IEC
I’ve been buying some IEC here today in the 4.70’s and 4.80’s here is what I like.
1) IEC is a successful turnaround story that predominantly does sales in three sectors of business, their growth is both located in healthcare and Defense (Two sectors I happen to like), while their problem side of the business has been the industrial side, in fact revs don’t look like they are growing much, but that is because the industrial side although has stabilized has stabilized at lower levels then where they were a year ago, so this is currently hiding growth (Of now 82% of their business), but the good news is the comp on the industrial side are coming more in line in coming quarters with current levels of revenue, hence that sector of their business will now longer be dead weight, hence the company should start becoming a revenue growth story in FY 2017.
2) IEC Earned .16 last quarter and .45 for 9 months ended. However there was a .02 and .07 charge in the numbers for 3 and 9 months respectively if you factor that in, we are looking at .18 and .52 for those periods. I expect q4 to be in the .18-.22, and I expect them to grow in FY 2017, hence I believe valuation for this soon to be growth stock is attractive, which is why I like it. And if you worried about taxes, don’t they have another 5 years at their current run rate, before they run out of NOL’s.
3) IEC is also paying down debt, in fact they have knocked about 35% of their total debt off in just 9 months, at some point I expect IE to drop as well as they continue to pay down debt currently that is about a .15 a year annual drag on earnings in a couple of years that may be completely gone in my opinion.
Conclusion: I feel IEC is undervalued, and Feel FV is around the $7-$8 range based on the .70-.80 run rate I see them on right now, with a 10 pe popped on it. I will continue to buy on weakness. All is just my opinion, and I could always be wrong though.
