Technical design software developer Cimatron Technologies (Nasdaq: CIMT) got a real jolt when in Monday's session, its volume rocketed 1,000 fold from 1,400 to 1.4 million shares and the stock, which reached $3.40, 145% higher than its level the day before, ended the session at $3.04, reflecting a 117% increase. Tuesday saw Cimatron begin the downslide back to normal values and, as usual, it will take some time until the stock feels, with the help of more intelligent investors obviously, that it has reached the right level at this point in time.
One of Israel's older publicly-traded software companies, Cimatron was founded at the beginning of the 1980s. The truth is that anyone who went through the results that the company unveiled on Monday won't understand why the stock should have climbed the way it did, but did anyone understand what happened back in November when Pointer Telocation Systems Ltd. (Nasdaq: PNTR) gained fivefold and more? The issue here is not the fact that Cimatron moved from a significant loss for 2005 to a slight profit for 2006. What should be asked now is whether this veteran player has finally found the right niche and path over on Main Street.
It will take another quarter and perhaps two until we finally learn whether Monday's monumental jump represented a genuine turnaround. While there had been initially been a long process of cost cutting, said former board chairman and current board member Yossi Ben Shalom, the most important thing now was the development of the company's new product. If a new product is indeed on the cards, then at the current price of $2.90, the stock is definitely worth checking out thoroughly.
As I am not much of an expert on computer assisted design or manufacturing, I would be happy to see some analyst research on the company, but this will be only forthcoming once the stock edges past the $5 level, or if the company commissions some research of its own, so I might as well try it out myself. I will have to rely on the statement by chairman Rimon Ben Shaoul, who said that after several years of streamlining and adding new product lines, the company is now finally back on track. I, for one, hope that is the case.
As regards the management team, CEO Danny Haran, who is a graduate of Comverse Technology Inc. (Pink Sheets: CMVT.PK), a company that has been an excellent school for many managers, looks like the right man for the job, and I know the company's CFO Ilan Erez from his time as CFO at Silicom Ltd. (Nasdaq: SILC), so investors are in good hands.
What caused Cimatron's stock to skyrocket? Nobody knows. Nevertheless, the company is worth a look if it really has a new product in the pipeline.
CIMT 1-yr chart
Published originally by Globes [online], Israel business news - www.globes.co.il
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.