Tel-Instrument Electronics Corp. (TIKK)

[SSKILLZ1]

TIK

I have been a buyer of TIK in the mid to upper 4’s in the last week. Here is what I like.

1) TIK has been beaten up for and overreaction in my opinion. CEO is overly conservative. In the Q3 press release he say revs would be 5.6 million for q4, and they have turned out to be 6.5 million in q4. Now he say at least 5.5 Million which even if it was 5.5 million that is the second best quarter in recent memory, but it will probably be over 6 million when it is all said and done.

2) Are delays disappointing, yes, but the trend has to happen as there is a necessary upgrade cycle coming, so this is a multi-year story of revenue growth in my opinion.

3) TIK Should post about adjusted.22- .25 in q4, which in my opinion could get the stock going back in the right direction, I also wouldn’t be surprised if the q1 outlook is upgraded as well. Lost in the shuffle people are ignoring the facts, that they earned .10 (Minus Lawsuit, and Debt Charges in q3 on 5 million in sales). Not that it is full proof, but I see about .05 eps added for every 500k of sales.

4) Stock was liked and talked about when it was in the 6’s, I never quite got the excitement their when it was running and red hot. Since then they have followed up a really good q3, with a better q4, and a q1 looks strong despite the market disappointment, and now we get to buy it in the 4’s. To me the stock offers the best risk/reward here, as the stock has been beaten up, has two really solid quarter coming (and I strongly believe many more to come with the upgrade cycle)

Conclusion: I really like TIK and believe it offers a good risk/reward, with a multi-year growth story, really good earnings and revenue growth, and the stock is beat up. My kind of stock in my opinion. All is just my opinion, and I could always be wrong though.