The basis for our own research stems from insider trading and then we extend it based on the fundamentals.
INOD caught our attention a short while ago for the strong history of insider purchasing. Generally, we discount purchases by directors and apply a greater factor to purchases by officers. With INOD, we liked that senior management was purchasing fairly regularly. We did notice a few sales, but they were related to exercising options and we don't weigh those as heavily.
Seeing the strong insider purchasing we looked at the financials/fundamentals.
We like that there's no debt, about $1/share in cash on the balance sheet, and the company is profitable. With the stock at $3.84 right now, it's effectively valuing the business at $2.84/share, or about $70 million. Looking at trailing 12 months earnings of $9 million that's an effective P/E of 7.7, P/S of 0.77, and PEG shows an estimate of 0.39. These are all very strong numbers for a company in INOD's business.
We also look at other things, but that's the bulk of what made us interested in INOD as a conservative investment with much more upside than downside.