Rimage Corporation (RIMG), a technology company operating within the computer peripherals industry, currently generates free-cash-flow of $12.07 million on a trailing 12 month basis. The last trading session valued the business (enterprise-value) at $18.58 million, hence returning a significant robust free-cash-flow-yield
As a result, the company qualifies within my "fundamentally undervalued" watchlist, where I seek out specific stocks with a minimum 10% free-cash-flow-yield (as a starting point). This is backed up by additional metrics in favor of the investment. In comparison to competing businesses within the same industry, RIMG currently offers significant "relative" undervalue, based on the noted high free-cash-flow-yield, supported by an analyst mean target price of $17, insider transactions up over 83% in the last 6 months, book value (historical cost) relative to its market value is at 0.96 (strongly bullish), and five year average ROE is 10.08% (strongly bullish).
I am entering long RIMG, hedged by a dollar-neutral short S&P pair trade
- a non-directional market-neutral position - in anticipation of the company outperforming the S&P index (SPY
) over the short-medium term. RIMG is currently trading at $13.57 per share, around 3.81% above its 52 week low.
Enterprise Value/Free-Cash-Flow Data Sourced From Yahoo Finance. Stock Data & Technical Analytics Sourced From TradePilot.com.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in RIMG over the next 72 hours.