What to do with Click Commerce shares? (CKCM, ITW)

I wrote in some detail last week that I found the Click Commerce (CKCM) takeover by Illinois Tool Works (ITW) to be both confusing and irritating, in that it seemed an odd fit and it valued the company at what I think is a significant discount.

But I didn't decide on the spur of the moment what to do with my shares. It was my inclination to sell some of them before the tender offer goes through, since the possibility, however slim, of the deal falling apart would likely depress the shares, and I can likely come up with something better to do with that money ... but I wanted to make sure there wasn't any solid likelihood of a better offer from another acquirer.

Well, I still haven't heard anything about another acquisition, and Michael Ferro has officially tendered his shares to ITW (see the SEC 13D), so if there was any doubt we know that the CEO and largest shareholder is going along willingly. The shares bumped up by a few cents today, though still under the tender offer price of $22.75, and they actually very briefly spiked over the tender offer in after hours trading to $22.80, which I assume was simply a trading error by someone and not a sign of a nefarious insider leak. The little bit of volatility that was reintroduced to the shares today, likely as a result of some sort of swirling rumour without any basis in fact, does give me a bit of pause (see the chart -- this is really the first time since the shares settled down following the announcement that the shares broke out of their 2-cent range) ...

... but just a bit.

So on Wednesday I'll plan to sell the half of my shares that are slightly leveraged and that are held in a low-commission account (I have a little bit of margin in this position), and hold the remainder ... just in case.

Here's my reasoning:

The tender offer is going to be at $22.75, but it will take some time before we reach that point. During that time, we're dealing with the time value of money and the deal risk, the playground of the arbitrageur (which I am not).

The tender offer is scheduled to begin next Monday, September 18, and to be open for a month (20 business days). During that time I could tender my shares and, most likely at some point immediately following the end of the tender period, receive my $22.75 per share payment.

If I elect not to tender my shares and the deal still gets a majority approval (which seems exceedingly likely, since I've heard no objections from the institutional owners and Ferro's 20%+ stake will go a long way toward deciding the matter), the shares would be taken from me in exchange for $22.75 when the deal closes, which is supposed to be "sometime in the fourth quarter." My guess is that it would be pretty quick, given the likely lack of regulatory complaint and the relatively smallness of the deal for Illinois Tool Works.

So the basic option is: something like $22.55 today cash in hand; $22.75 in late October assuming the tender offer remains uncountered by another bidder and isn't recalled by the acquirer; or $22.75, probably by December, if the deal goes through. Those numbers won't be changing with ITW's stock price, since it's an all cash deal.

And as I intimated earlier I might do, I'm hedging my bets. The return of less than 1% (the .20 cent difference between today's price and the tender offer) over the next five or six weeks isn't sufficient to make it worth it to take the chance that the deal could possibly collapse, or to pay even a small amount of margin interest on my holdings.

But I'm also entertaining the possibility that another bidder could always potentially materialize, however unlikely ... so for the shares that I hold without margin, and which will also be cheaper to transact if I accept the tender offer than if I sell them outright (again, this is a tiny consideration -- less than 1% impact), I'll wait for the tender offer unless I see an opportunity in the interim that requires me to free up that cash immediately.

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Another Odd and Frustrating Acquisition (CKCM, PRVD)

This is getting a little frustrating -- for the second time in less than a year, a small, promising, high-growth investment is being bought out by a large conglomerate at a bargain price ... and I own the small company, not the big one.

Last December it was Provide Commerce (PRVD) being bought by Liberty -- a little bit of an odd fit, an online flower vendor being bought by an operator of cable channels. John Malone picked up PRVD at prices well below their highs of the previous year, taking advantage of a rough summer that had depressed prices somewhat.

