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NVE CORPORATION (NVEC) IS RATED A BUY
I wanted to see if I could briefly write up NVEC once again on this blog. NVE Corporation (NVEC) made the list of top % gainers on the NASDAQ today, currently trading at $27.70, up $3.10 or 12.60% on the day. I do not own any shares nor do I have any options on NVEC.
Why a 'revisit'?
I call this a "revisit" because I first posted NVEC on Stock Picks Bob's Advice on June 23, 2004, when the stock was trading at $36.61. Thus the stock is trading under that level!
I next revisited this stock on the blog on September 5, 2006, when the stock was trading at $34.01, also higher than the current stock price (!). And yet even with two prior picks at higher levels, I am back looking at this stock once more! It certainly hasn't gotten away without me yet.
Last month, on October 17, 2007, the company reported 2nd quarter 2008 results. Total revenue climbed 14% to $5 million from $4.4 million the prior year. Net income increased 28% to $1.64 million or $.34/diluted share, from $1.28 million or $.27/diluted share the prior year.
The Morningstar.com "5-Yr Restated" financials page looks solid. The company has been steadily increasing its revenue since 2003 (except for a slight dip in 2005 to $11.6 million from $12.0 million), and has also (except for a dip in 2005) been increasing its earnings from $.15/share in 2003 to $1.00/share in 2007 and $1.22/share in the trailing twelve months (TTM). Outstanding shares have been fairly stable with 4 million in 2003, 5 million in 2004 and 5 million in the trailing twelve months.
Free cash flow has been positive and growing with $-0- reported in 2005, $3 million in 2006, $5 million in 2007 and $6 million in the TTM.
The balance sheet appear solid with $1 million in cash and $7 million in other current assets with $.9 million in current liabilities and $-0- in long-term liabilities.
Per Yahoo Key Statistics, this is a tiny company with a market capitalization of only $127.23 million. The trailing p/e is 22.44, the forward p/e is 17.94 (fye 31-Mar-09) and the PEG (5 yr estimated) is only 0.79.
According to the Fidelity.com eresearch website, the company is relatively richly priced with a Price/Sales (TTM) of 6.28 compared to the industry average of 3.98. Return on equity, however, is more profitable than the industry average coming in at 23.66% compared to the average of 14.38%.
Per Yahoo, there are 4.64 million shares outstanding with 4.62 million that float. As of 10/26/07, there were 1.32 million (!) of those shares out short representing 28.60% of the float or 14.2 trading days of volume (well above my own '3 day rule' for short interest).
No stock dividends and no splits are reported.
Looking at the 'point & figure' chart from StockCharts.com, we can see that this stock has been highly volatile, bottoming in May, 2005, at $11.50 and has subsequently broken through resistance and appears to be moving higher. It is a very volatile stock.
I still like this stock. I have yet to have any of these picks move higher for me :(. Each time I have picked the stock it has moved lower until I once again revisit it here. I am optimistic that since the financial results bottomed in 2005, the stock is once again moving higher. Time will tell.
NVEC reported terrific earnings, has reasonable valuation, a PEG under 1.0, solid Morningstar.com results, a nice balance sheet, and a very volatile and less-convincing price chart.
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