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Key Tronic Corp. Message Board

  • pat2ric pat2ric Jan 30, 2013 4:05 PM Flag

    My big toe

    Dipped my toe in at 9.75. I've been following this stock for some time.
    good luck longs.

    Sentiment: Buy

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    • Sometimes when you dip a toe in the water you pull back a nub! I'm going to let this one settle for a while before jumping in. Not that $9.75 won't ultimately prove to be a great entry point, but I think KTCC is going to trend lower over the next few quarters.

      Back in January 2011, when KTCC lowered forward guidance due primarily to bottlenecks in the supply chain. The price dropped from The low 6's to the low 3's before rebounding to the low teen's with the Jan 2012 earnings report. Obviously, history doesn't repeat itself perfectly, but I wouldn't be shocked to see KTCC dip into the low 8's or high 7's before resuming its upward trend, which will predicated on the guidance given at the next conference call.

    • Too soon to tell if you are premature, but here is my take on KTCC as it now sits.

      One of the great uncertainties in investing in many microcaps that function as a "supplier" is that their customer base is typically insufficiently diversified to withstand the loss of a significant customer. I've been in stocks many times over the years where the loss of a significant customer has sounded the death knell for the company.

      The CC was significant for the fact that KTCC saw that vulnerability a while back, took affirmative steps to mitigate the problem and, according to Gates, was about 2 QTRS away from insulating itself from its loss of one of its largest customers. Quite a testament to the company that it can weather a loss like this without any significant impact on revenues. Yes, this is a new company, and a solid one at that.

      They say the market looks about 6 mos. out. Well, Gates basically said we will see the new contract wins replace the loss of the customer (and more) within 6 mos. If the market acts rationally and Gates' predictions comestrue, this could be a very good entry point. Good luck on your trade..

9.20+0.59(+6.85%)Jan 28 4:00 PMEST

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