O&G stocks depend mostly on the price of oil and gas, so they won't be significantly affected by the bear market. Feel free to buy them now.