Ectel is an Israeli telecom fraud prevention company that was crushed back during the telecom collapse. Since then, the company has retained a new CEO (turnaround specialist), who has turned the company around and gotten it back on its feet.
The company is undervalued for a few reasons. First of all, it has a ~$50M cash reserve and strong cash generation. It has decided recently to use $15M of it to buy back company stock on the open market. Keep in mind Ectel's market cap is only $98M (so this buyback represents a 10-15% buyback) and the average volume is only 66k/day. Therefore, this buyback (to take place over one year) should have a material impact on the price. Secondly, if you discount future cash flows to current while considering their projected growth rates, you'll see that the current price is grossly undervalued. Thirdly, CBIC recently renewed coverage on Ectel (first analyst to do so in three years), giving it a sector outperform rating with a $6.50 pricetag. This should serve as a catalyst.
Overall, I believe this company will appreciate 20%+ in the next couple of months, and perhaps double within the year.
$5.45 (04/27/06)
Agree
Disagree
