Saturday, October 6, 2007

Forward Industries Update (FORD)

A few weeks ago a lawsuit against the company was dismissed, it roughly saves the company $200k a quarter. This won't have a significant effect on Q3 earnings, but its roughly $0.10 per diluted share a year afterwards. Not too big, but when the stock is trading for only $3.20, that is significant. There has not been much significant news besides that, except that price has been slowly rising and there has been a significant pickup in volume since the lawsuit was dropped. This could still be a case of the "value trap," but I think based on their past history, I think the company will be able to turn around falling earnings in the near future. Management has done a good job of managing their balance sheet, most of their book value is back by cash on the books. Accounts Receivables has also been shrinking. FORD still has $2.67 of cash per share and that gives a significant downside protection, that's roughly a 20% downside. Investors still have to watch for new contracts and if the Motorola contract will be renewed as it expires at the end of the year. Any positive news will send the stock running with the low float and small market cap. I think it is worth the risk at these prices.

Disclosure: I am long FORD.


Anonymous said...


singh said...

new MOTOROLA phone needed for it's Spike