And today, Click Commerce (CKCM) is being acquired by Illinois Tool Works (ITW) -- again a bit of an odd fit, with the massive diversified manufacturing conglomerate picking up the small supply chain software company. It's true that both CKCM and ITW have been serial acquirers, but that's about all they have in common -- ITW is mostly known for selling welding supplies, refrigerators and ovens, and other hard, dirty businesses. They have some units that would work well with Click, such as some manufacturers of barcode readers and some packaging suppliers that could integrate well with a supply chain management software suite ... but it could also just be that it was cheaper to buy Click than to hire them to help with supply chain management for ITW's huge, diverse manufacturing and supply operations.

And just as with PRVD last year, I think the big guy is getting a bargain. CKCM has traded as high as $31 this year and as low as $13 or so a year ago, but has never been given a premium price to match its meteoric growth rate -- perhaps because no one trusts CEO Michael Ferro because of their trouble during the dot com meltdown, or because no one is sure that they'll be able to continue growing if they ever stop acquiring small software companies. Click has had its share of skeptics, but at both a forward and current PE of about 14, excellent profit margins that should be able to climb as the RFID business grows, and a tiny price/sales ratio of under 3, I think Click remains a bargain to this day.

And it looks like ITW will enjoy the bargain, and we small shareholders will be left out in the cold. It's nice to see the 25% bump for my portfolio today, but I've bought shares both above and below the buyout price so my overall profit if I tender all my shares will be just about 13% -- fine, but not as great as I would have hoped for from Click as a stand-alone concern over the coming few years. CKCM has been growing consistently and profitably for about three years, and I was hoping for more. For more about my thoughts on Click, you can see previous articles from when I bought shares at $19 in May, $25 in March, and $14 last October,

I don't see any other potential bidders lining up to throw their money at Michael Ferro, and the fact that he has apparently agreed to sell his 25% at this price means it might be tough to get any leverage on ITW or any other bidder, so I'll probably be stuck with this offer regardless of how I feel about it. I haven't seen the official deal paperwork yet, but it appears that any other bidder would just have to pay enough to make up for Click's $10 million penalty to ITW -- not all that much, actually, just over 3% of the deal amount, but there's still no reason to assume that there are other interested parties out there.

If nothing else changes over the next few days, I'm likely to hedge my bets by selling half of my position, and let the rest ride until it's taken out by the tender offer unless I see a better short term use for that money -- one benefit here is that it's an all cash deal and should have no regulatory implications, so the expected tender offer in two weeks and closure of the deal within a couple months is probably quite feasible. Absent a bidding war that hasn't yet shown its handsome face, this isn't going to drag on.

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One up for every one down (FORM, CKCM, AKAM, ISRG)

Many of my holdings have been moving in almost perfect mirror trajectories over the past couple of days, following earnings reports that either disappointed or encouraged investors.

Akamai (AKAM) did much better than I had expected -- and even though it showed accelerating growth, which is the holy grail for investors, I was shocked to see it climb back to within a hair of it's 52 week high. I thought the shares were already priced for some pretty dramatic outperformance, but clearly the wave of analyst upgrades following their earnings did their job as the shares zoomed higher by better than 20% yesterday. A nice surprise.

On the flip side, Intuitive Surgical (ISRG) shareholders reacted to strong growth and forecasts with much more anger -- we've gotten spoiled with ISRG, as with AKAM, and expect blowout growth every single quarter, so merely great growth isn't going to cut it if you're carrying a high multiple. Intuitive had very strong recurring revenue growth from their sales of instruments, which means procedure growth is very good. I think that's the most important thing to see, that surgeries using the da Vinci are continuing to grow, but clearly a lot of investors were looking for much more dramatic growth in system sales.

ISRG surprised everyone to the upside in the first quarter with 35 systems sold, many of them the newer, more expensive da Vinci S system, but even a 50% rise in systems sold year over year to 39 in this quarter was inadequate for many, even with a small-scale beat on earnings. I think folks expected a dramatic sequential climb in installations and didn't get it, but the growth there is still continuing and the second quarter can be pretty soft for big ticket purchases, so I'm not worried. I still think the key for ISRG will be procedure growth in Hysterectomies now that they have proven that they can build a dominant position in Prostatectomies, but it's early days still for the da Vinci in gynecological surgery.

