Tech World: Comtech Telecom Showing Stellar Return on Equity
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July 22, 2008
Comtech Telecommunications Corporation (CMTL) is involved in the design, development, production, and marketing of products, systems, and services for communications solutions. It operates through three segments: Telecommunications Transmission, Mobile Data Communications, and RF Microwave Amplifiers. Comtech markets its products through its sales, marketing, and engineering personnel, independent representatives, and value-added resellers. The company was founded in 1967 and is headquartered in Melville, New York.
The company recently announced that its Melville, New York-based subsidiary, Comtech PST Corp., has received $2.5 million of orders for high power amplifiers from a leading provider of aviation electronics and communication systems. These amplifiers are utilized as part of satellite communications systems which provide commercial mobile airborne-to-satellite-to-ground communications service. These orders supplement a significant installed base of Comtech high power amplifiers previously delivered to this customer.
Comtech has real good fundamentals with expanding operating margins and great return on equity. The last earnings announcement showed that 2008 third quarter revenues were $138.1 million compared to $119.4 million in the third quarter of fiscal 2007, reflecting significant growth in the mobile data communications and RF microwave amplifiers segments. Net income came in at $19.3 million.
Comtech’s stock has an average trading volume of around 7.3 million shares per day. The company has annual sales over $522 million and in percentage terms has a sales growth rate of over 22 percent per year. Comtech is in an Elliott Wave-4 buy formation, projecting gains into the $55 per share area by the end of August. The company does have a liquid options market that currently extend out to January of 2010 allowing the options strategist more than enough time to trade this opportunity.
Figure 1: Daily Elliott Wave-4 Buy Pattern for Comtech Telecommunications
(Source: Profit Source)
Happy Trading.
Jeff Neal
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent
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