Mad Money joins Rofin-Sinar Bandwagon (RSTI)
I bought some shares of Rofin-Sinar Technologies (RSTI), a diversified laser company, early this year and I've considered them to be a lot like my FARO holdings -- they're maybe a little bit too dependent on the capital spending cycle, but both are well-managed small companies that have a great niche and solid management (there's beginning to be some question about that "solid management" for FARO, but that's a topic for another day).
For the record, I made RSTI purchases in February and March and am holding them at an average cost of $34.31. I have not done any selling of this one.
I thought this would be a boring long-term hold for me that might grow steadily at 10-15% or so in most years, with possibly some more cyclical upside and not too much downside -- and I was fine with that. I haven't even every writtein about RSTI before, for the most part they've just been too slow, steady and boring to pay too much attention to, excepting a few points in the year when management had to quell analysts' high expectations.
But now the madman of Mad Money has got his wild screaming tongue wrapped around Rofin-Sinar, and I'm wondering whether the volatility will take a leap.
I happened to have CNBC on in the background on Friday evening when I heard RSTI mentioned at high volume, so I got curious about what that might mean and popped over to the computer to check the after hours trading. I think it hit about 5% on the upside, which is pretty wild for a $600 million company that is heavily owned by institutions, rarely trades after hours, and has a very low profile on the Street. Quite a powerful show, though I can't believe people actually sit at their computers with the trading ticker open ready to buy on Jim Cramer's mention of a stock -- that reminds me a little too much of the CNBC influence in the late 90s and makes me a bit nervous.
Jim Cramer actually credited the Motley Fool for turning him on to RSTI, which surprised me a little -- I didn't expect that to be a source he would follow. I think RSTI was a newsletter pick of theirs last year, and they do follow the company pretty well -- a few days ago there was a good Fool article following the last earnings release.
I expect the Mad Money crowd will have drifted back out of this stock within a few weeks, and I hope they don't end up exerting much influence on the shares -- RSTI had an odd year, with some earnings disappointment early on, but it has been a relatively slow and steady climb since then. It looks like the after-hours froth of Friday evening has already cleared up for the most part -- maybe this one just wasn't sexy enough for most of the viewers to buy in today.
For a small company, Rofin-Sinar has a very diverse product offering and a huge number of customers, which should bode well for the continued steady growth that management is predicting. But I don't expect them to blow out the lights, and I definitely didn't expect them to get Jim Cramer excited.
The fact that they are quite unique among the laser manufacturers in their ability to serve all of the major industrial laser segments -- complementary acquistions have given them a good slate of laser products in machine tools and autos, medical, and semiconductor and electronic manufacturing, should mean that they're not beholden to any one product cycle, which should help to smooth the curve of what for many of their competitors is a highly cyclical business.
The tiny number of analysts who follow RSTI predict something on the order of 10% sales and earnings growth, which makes their valuation here at a PE of around 16 seem perfectly fine but not necessarily a screaming bargain. I see limited downside for this very conservatively managed company, and some significant chance for growth if their machine tools, auto, and semiconductor clients are ever able to hit on all cylinders at the same time. I have no plans to sell this one or to buy any more at this point, but I am keeping an eye on the Mad Money folks to see if the character of the stock changes in their wake.
For the record, I made RSTI purchases in February and March and am holding them at an average cost of $34.31. I have not done any selling of this one.
I thought this would be a boring long-term hold for me that might grow steadily at 10-15% or so in most years, with possibly some more cyclical upside and not too much downside -- and I was fine with that. I haven't even every writtein about RSTI before, for the most part they've just been too slow, steady and boring to pay too much attention to, excepting a few points in the year when management had to quell analysts' high expectations.
But now the madman of Mad Money has got his wild screaming tongue wrapped around Rofin-Sinar, and I'm wondering whether the volatility will take a leap.
I happened to have CNBC on in the background on Friday evening when I heard RSTI mentioned at high volume, so I got curious about what that might mean and popped over to the computer to check the after hours trading. I think it hit about 5% on the upside, which is pretty wild for a $600 million company that is heavily owned by institutions, rarely trades after hours, and has a very low profile on the Street. Quite a powerful show, though I can't believe people actually sit at their computers with the trading ticker open ready to buy on Jim Cramer's mention of a stock -- that reminds me a little too much of the CNBC influence in the late 90s and makes me a bit nervous.
Jim Cramer actually credited the Motley Fool for turning him on to RSTI, which surprised me a little -- I didn't expect that to be a source he would follow. I think RSTI was a newsletter pick of theirs last year, and they do follow the company pretty well -- a few days ago there was a good Fool article following the last earnings release.
I expect the Mad Money crowd will have drifted back out of this stock within a few weeks, and I hope they don't end up exerting much influence on the shares -- RSTI had an odd year, with some earnings disappointment early on, but it has been a relatively slow and steady climb since then. It looks like the after-hours froth of Friday evening has already cleared up for the most part -- maybe this one just wasn't sexy enough for most of the viewers to buy in today.
For a small company, Rofin-Sinar has a very diverse product offering and a huge number of customers, which should bode well for the continued steady growth that management is predicting. But I don't expect them to blow out the lights, and I definitely didn't expect them to get Jim Cramer excited.
The fact that they are quite unique among the laser manufacturers in their ability to serve all of the major industrial laser segments -- complementary acquistions have given them a good slate of laser products in machine tools and autos, medical, and semiconductor and electronic manufacturing, should mean that they're not beholden to any one product cycle, which should help to smooth the curve of what for many of their competitors is a highly cyclical business.
The tiny number of analysts who follow RSTI predict something on the order of 10% sales and earnings growth, which makes their valuation here at a PE of around 16 seem perfectly fine but not necessarily a screaming bargain. I see limited downside for this very conservatively managed company, and some significant chance for growth if their machine tools, auto, and semiconductor clients are ever able to hit on all cylinders at the same time. I have no plans to sell this one or to buy any more at this point, but I am keeping an eye on the Mad Money folks to see if the character of the stock changes in their wake.
Labels: RSTI
This article posted by One Guy @ 11/15/2005 10:36:00 AM 2 comments
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