Thursday, April 06, 2006
Glenayre Technologies Inc, stock of the week April 2, 2006
months generated revenue, OPS and Free Cash Flow growth of more than 400%.
GEMS provides network-based messaging and communications systems, and
software worldwide. It engages in the design, manufacture, marketing, and
servicing of products that support messaging applications, including voice
mail, fax, email, text messaging, voice-activated dialing, and multimedia
messaging service, as well as other services comprising missed call
notification and video mail.
The current price at the closing of business on April 6th was $5.44.
By looking and understanding the graphs below you will see what Michael is talking about. Below you can see the 5 year operational cash flow (OPS ) chart for Glenayre. It is looking the best it has over the last 5 years. Click on the graphs to view. Click again for a larger view (this may take a couple of seconds).
If you have read our discussion on Cashflow investing and understand how to read the graphs you will understand the 5 year chart does not give us a good enough indication and is only our starting point. (To learn how to read these graphs click on the sidebar link to read The health of any stock is determined primarily by its cash flow)Next we look at the graph below depicting the last 4 Quarters. You can see Glenayre has the second highest rating of a 2. (To understand these ratings you need to click on the sidebar link and read the article mentioned above)
After looking at the last 4 quarters we need to look at the 20 quarter charts to really understand the business and to look at quarterly trends year over year. (Again read the article mentioned above to gain a better understanding of what I have just said)
However, the guru's we all try and follow, including Michael, really only concentrate on the following two graphs. It is these graphs that cause Michael's picks to outperform the market year after year and is the reason our portfolios (for more information on the portfolios click the link on the side bar) will beat the market year in and year out.
Below is the 5 year free cash flow chart. You can see year over year the free cash (FC) yield (the 10th line down) is up 14.2% while the free cash margin percentage is 11.6%.
As stated earlier we need to look at the 20 quarter chart to get the real picture
