Nsom Challenge...Pt. 2
ZRBA Zareba Systems ($7.05): This company manufactures and markets electronic perimeter fence and access control systems. According to the company, "These products are used for the control, containment and deterrent of everything from humans (in the case of terrorists or prison inmates in security applications) to horses, livestock, and lawn and garden applications (in the growing hobby farm market)." I see two chances during the contest period to get a low-float (less than 2M) surge out of ZRBA shares. The first chance will be this week when the company reports Q4 (June) results. Q4 is by far the company's best quarter of the year and, in the Q3 PR, management said that several factors in the quarter "should provide the platform for a strong finish to our fiscal year." My WAG for Q4 EPS is $.40 vs $.33. I think low-float mania will be much in evidence for this seven dollar stock if ZRBA hits or exceeds my guess. The second chance for ZRBA will come when the company reports Q1 (Sept.) results in mid-November. Juicing those numbers will be the profit realized on the sale of the ZRBA's Waters Medical subsidiary. The sale was announced 7/25 and ZRBA will enjoy a $4M pre-tax gain from it in the September quarter...that equates to about a dollar a share after taxes. Once again, when that EPS headline hits the Dow wire, I believe the stock will hop.
UVE Universal Insurance ($5.57) I'm sure everybody is already well-acquainted with UVE, the top pick in PSL7. With EPS of $.05, $.10, $.20, $.30, and $.43 the past five quarters, and revenues of $9M, $19M, $31M, $44M, and $53M, respectively, I still view the stock as significantly undervalued. A big chunk of the 2007 hurricane season is in the rearview mirror now and UVE appears unscathed so far. Q3 results are in the bag now and, with a meager $.10 comp last year, should be eye-catching. I'm expecting Q3 EPS of about $.40 and a dividend boost next month. If the tropics remain quiet, UVE could double during the contest period...
When it comes to P/Es, 7 is the new 14...
