Glenayre Technologies -- A Gem of a Pick (GEMS)

| About: PureFunds ISE (GEMS)

Over the last 12 months, Glenayre Technologies, Inc. (NYSEARCA:GEMS) has generated revenue, OPS and Free Cash Flow growth of more than 400%.

GEMS provides network-based messaging and communications systems, and software worldwide. It engages in the design, manufacture, marketing, and servicing of products that support messaging applications, including voice mail, fax, email, text messaging, voice-activated dialing, and multimedia messaging services, as well as other services comprising missed call notification and video mail.

The current price at the closing of business on April 6th was $5.44.

Marc Selley ( adds:

By looking and understanding the graphs below you will see what Michael is talking about. Below you can see the 5 year operational cash flow [OPS] chart for Glenayre. It is looking the best it has over the last 5 years:

(Click to enlarge).

Gems # 1 sm

If you have read our discussion on Cashflow investing and understand how to read the graphs you will understand the 5 year chart does not give us a good enough indication and is only our starting point. (To learn how to read these graphs, check out our site or our free tutorial).

Next we look at the graph below depicting the last 4 Quarters. You can see Glenayre has the second highest rating of a 2.

(Again, click to enlarge. Same for all charts that follow).

GEMS # 2 sm

After looking at the last 4 quarters, we need to look at the 20 quarter charts to really understand the business as well as quarterly trends year over year.

GEMS # 3 sm

However, the gurus we all try and follow, including Michael, really only concentrate on the following two graphs. It is these graphs that cause Michael's picks to outperform the market year after year and is the reason our portfolios will beat the market year in and year out.

Below is the 5 year free cash flow chart. You can see that year over year, the free cash (NYSE:FC) yield (the 10th line down) is up 14.2% while the free cash margin percentage is 11.6%.

GEMS # 4 sm

As stated earlier we need to look at the 20 quarter chart to get the real picture:

GEMS # 5 sm

GEMS 1-yr chart:

GEMS 1-yr chart

Some additional definitions which be help you to better understand this post: cash flow, free cash flow, and operating cash flow.