And because my ISRG position is roughly twice as large as my AKAM position, they completely cancelled each other out yesterday.

The same thing happened today with two more volatile stocks -- Click Commerce (CKCM) disappointed due to a much higher tax rate and some slowing sales growth, and Formfactor (FORM) surprised with greater than expected growth in both earnings and sales.

I was a little disappointed with CKCM's performance, but not enough to sell my shares -- and frankly, given their low multiple, I think the shellacking the shares have taken this morning is quite overdone. Even if they were not growing very robustly, which they are even though taxes have taken a big bite out of earnings this quarter for the first time, they're being valued at a PE of about 9 on both forward and TTM earnings. That's just silly, and it implies an assumption that investors are assuming that their investments in R&D and in marketing will not allow them to build the business. They're priced for no growth now, but I expect good growth that will, within a couple quarters, come down to the bottom line. I am tempted to buy more but already have a large position, so I'll have to think about it a bit.

Formfactor, on the other hand, continues to delight. As I wrote a few weeks ago, the competition and innovation in the semiconductor industry is mother's milk for FORM as it allows them to sell a greater variety of testing probe cards, in higher volume. I don't see a significant downside even with overall semi volatility, given the remarkable diversity of customers and end user semiconductor applications that they serve. They managed sequential sales growth of 14% and YOY growth of 77% ... no complaints there, even though the year ago quarter was a low point. And more impressively, they turned that 14% sales growth into better than 20% sequential earnings growth. Unlike CKCM, FORM is priced now for significant ongoing growth, but I still like their chances. FORM is actually a relatively small position for me because I was never wise enough to double down last summer when the price was very enticing -- if it was one of my larger holdings I'd be tempted to take a small portion of my profits off the table given their high multiple, but as the situation stands it makes more sense to just hold and watch.

Formfactor's industry colleague MEMC Electronic Materials (WFR), by the way, is clearly confusing investors on a very fundamental level. They soundly beat the earnings estimates AND significantly increased their guidance for this year's earnings, and the shares actually went down. They're poised to invest in capacity to serve the solar power industry, thanks to an agreement with Suntech Power, and they continue to supply scarce wafers to the semiconductor fabricators at very nice margins. Given the average market multiple and their dramatica decline already over the course of this year (from $48 to below $28), I can only imagine that the reason WFR is falling is that everyone is terrified of the Intel/AMD problems. That's close to irrelevant for WFR, in my opinion, as long as chips continue to be required to run everything from laptops to cell phones to cars.

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More Click Commerce (CKCM)

I took advantage of what I hope is merely some temporarily confusion and investor unease with Click Commerce (CKCM) to up my position a little bit. I used some of the cash freed up from my recent sales to buy a few additional shares of CKCM at $19.61 this afternoon.

I've done this before, and the circumstances were similar. I picked up some shares back in March when there was an unwarranted scare related to their delayed 10-K filing. I think this will have to be my last CKCM purchase for a while, it has become a pretty large position in my portfolio and I'm not sure I can handle more of this highly volatile stock.

I'm not entirely sure why CKCM dipped today to a point that I couldn't resist an add-on purchase -- there has been no new news about the company, no huge new releases of products or new clients announced, though they've certainly been active with their webinar series that's aimed at clients, their new CFO last week, and, most importantly, their arguably-below-estimates- but-not-worrisome earnings.

The Fool had a good brief article on Click after the earnings release, and there has been a little confusion today regarding exactly how much Reuters screwed up the analyst estimates part of its Click Commerce reporting -- they wrote after earnings that an analyst had previously revised estimates down significantly (but misleadingly titled the article Click Commerce Q1 EPS estimate revised), then realized that the title was misleading and issued a new article, Click Commerce Q1 EPS estimate corrected, that tried to clarify that this had nothing to do with the company or with a new downgrade, just a correction of an existing analyst estimate.

Phew. This kind of stuff happens to CKCM all the time ... and with such a tiny company, with a small float and a large short position, it takes very little to move the shares dramatically. I don't know if it's just the general malaise of the Nasdaq that's bringing Click down today to my buying point or if it's a reaction to this news or a delayed reaction to earnings.

