October 17, 2003 Image Sensing Systems (ISNS)
The market is down and the trading portfolio is holding up fairly well due to fairly nice performances in Merit Medical (MMSI) and Closure Medical (CLSR) which both had excellent earnings reported...or anticipated in regards to Merit.

Looking at the largest % movers today, the pickings were slim as one might say. I did come across another of those 'Twin Cities' high tech firms....Image Sensing Systems (ISNS). I never thought of the Minneapolis area as a hotbed of high tech innovators....but there are quite a few of these little firms that make our lists.

According to money.cnn.com, Image Sensing Systems (ISNS), a company that I own NO shares of, "...markets and develops products using video image processing technology for use in advanced traffic management systems and traffic data collection." This is a very small company.

On July 22, 2003, ISNS reported results for the second quarter ended June 30, 2003. They had a very nice quarter with revenue growth of 16% to $2.59 million from $2.23 million last year. Net income was $827,000 ($.24/fully diluted share), vs $336,000 ($.11/diluted share) an increase of 221% (!).

Morningstar.com shows that this small company has been experiencing steady growth with revenue growing from $3 million in 1998, $5 million in 1999, $6 million in 2000, $7 million in 2001 and $8 million in 2002.

Earnings/share have grown, with periods of losses in 2000 and 2001, from $.08 in 1998 to $.57 in the trailing twelve months.

At the same time, free cash flow which was $0 in 2000, and ($1) million in 2001, increased to $2 million in 2002 and $3 million in the trailing twelve months.

Balance-sheet-wise, ISNS has $3.3 million in cash and $2.6 million in other current assets; more than enough to cover the $1.4 million in current liabilities and $0.1 million in long-term liabilities.

The trailing p/e is reasonable at 16.79, price/sales a bit rich at 3.66. The market cap is a tiny $32.10 million, one of the SMALLEST on this website, with only 3.21 million shares outstanding and 1.90 million of them that float. There are only 3,000 shares out short, representing about .167 days of average trading volume. The last stock split was in April, 2000, when ISNS split 6 for 5.

Except for the tiny size and small daily volume, this is a BEAUTIFUL microcap stock with excellent revenue growth, earnings growth, free cash flow improvement, balance sheet, and a reasonable p/e.
If I can find some cash, I will be buying some shares...but then again there is always the nagging problem of MARGIN....:). Thanks for stopping by!

Bob

10/18/03...p.s. I just noticed I didn't post the price on this issue. The stock closed on 10/17/03 at $10.00, up $.43 on the day for a gain of 4.49%. You would think I would REMEMBER to list the price....I mean after 200 posts! Have a great weekend everyone!