2 small-caps I like

parttimepro · #1 02-21-2005, 05:55 PM

Disclaimer: I bought these last week. If lots of people buy these, I will be slightly richer. Always do your own DD.

RSTI: makes lasers for a variety of industrial applications. Diversified across industries and geographically. Trailing P/E of 15, forward of 12.3, great balance sheet (market cap 500 M, 50 M debt, 100 M cash). Mean estimate of 12.5% earnings growth in the next year. Raking in cash and using it to expand the business. Good management, from what I understand. It's down recently because their recent earnings announcement was only a slight upside surprise over guidance, rather than a giant one.

SIRF: Designs and makes GPS units for consumer applications. Specifically, builds for Onstar vehicle navigation systems, and will likely expand into cell phones in near future. Trailing P/E is 17.8, mean earnings growth estimate is 35% next year. Another great balance sheet, with market cap of 500M, just 2.5 M debt, and 100 M cash. This one is cheap, and may remain so for a while. Conexant (CNXT) owns a good chunk of the company, and is probably selling it to pay off their debt. Once they're done, I expect to see valuation more in line with a company with these sorts of growth prospects.

MikeyObviously · #2 02-23-2005, 01:22 PM

I am new to investing, but have the same problem as a lot of other 2+2ers (I have money laying around not doing anything).

small-caps are mutual funds, correct? Where can you invest in these things online? I am sure there are a lot of places, but which is the best?

TGoldman · #3 02-23-2005, 06:02 PM

[ QUOTE ]
I am new to investing, but have the same problem as a lot of other 2+2ers (I have money laying around not doing anything).

small-caps are mutual funds, correct? Where can you invest in these things online? I am sure there are a lot of places, but which is the best?

[/ QUOTE ]

Small-caps are not mutual funds. The term "small-caps" is a quick way of referring to small capitalization stocks, i.e., stock whose capitalization is less than 1 billion dollars where capitalization is defined as the total shares outstanding * the price per share. Smaller companies usually have stock categorized as a small cap. Naturally, small companies tend to have a higher risk of bankruptcy and are more speculative than larger stocks, but they also have the potential 10x in value.

A mutual fund is just a professional managed investment vehicle. You send the mutual fund company your money and they do all of the stock picking and investing for you, for a small fee of course. There are mutual funds that specialize in small-caps, mutual funds that specialize in mid-caps, and mutual funds that specialize in every possible sector you could imagine.

Most people recommend Scottrade for a discount broker, although they are all pretty similar for the most part. I personally use Scottrade and have been very pleased with them thus far.

Anyway, that answers your immediate questions. You should probably pick up a few intro books and familiarize yourself more with various investment strategies. Welcome to the investment forum. :P

MikeyObviously · #4 02-23-2005, 07:24 PM

Right now, the only investment I actually plan on pulling the trigger on is an ING 2.34% savings account. Anyone see any better than 2.34%? And if I sign up now, I won't be locked in will I?

TGoldman · #5 02-23-2005, 07:59 PM

[ QUOTE ]
Right now, the only investment I actually plan on pulling the trigger on is an ING 2.34% savings account. Anyone see any better than 2.34%? And if I sign up now, I won't be locked in will I?

[/ QUOTE ]

We probably read the same ING bank thread over on the Internet forum. Without having done my own research, 2.34% is probably the best you'll find for a savings account. You'll have to read the fine print to find out how often the bank adjusts their interest rates. It's a start, however, a portfolio that consists of 100% cash isn't much of an "investment." At 2.34% you're pretty much just hoping to keep pace with inflation.