SMTC Corporation: A Cheap Stock With Great Strength

| About: SMTC Corporation (SMTX)

Cheap stocks with great fundamentals and good relative strength are hard to come by. SMTC Corporation (NASDAQ:SMTX) is a good example of one of those rare finds.

According to Yahoo finance:

SMTC Corporation provides integrated electronics manufacturing services. The company offers various supply chain services, including product design, procurement, prototyping, advanced cable and harness interconnect, high-precision enclosures, printed circuit board assembly, test, final system build, supply chain management, packaging, global distribution, and after sales support. It also provides enclosure and precision metal fabrication, cable assembly, interconnect, and engineering design services. SMTC Corporation offers its services to original equipment manufacturers and technology companies primarily in industrial, computing and networking, and communications markets worldwide.

The stock had two great pops when it announced quarterly earnings in mid March and mid May. Here are some highlights from its latest quarter report:

  • Growth in first quarter revenue to $69.5 million, a 16% increase over first quarter 2006.
  • Growth led by diversified customer base of both long-standing and new customers.
  • Net income of $2.8 million or $0.19 per share for the first quarter of 2007, approximately three times net income reported in the first quarter 2006. Net income in the first quarter of 2007 includes a one-time non-cash income tax recovery of $1.5 million.
  • Operating earnings of $2.9 million representing a 35% increase over the comparable period last year - EBITDA(x) of $4.2 million in the quarter, representing a 28% increase over the first quarter of 2006.
  • Generated cash flow of $4.0 million used primarily to reduce debt.
  • The stock's PE is just above 5. Volume has picked tremendously lately. It is worth a look.

    Disclosure: Author has a long position in SMTX

    SMTX 1-yr chart


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