Matt...SCKT.... Do I think SCKT is fairly priced for $4.4M and 2 cents/share results of 2Q with their current balance sheet? Yes. Do I think it's priced for the future growth? Not even close.
I think when the full impact of tablet/cloud based POS starts to roll through retailers, the growth at Socket will expand tremendously. With their expanding margins and fixed expenses, every $200K in growth is equal to 1.5 to 2 cents/share net income per quarter. Just wait for 3Q numbers. If they do $4.9M and 6 cents per share then the market will realize that (the most important part of their business) scanners have grown from $2.7M in 1rst Q to around $3.8-9M in 3rd Q, margins went from 42% to 44%, expenses didn't go up at all, and net income grew from (-2) to 6 cents/share. The future of tablet/cloud POS for retailers is just starting. What's going to happen when those 100 POS developers (and 1000 developers overall) who have purchased the software development kit in the last 24 months who now use Socket scanners and have barely even implemented their products really get rolling worldwide? What's net income going to be when 217 scanners/day that Socket sells now goes to 500+/day?!? At $1.55, the stock has absolutely none of that priced in. The current stock price assumes there is no future growth. Talk to the CEO or CFO if that's how they see it? It's why I track inventory numbers.
Not many $7M market cap companies have the software partners and the growth potential that tablet/cloud POS systems presents. It sure beats most of the OTC garbage that has 45M outstanding shares and market caps 5x this stock does and aren't even profitable. Sadly, Socket had enough issues with the Somo to have their shareholder equity drop enough to lose Nasdaq listing a couple of years ago which resulted in them losing all their institutional buyers and no one paying attention to them. The company is determined to get back there (probably won't be until spring 2016 when 2015 numbers can be audited), but they are looking at implementing a new IR campaign in 4th Q to bring attention to their situation. At least, even through the worst of it, they always have done cc calls and will answer questions if you call them up. I've met them all personally and been to the company. It's a small but solid little operation. They just screwed up horribly with the Somo but they are determined to make the scanners a big winner.
