Value Microcaps Motherboard

[jaybird249]

SMTX: Updated DD Summary on best NASDAQ Buy:
Trading at 2.3 X trailing EBITDA, SMTX:NASDAQ is the best buy the NASDAQ MARKET based on financial metrics IMO. SMTX operates in the Electronic Manufacturing Services (EMS) Sector, one of bright spots in the technology sector this year.

SMTX has over $250 MILLION in annual sales and trades at a Price/Sales ratio of 0.14 compared to 0.64. http://finance.yahoo.com/q/co?s=SMTX......
If SMTX traded at the Industry average PS ratio it would be a $11 stock.

With a trailing EBITDA of $12.4 million SMTX is trading at a RIDICULOUS 2.3 x annual EBITDA. Most tech companies trade at 12-15 x EBITDA.

SMTX WAS A $100 STOCK IN 2000. The last time SMTX was profitable it reached $8 in 2003. The projected 2006 earnings are MUCH better than in 2003.

Simply put, the EMS sector is on fire. All of SMTX's competitors are reporting doube digit sales gains robust profits due to rebounds in the telecom, networking and computing sectors.

Virtually every other EMS stock has risen dramatically over the last 6 months (SANM SIMC KTCC) SMTX is a laggard.

SMTX earned $.06 EPS in the Q1 2006, traditionally its weakest quarter. The next quarter should see a minimum of $.10 EPS due to seasonal strength and ramp up of production to meet new customer demand: "As expected, we utilized approximately $6.0 million in cash to finance our growth and higher level of activity at the end of the quarter", stated Jane Todd, Senior Vice President.

SMTX has only 14 Million shares outstanding and a 12 million float. GENERAL ELECTRIC AND MICROSOFT are major holders.

The SMTX CEO John Caldwell is a turnaround legend. He took over GAC.TO around $1.50 and it was recently bought out at $12.

DETAILED Q2 EARNINGS ANALYSIS:
SMTX will report Q2 results by the end of July. SMTX will post robust Q2 results for the following reasons:
)Last quarter was traditionally the weakest for their 3 big customers, EMC/Ingenico/Mars. This quarter should see about 1-3 million extra in revenue from these companies.

2)The deal signed a year ago with Leitch, is ramping up volume (6 million + per quarter as of January 2006). In February, SMTX said the large Telecom production contract with BVC:LSE was ramping to full production during Q1 2006. The other 2 new major new customers procured in late 2005 are ramping up as well. Other smaller contracts signed a year ago may be picking up as well. This should add 2+ million over last quarter.

3) All of SMTX's competitors are reporting double digit sales gains robust profits due to rebounds in the telecom, networking and computing sectors.

4)CEO quote: As expected, we utilized approximately $6.0 million in cash to finance our growth and higher level of activity at the end of the quarter", stated Jane Todd, Senior Vice President.

5)In the May Q1 Conference Call, the CEO noted a pronounced upturn in SMTX and Industry cycle. The CEO noted the Significant purchase of inventory at the end of the quarter.

6) The following comment was made by the SMTX sales VP in Q4 2005 Conference: "We also broadened our sales team’s geographic coverage, increased the number of sales leads by over 10 fold, and left the year with the healthiest sales funnel the company has seen in a number of years"

7) Go back back and look at last year sales. there was 12% improvement from Q1 to Q2.

I would look AT LEAST 4 - 7 million over last quarter. So about 62-65 sales this quarter and $.10 per share.

In conclusion, SMTX represents a compelling investment opportunity: A profitable technology stock in the robust EMS sector trading at a huge discount to its peers. The disconnect between SMTX's performance and the share price WILL NOT LAST.