Neither macro-economic changes nor productive expenses to garner market share should be negatives in the evaluation of any stock. Yet, these are the reasons given by analysts who have downgraded this small capital stock from Minnetonka, MN. However, time could prove these bases for negative projections wrong. The company is in good financial shape, and it has a robust business strategy in place. Classic stock investment principles strongly support decisions to stay with this corporation.
Exits at the May 2008 starting stock price of less than $8 might prove costly in the long run. The stock has a 52-week high of well over $17. The early May 2008 Price to Earnings Ratio is less than 11. Institutions hold 81% of the stock. These are clear hold indications for stock from the Computer Hardware Industry.
An important strength of this corporation is the business it has built outside the United States. The continents of Asia and Africa provide decades of strong industry growth. Computer penetration is very low in countries on these continents. Early entrants will have definite advantages in emerging and future markets. Accounting rules allow companies to charge off marketing investments to a single quarter’s profits. However, that should not delude investors.
The company’s product range is another sustainable competitive advantage. It has offerings in both the embedded and non-embedded market segments. This wide array enables the company to offer single-window solutions to all manner of clients for computer hardware. The company has made an important new launch in 2007 related to wireless networking with remote electronic devices. It has followed this up with a strategic, inorganic growth move in April 2008. The company has entered the Internet protocol routing business segment with this acquisition.
The company has consistently led the Computer Hardware Industry in terms of Gross Margin. This key parameter has averaged 58.28 over five years against just 27.55 for the industry during this period.
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