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No. of Recommendations: 0
I just can't get excited about this company. What this basically means is that I am not convinced that this can grow at the predicted mimimum 8% growth rate. When Matt originally wrote about them, he mentioned the risk of not developing some of the new products. It seems that fear or risk has been realized. I realize that the shares are undervalued relative to future growth and fairly valued based on zero growth. I just don't understand the path to future growth. I am currently long, but am contemplating selling because I feel that there are better opportunities out there.

Comments?

gbbiehle
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No. of Recommendations: 2
gbbiehle,

"I realize that the shares are undervalued relative to future growth and fairly valued based on zero growth."

I wonder if they might not even be overvalued at zero future growth. With TTM EPS at $.61 which are projected to grow to $.66 next year, we're looking at a growth rate of only 6.5% which would give us a share price of around $4.00 a share. Even at a high EPS estimate of $.68, we only get a share price of $5.50. Worse still, EPS estimates for next year keep getting ratched down: 3 months ago, expectations were for EPS of $.76, now they're $.63.

Let's hope CNXS makes its high-end quarterly EPS guidance of $.02 loss, giving it a best-case scenario of $.53 for the year, and a growth rate of 24.5% next year, we're still talking about a stock valued at around $13 per share.

I don't have a position in the company one way or the other, but my own feeling is that there are better candidates out there.

Rich
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No. of Recommendations: 1
Hopefully my action was not a short term reaction but I recently sold my CNXS shares based on the following info:

1) Lack of a new product and forward revenue guidance. Clear strips is a re-introduction of an old product (I suspect that it willnot bring new sales)
2) Rereading the HG newsletter and noting that the key item commented on was this was a possible takeover target and to expect slow growth.
3) How impacted their earnings were because of a mild flu and cold season (not diversified product line)
4) Marketing: Or lack of. Includes their ads for the vapor shots and product placement on shelves in local stores (bottom shelf).

This just did not add up to the best use of my investing.

Mike


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No. of Recommendations: 0
FoolishCop and Mac750 (and other lurkers) -

I was basing my valuations on the following assumptions:

3 stage DCF model
5% growth for years 1-5
5% growth for years 6-10
2% growth for years 11 and on
11% discount rate
$42million in net cash
13.6 million shares
$0.55 /share current earnings

This yielded $7.70 in net present value from the earnings plus $3.09 in cash for total of $10.79/share

Using a 15% discount rate drops the value to $8.29/share

I don't always run valuations like that, I just happened to use DCF this time because I felt like the sales were relatively predictable.

Disclosure: I own a small quantity of shares that are currently at a small loss. I am planning on selling, based on this evaluation

gbbiehle

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