Value Microcaps Zip Code Changers

[southacresdave]

bbotcs...SCKT...I agree with both your assessments.

The "pro" to the company is that there is great leverage there---they don't directly manufacture their product (sub-contract it) and sell it primarily through distributors for small buyers (and directly to large buyers). Increased revenue will increase gross margins nicely with minimal operating expense increases (theoretically). The expansion of the scanner business and the HP market opening up could make for some serious growth.

The "con" to the company is that one quarter of EBITDA positive does not show a true turnaround in getting profits to the bottom line (and rewarding shareholders). Operating expenses need to be kept in line and grow at a significantly less rate than gross profits. They have a long ways to go before they earn true respect from investors.

As such, the stock isn't cheap at $2 for a company that has one quarter of EBITDA positive behind it, but is also a "steal" if it comes together for them. Ah, the risk/reward of the stock market!