John Leonard, CFA
Special situations, micro-cap, contrarian, CFA

The Transition From Reseller To Managed Services Provider Should Drive Multiple Expansion For PCM

Investment thesis

The ongoing transition from a low margin IT reseller to a high margin managed services provider with a strong recurring revenue stream should result in a higher multiple for PCM (NASDAQ:PCMI). High insider ownership and a 21% share count reduction in the past five years provide a floor for the stock while the increasing popularity of the cloud supports the long-term growth thesis.

Company overview

PCMI is a multi-vendor provider of technology products, services and solutions offered through its sales force, direct marketing channels (including websites/catalogs) and four retail stores. PCMI sells primarily to small/medium businesses, government/educational institutions and individual consumers in the U.S. PCMI operates three segments (commercial, public sector and MacMall, which sells to...

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