But in the end, it appears to me that business is doing very well -- hosting and maintenance have become big drivers of earnings lately, and their big clients like Home Depot are making more and more use of Click's products, something that I hope to see continue as RFID begins to make itself more and more cost effective in the supply chain. (I wrote more about this the last time there was a real fire sale on CKCM shares, back around $13 in October)

This is still a risky investment, and clearly one that the market thinks is really on the edge given their very low valuation and tumultuous history. With a tiny trailing PE of around 13 and a dramatically strong, if uneven, growth rate (even though taxes are likely to bite into earnings more as we go forward), I'm willing to hold through the bumps that I expect we'll feel in the road ahead.

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Quick buy note (CKCM)

Don't have anything of substance to say about Click Commerce (CKCM) and their business (I did plenty of that here and in other previous posts ... but I wanted to note that I did buy a small additional portion in after hours trading this evening.

CKCM announced around mid-afternoon on Friday that they would be delaying the filing of their 10-K (WFR, incidentally, announced the same thing today). The stock has a big short position and seems often to be in the grip of momentum traders, and I thought the shares wildly overreacted to the news, dipping by more than 10%.

So I took advantage of the sale and picked up a little more CKCM in after hours trading today at $20.40. I could be wrong, but I don't think so. Click even went so far as to issue a press release reaffirming that the filing was not due to any significant issues with the numbers -- and I'm guessing that if that press release had come out concurrently with the SEC filing there wouldn't have been any dip at all. I think the overreaction will work itself out within a brief period next week, and the company's business has not been at all impacted by their brief delay in filing -- a delay we're seeing a lot this year as companies, particularly small companies, struggle with the Sarbanes-Oxley rules.

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Click marks the price (CKCM)

Though I wrote a couple months ago that Click Commerce (CKCM -- click to register for free RT streaming quote) would likely get more money from me if their shares fell below $20, I reassessed after their earnings release and decided that today's prices, below $25, marked a good point for me to increase my position.

So, I bought more shares of CKCM today at $24.87.

Even though I nearly fell asleep listening to the littany of financial specifics from the CFO during the conference call last week, the call itself is certainly worthy of a listen to hear CEO Michael Ferro's description of their business plans and recent business -- especially the new Air Force contract that CKCM is a part of along with Oracle and others. And if it's any impetus to get you to listen, the call is very short thanks to the tiny number of analysts followign CKCM.

Click Commerce has been a favorite of mine since I first picked up some shares early last year, even though the stock seems to be subject to the whims of the momentum traders at times. My last detailed writeup on CKCM back when I added to my position in October covers a lot of the reasons why I think this company is an exciting investment.

The story hasn't changed ... Click still has a lot of things going for them, not least of which is growth at over 100% -- fueled by smart acquisitions of small software companies.

CKCM is pushing RFID as one of their main growth engines moving forward, and they recently opened a center to help with RFID advancement and began a seminar series to educate their current and prospective customers, but they are not completely subject to RFID growth for their success. This "software as service" company helps with all kinds of data and supply chain management and has a huge range of offerings for such a small company -- from supply chain management, to research management in health care and academic institutions, to customer order management, parts and service management (which is what the Air Force contract is for), and management consulting. They're also now partnering with UNOVA to get into grid computing to handle the massive data handling that full rollout of RFID will require, though that part of their business is just now beginning and was just announced on the conference call.

Click Commerce fell quite a bit after their earnings release, partly due to the fact that they didn't "blow out" the numbers or issue blowout guidance, and the momentum folks were undoubtedly bored enough to move on to the next big thing ... but they did grow at a huge rate and beat the estimates of the two (I think) small analysts who follow them.

Due to taxes, it's predicted that their earnings for next year will be a bit lower than in the past year, but that still means we're getting a company growing at tremendous speed in an expanding sector at a bargain PE of just about 16 (forward) or 15 (trailing).

