Is Nam Tai About to Fly?

Recommendation: Strong Buy

Reasoning: Incredible valuations, Superb financial security

Description: Nam Tai is an electronics design and manufacturing services provider to original equipment manufacturers of cell phones, PDAs, calculators, digital camera accessories, LCD modules, etc.

Pertinent Data

• ~$6 cash per share (current share price = $9.00)
• $1.28 FCF/share
• Price/Sales 0.51
• Price/Book 1.20
• 10% dividend yield
• Debt/Assets 1.49%


• Sales are declining in cell phones but increasing in other areas.
• New CEO recently appointed/restructuring completed
• Expect further weakness but potential for acquisition is too great to ignore. Cash levels are so high ($6/share) that some form of deal should be expected.

Technicals

Chart looks negatively balanced still but the potential for a deal is huge. Expect to lose money initially.

Significant volume support seen recently.

Disclosure: Author's firm is long NTE