As we’ve said repeatedly, Israel has a stable of really interesting microcap/smallcap companies trading under most investors’ radars. Cimatron (CIMT) is one of these plays that is worth a look.
Sporting a micro-cap of less than $25M, Cimatron provides investors with a profitable microcap with cash on the books, and which is poised to see some nice growth in the future. CIMT competes in the competitive CAD/CAM space for the tooling and manufacturing vertical. As much of manufacturing is pushed offshore, Cimatron continues to see nice growth from foreign markets — so much so, that it's purchase two tranches of its Italian distributor, Microsystem, with a call option to purchase the remaining shares.
Cimatron was up almost 15% on Monday (and over 125% on the year) off of the strength of its conference call, that was held in China.
I thought it’d be useful to highlight some points from the conference call that got the market so excited:
Microsystem had $10.5M in revenue in 2006 and poised to continue to grow profitably. Looks like earnings will become accretive in Q32007. Launch of Cimatron 8.0 appears to be really interesting for the company, as it positions them in a new market, the die design market. The company expects organic growth from this new target market in the quarters ahead. In terms of geographical sales, CIMT sells 57% in Europe, 23% in the Asia Pacific, 12% in North America and 8% in the rest of the world. The company said that they are focused on increasing shareholder value. Look for some more M&A in the future.
Cimatron is an interesting little play that is deserving of some serious research.
Disclosure: The author’s fund has no position in any stock mentioned as of October 28, 2007.