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Stocks R / Radyne Corp.


Subject:  Re: radn Date:  12/2/2004  7:18 AM
Author:  cle1321 Number:  30 of 96

Okay a few more words...

RADN was a Motley Fool Hidden Gem selection back in Feb 04 (guest analyst). It also appeared on the Foolish 8 list for three months (Mar to May 04).

To be honest, sales that last two quarters have not been that great. They really need to show a big jump in sales in the current quarter to hit previous estimates. To be honest, I don't see how they can beat last year's total revenues of $58M.

On the good side, the balance sheet is still looking good, with $35M in cash and no debt. Inventory and recievables are well managed. Gross margins (>50%) and free cash flow (>15%) remain high.

At a price in the $7 - $8 range, the stock appears to be undervalued, assuming that they can show increased sales in the coming year. I put a fair value on this stock of $20/share. Hopefully they can start approaching this valuation in the next 1-3 years. You would think that sooner or later HDTV will become the norm and they will be able to grow with that expansion.

Disclaimer - I currently own 1,125 shares that I purchased at a price of $8.14. I'm willing to be patient with this one into next year.

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