ScanSource Profits From Point of Sales Increases

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 |  About: ScanSource, Inc. (SCSC)
by: Jim Van Meerten

Today on Barchart one of the growth stocks with the most consistent price momentum is ScanSource (NASDAQ:SCSC). Analysts predict double digit growth in both sales and earnings and the stock is up in 16 of the last 20 trading sessions and has gained 19.62% in just the last month.

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ScanSource operates as a wholesale distributor of specialty technology products to resellers. The company’s ScanSource POS and Barcoding sales unit markets automatic identification and data capture (AIDC) and point-of-sale (POS) products, which interface with computer systems used to automate the collection, processing and communication of information for commercial and industrial applications, including retail sales, distribution, shipping, inventory control, materials handling and warehouse management. The AIDC product line includes various portable data collection terminals, wireless products, bar code label printers and scanners. The POS product line comprises PC-based products, such as cash drawers, pole displays, signature capture units, display monitors and magnetic strip readers, as well as products that attach to the POS network in the store, including kiosks, network access points, routers and digital signage displays. Its Catalyst Telecom sales unit markets voice, data and converged communication systems and distributes Avaya communications solutions including Avaya global communication solutions, small market business solutions and Internet protocol products. The company’s ScanSource Communications sales unit distributes various communications solutions consisting of video and audio conferencing products; telephony solutions, including voice over IP; and computer telephony building blocks. Its ScanSource Security Sales Unit involves in the hardware distribution of electronic security equipment, such as identification, access control, video surveillance, intrusion-related, and wireless infrastructure products. As of June 30, 2009, the company marketed approximately 61,700 products from 245 hardware and software vendors to 20,000 reseller customers primarily in North America, Latin America and Europe. ScanSource, Inc. was founded in 1992 and is based in Greenville, South Carolina. (Yahoo Finance)

Factors to Consider

Barchart Technical Indicators

  • 60% Barchart short term technical buy signals
  • Trend Spotter buy signal
  • Trades above its 20, 50 and 100 day moving averages
  • 16 new highs and up 19.62% in the last month
  • Relative Strength Index 75.71% and rising
  • Trades around 38.49 with a 50 day moving average of 35.16

Fundamental Factors

  • Wall Street brokerage analysts are just starting to follow this stock and have issued one strong buy, two buy and three hold recommendations for clients.
  • Sales are expected to increase by 24.80% this year and another 12.20% next year.
  • Earnings forecasts are robust with a 43.40% increase this year and 6.50% next year. Earnings should increase by 10.00% annually for the next five years.

General Investor Sentiment

  • Although not widely followed by the readers of Motley Fool the 90 readers that expressed an opinion voted 97% that the stock will beat the market.
  • The more experienced All Stars are more positive with a 100% vote that the same result will happen.

Summary: If and when the world wide economy recovers, retail business both new and existing will be buying point of sales equipment and software. With new acquisitions and increasing market share, ScanSource should do well. Your portfolio should include stocks with double digit projections of increases in both sales and earnings with positive price momentum.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.