In the current finanical environment we see two dyanmics that represent challenges for CASS. These are the general slowing in business activity and declining interest rates. While I think these may represent temporary challenges, I have decided to keep my current shares and may add more upon any significant decline. I think the CASS story still has a long way to unfold both in terms of business expansion and in terms of recognition by the financial community.
A key to CASS growth long term is expanding the extent of offerings and expanding the customer base. From the latest 10-Q:"Currently, management views Cass' major opportunity and challenge as the continued expansion of its payment and information processing service offerings and customer base. Management intends to accomplish this by maintaining the Company's lead in applied technology, which, when combined with the security and processing controls of the Bank, makes Cass unique in the industry. This trend has been positive over the past years and management anticipates that thisshould continue in 2006."Third Quarter of 2006 compared to Third Quarter of 2005:"Freight transaction volume for the Third Quarter of 2006 increased mainly due to increased activity with existing accounts and a growing customer base. Total dollar volume processed by this division also increased during this period due to the increased activity and larger average freight charges. The increase in transaction and dollar volume from utility transactions increased primarily due to new customers as the growth of this division continues. These increases in transaction volume, combined with the expansion of the customer base in thetelecom division, drove the 13% increase in processing fees."As I commented the current Q is likely to see some slowing in number of transactions from the existing customer base due to a softer overall economy. But long term what we want to see is continued increase in the number of customer using CASS systems and also further increase in the extent of services offered. My belief is CASS still has plenty of growth opportunities along those lines.The recent price weakness got me to put in a buy order today. It did not fill, but I will look for chances here to nibble. There has been no signficant insider selling (one sell by Harry Krieg on 11/14, a couple of small buys by W. Grace earlier in Nov.)sw
CASS is well off its 52 week high and normally I would take this as a buying opportunity. But, I am fully invested (no cash) and my portfolio is already too overweighted with this one. Gonna let it ride for now.
It is coming back this morning on some decent volume. The next earnings report (early Feb.) could have some softness. That could be a buying opportunity.
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