There are certainly plenty of risks that it would be worth anyone's time to investigate. This is a tiny company, and while they have a strong roster of customers and I'm confident that they'll be able to grow much bigger they could suffer if larger companies tried to drum them out of business. Frankly, I think it's more likely that they would be bought by Oracle or one of the other large players.

And there is a lot of competition in this space, and the hype surrounding RFID might be overdone. In my opinion, RFID is not going to go away, but it might take longer to be fully rolled out than any current hype would expect. I'm willing to wait if that's the case, and I like that Click has a huge and flexible array of products to sell aside from those that are tied in directly to RFID -- though RFID certainly makes many of their software solutions more valuable to their customers.

And finally, they are run by a charismatic CEO with a large personal stake -- Michael Ferro owns more than 20% of the company and has seen it touch bottom and nearly disappear, then recover over the past couple of years and become a strong, growing, going concern. He might make some dumb decisions, or he might decide to sell more of his shares, and either could disrupt the stock's progress. With very low institutional ownership of under 20%, the CEO has very little check on his control -- with his track record at this point, that's fine with me. And I think that it's safe to believe him when he says he has completed his recent selling of a small part of his holdings and has no plans to sell more this year.

So I recognize the risks of investing in this sector, with heavy competition, and in this particular company -- but I am very impressed with their execution, especially their fairly smooth integration of so many different small acquisitions over the years, and I really like the growth potential I'm buying at what I consider is still a bargain price ... even if it does again drop down to my last entry point under $15 sometime in the near future.

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Annual Checkup -- CKCM

Click Commerce (CKCM -- free RT quote) is one of the smaller companies in my portfolio at $230 million (even after acquiring dozens of small software companies), and is certainly one of the more volatile. I made my most recent purchase back in October around $13, and my previous one around $25 in the Spring, and my average cost is just over $16 a share. Click works in several areas that are growing rapidly, and even though they have lots of competition I very much like their diversified product offerings, their growth potential, their reasonable valuation, and their charismatic CEO, Michael Ferro, who owns about 25-30% of the company. RFID data management certainly appears to be their major growth engine for the near future, and they are doing a good job signing up Wal Mart suppliers and getting other major retailers like Home Depot to use their integration software. I'm convinced that RFID will be a significant area of investment for all companies in the supply chain, but even if it isn't CKCM has lots of other business software solutions on offer and hundreds of other quality clients -- they're surprisingly diverse in their targeted product offerings for such a small company, and I like that. Because I can't really be an expert in the offerings of all the companies in this space, I just follow the cycle of investment in software services and the speed of RFID rollout as indicators for Click's potential growth, and as far as I can see things look very solid. CKCM has been extraordinarily volatile and is very underfollowed on the Street, but if we see prices drop under $20 again soon I'll be very tempted to add more -- this tiny company has a lot of room to grow, and heavy insider ownership means that the acquisitive CEO is on our side.

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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.

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Sometimes it just clicks (CKCM)

**UPDATE Oct. 14 -- Frogs are raining from the sky, dogs and cats living together, up is down. This is the first time in many months that I've bought a stock only to see it RISE in the short term (see Shanda for my latest imperfectly timed purchase). For once, my purchase was not a short term contrary indicator, at least not immediately -- the exception that proves the rule? And yes, it turns out that even us long-term investors can be obsessive daily portfolio watchers.**

Click Commerce is one of the many stocks in my portfolio that has fallen like a stone in recent weeks, but I have never considered my purchase of Click to be a mistake -- it's just a wildly volatile and very small cap stock that the market as a whole has not yet really gotten a handle on -- and, frankly, had left for dead years ago. I was afraid that maybe I didn't understand the company well enough, so I did some more reading of their filings and listened to some presentations their CEO gave at a few conferences this year ... and I liked what I saw and heard.

So I purchased more Click Commerce (CKCM -- get free real time quote from ADVFN) on October 13, 2005 at $13.60.

I first bought CKCM back in June for $24.90, so with this larger purchase my average cost per share is about $16. With earnings for next year looking pretty likely to be around a dollar, I'm quite happy with that multiple for such a fast growing company.

