CAMP - CalAmp Corportion

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CalAmp Corp. (CalAmp) is a provider of wireless communications solutions for a range of applications to customers globally. The Company has two business segments: Wireless DataCom and Satellite. The Company's Wireless DataCom segment offers solutions for mobile resource management (MRM) applications, the machine-to-machine (M2M) communications space and other markets that require connectivity anytime and anywhere. The Company's MRM and M2M solutions collect, monitor and report data and intelligence from remote and mobile assets. It delivers products, software services and solutions for energy, government, transportation and automotive vertical markets. The Company's Satellite segment develops, manufactures and sells direct-broadcast satellite (DBS) outdoor customer premise equipment and whole home video networking devices providing the delivery of digital and high definition satellite television services.

 

CAMP is an interesting growth prospect. Earnings today (4-19) after the bell. Good reaction could produce a favorable trend for a swing. Longer term I see this one as a good growth stock over the next 3 to 5 years. They are in a sweet spot for growth of IoT and streaming media segments which are in a mega-trend up

 

CAMP is down a lot in pre-market (15.21 for -12%) but here's the reason why:

• Subsequent to the end of the fiscal year -- and this explains CalAmp's plunge today -- direct broadcast satellite customer EchoStar (NASDAQ:SATS) informed CalAmp that it will discontinue purchases from CalAmp at the end of the current product demand forecast, extending through August. This decision was primarily made as EchoStar consolidates its supplier base, given reduced demand for products CalAmp supplies. Because EchoStar is responsible for essentially all revenue of CalAmp's satellite segment, CalAmp expects this portion of operations to be discontinued in fiscal 2017.
• CalAmp "does not believe that the loss of EchoStar as a customer will have a material adverse effect on its overall business.

They are not ready for a play right now but this drop may put them in a nice value area. I need to take the time to run fundamentals on them. This one is on a strong watch list for me personally. Once the gap down that happens today plays out. They have expected and discussed how their satellite segment is going away, but they did not expect it this early so will lose some revenue they did not expect to lose but very temporary. Also they did just complete their acquisition of LoJack and are building a strong position in their wireless segment.

 

I just checked the fundamentals on CAMP after this gap down and man they look like a really good play over the next year or so. This company is cash rich and has a solid financial base. They could well afford a dividend but since they are small cap they are more focused on growth and they have plenty of cash for acquisitions. They have a current ratio and quick ratio that exceeds 6 which is solid. I see them at fair value around $22 per share within the next year and I think that is conservative. With a 1.2 beta they could be a good swing play when the trend turns up. On the other hand, they could also be a good value play at this level for longer term hold. I think I'm going to let this gap down play out for a few days and consider strongly an entry with a partial position size for a longer term play.

 

Yes, I see that. In fact I'm having to exercise patience and may not get in but I decided to put a buy order in at 15. We'll see if it drops back this afternoon and let me in. I really do like the fundamentals and growth prospects of this company.