CKCM Still Clicking
I'm very pleased with the performance of Click Commerce (CKCM get free real time quote from ADVFN) since I purchased my initial shares back in the Spring and added significantly to my holdings a few weeks ago. With an average cost of just over $16, I can't help feeling like I really got a bargain now that we look at their latest quarterly release.
The great news is that Click is still growing at an amazing rate -- their acquisitions have hurt cash flow a little bit, but they are also boosting earnings dramatically and they all seem very strategic and in the long term should be accretive to earnings ... though at growth rates like this it's hard to complain if it takes a while to integrate the new companies.
The stock has been incredibly volatile of late, due not only to it's small size and it's toehold in the "hot" sector of RFID services but also because it has apparently been a real darling of the momentum investors and it's pretty easy for them to exaggerate the swings in a company with such a small float. I've written about Click a couple times as I analyzed the company and decided to average down during the last dip, and I still believe in their potential (and think my guess of "at least a dollar" for next year's earnings was a real lowball estimate). For a company that's already profitable and growing quickly in an industry that sees frequent consolidation and should have strong overall long term growth, we're not being asked to pay too much of a premium with a forward PE of just 18 or so.
But that, of course, is the key -- CKCM's small size and the weight of its competitors make it very hard to judge exactly where they'll be in a few years. We have bumped up almost 20% today based on the solid "beat" of analyst's expectations, but I think the conference call this everning has the potential to move the stock as well when they discuss next year's outlook and any possible guidance they might provide. And who knows whether that will be up or down from the current price, but given the CEO's enthusiasm and talent for selling his vision I'd expect a lively and optimistic call.
The big news for me is that RFID tags continue to come down in price and the usage of the technology should continue to seep into mainstream inventory management systems as folks follow Wal Mart and Home Depot's lead. All indications are that it's working and that it's worth it -- at least for the retailers, if not yet for the suppliers.
There was a study by the University of Arkansas just recently that confirmed that the stores which were highly RFID-capable were able to be much more effective at keeping popular items in stock, which is obviously a key for all retailers. And they're moving forward pretty aggressively, expecting their top 600 suppliers to be RFID-compliant by January 2007.
So let's look forward to a great conference call this afternoon, but even without any immediate RFID bonanze for Click I think their core businesses of computer interoperability and data sharing will continue to grow. This seems to me to be a tiny company in a very sweet spot as they enable greater efficiencies for industries and operations of all kinds.
The great news is that Click is still growing at an amazing rate -- their acquisitions have hurt cash flow a little bit, but they are also boosting earnings dramatically and they all seem very strategic and in the long term should be accretive to earnings ... though at growth rates like this it's hard to complain if it takes a while to integrate the new companies.
The stock has been incredibly volatile of late, due not only to it's small size and it's toehold in the "hot" sector of RFID services but also because it has apparently been a real darling of the momentum investors and it's pretty easy for them to exaggerate the swings in a company with such a small float. I've written about Click a couple times as I analyzed the company and decided to average down during the last dip, and I still believe in their potential (and think my guess of "at least a dollar" for next year's earnings was a real lowball estimate). For a company that's already profitable and growing quickly in an industry that sees frequent consolidation and should have strong overall long term growth, we're not being asked to pay too much of a premium with a forward PE of just 18 or so.
But that, of course, is the key -- CKCM's small size and the weight of its competitors make it very hard to judge exactly where they'll be in a few years. We have bumped up almost 20% today based on the solid "beat" of analyst's expectations, but I think the conference call this everning has the potential to move the stock as well when they discuss next year's outlook and any possible guidance they might provide. And who knows whether that will be up or down from the current price, but given the CEO's enthusiasm and talent for selling his vision I'd expect a lively and optimistic call.
The big news for me is that RFID tags continue to come down in price and the usage of the technology should continue to seep into mainstream inventory management systems as folks follow Wal Mart and Home Depot's lead. All indications are that it's working and that it's worth it -- at least for the retailers, if not yet for the suppliers.
There was a study by the University of Arkansas just recently that confirmed that the stores which were highly RFID-capable were able to be much more effective at keeping popular items in stock, which is obviously a key for all retailers. And they're moving forward pretty aggressively, expecting their top 600 suppliers to be RFID-compliant by January 2007.
So let's look forward to a great conference call this afternoon, but even without any immediate RFID bonanze for Click I think their core businesses of computer interoperability and data sharing will continue to grow. This seems to me to be a tiny company in a very sweet spot as they enable greater efficiencies for industries and operations of all kinds.
Labels: CKCM
This article posted by One Guy @ 11/03/2005 11:38:00 AM 0 comments
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