This stock has nearly tripled in the last year, but also has fallen by more than 50% in two months -- that's the kind of stock that makes most people's noses bleed, but I think owning this kind of company is one of the better ways to beat the market. Virtually uncovered by analysts, insiders/management with very large holdings, a high short ratio based largely (as far as I can tell) on it's quick appreciation, and huge sales and earnings growth in a growing market. And we can buy them today at about the same price/sales ratio as Seibel or Oracle -- Oracle's a fine company, sure, but I expect little CKCM to grow a heck of a lot faster and I think a perfectly logical market would place more of a premium on that.

Click Commerce is a turnaround story, to be sure, and it is definitely still finding it's equilibrium ... but the turnaround is really already well underway. Not too long ago they were a dot-com bomb, teetering on the edge and not taken seriously by anyone -- they even had to do the dreaded reverse stock split.

Today, they have a great stable of clients on board (Home Depot, to name one) and they have now laid down a nice series of eight quarters of revenue growth and positive earnings. And while they are being touted as a RFID play (Radio Frequency ID, the technology that Home Depot, Wal-Mart and other big retailers are starting to require for inventory tracking), they really provide a much more complete line of collaborative commerce solutions ... though wide RFID adoption will certainly dramatically increase the size of their addressable market.

Click Commerce does not make barcode/rfid readers or the tiny little antennas that are actually affixed to price tags -- there are some promising companies that do, like Zebra Technologies (ZBRA), but I don't think it's clear yet whose technology or standard is going to be important in this field, or if there are defensible differences between the various kinds of RFID implementations that would make one of those companies a better investment than the others.

No, what CKCM does is license and host software to enable collaboration between companies and suppliers -- sometimes that's part of an RFID implementation, but even before RFID is widely in use this kind of collaboration is critical. At the most basic level it's something like a vendor checking inventory at a supplier automatically to know whether or not they can sell a product, or take the example the CEO used at a presentation a few months ago of an independent plumber out on a job, identifying a product he had to work on, checking the manufacturer specs via his Blackberry to see what parts are needed, then linking through to see which suppliers have it in stock in the area so he can pick it up to make the repair. Now I can't quite picture my plumber doing this just yet, but I definitely see how this can add some real value if companies can be convinced to share this information for their own benefit.

Click Commerce has had a wild ride, to be sure, but they appear to be very nicely situated for the rise in RFID usage and the increasing need for companies to develop more collaborative networks for data sharing and management. They have made some good acquisitions over the years, including some strong, small RFID players earlier this year, and they are likely to do more acquiring of niche players as they move forward. Currently, debt is not so bad and could be easily paid off with one year's free cash flow at this rate, so they have plenty of flexibility. Dilution has been pretty significant over the past couple of years, but that's to be expected for a serial acquirer -- and they seem quite disciplined on that front, aiming to make deals only if they would be easily absorbed and accretive to earnings within a very short period of time.

So there you have it -- massive moves up and down and a stock that may well be being manipulated by day traders and certainly has a big short position (or at least had one, before this latest collapse in the stock price), but also has quickly growing sales and earnings, relationships with some excellent customers, riding the crest of an important new wave in commerce and with a subscription and licensing model that encourages retention of customers and steady revenues, and with strong, charismatic and committed CEO who is motivated by ownership to reward shareholders in the long run.

For a tiny company, CKCM has a pretty overwhelming array of initiatives and products -- a glance at their web page doesn't give you a nice clean understanding of the company as a "pure play" in RFID or anything else, which I expect is also helping to keep some investors away. That's OK, more for the rest of us. I like that they're able to offer such an array of products and services to a wide variety of industries -- they're a small company, it's great that they have the flexibility to take advantage of any profitable customer they can acquire.

To sum up, I'm pretty happy to buy a company that grew earnings at over 100% last quarter and that has the potential for further rapid growth, at a market multiple (PE of about 16 today) -- if there were more analysts covering this tiny company (less than $200 million market cap after this latest fall), I expect they'd be piling on with buy recommendations.

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