Via www.valuediscipline.blogspot.com:
Beaten down stocks can often be value traps and turnaround candidates often take much longer to turnaround than one expects. The danger of being too early can result in significant underperformance, confidence can take awhile to be restored, and dead money is frequently the result. However, a bit of patience, a bit of care, and an understanding of competitive advantage can provide the courage to buy the turnaround security. A decent balance sheet provides the comfort of knowing that delays in a turnaround can be absorbed without having to resort to new debt covenants and higher interest costs or worse.
I believe that Cogent Systems (COGT) fits this bill. Cogent sells Automated Fingerprint Systems (AFIS) used for immigration and border crossings, national ID programs and voter registrations. Cogent's AFIS system is regarded as the fastest and most accurate biometric database search system. This system generates rapid and accurate real-time searches with its state of the art image processing, neural networking, and parallel processing capabilities.
The year 2006 has been difficult for the company as revenues have dropped off some 35-40%. As a result, the shares have fallen off a cliff, down some 50% YTD....
$10.52 (01/29/07)
