Analysts expect growth of 70% for this industrial company next year.
Cemtrex (CETX)
From S.A. Advisory
Cemtrex (CETX) is a global, diversified industrial and manufacturing company that provides a wide array of solutions to meet engineered electronics, industrial contracting services, monitoring instruments for industrial processes and environmental compliance, and equipment for controlling particulates, hazardous pollutants, and greenhouse gasses. The company has exposure in five ETF’s, is ranked #184 out of top 500 in North America, according to Deloitte’s 2017 tech fastest 500, and was named to Crain’s New York Business fast 50 companies.
CETX just announced it has introduced a Smart Desk IoT product, via a newly-formed sub. The Smart Desk is targeting the office place market and is designed to help companies adopt the most advanced technologies available and significantly increase employee productivity. According to management, “with over 60 inches of intelligent touch display area, exclusive custom applications, and advanced content touch management systems, the smart desk is slated to be a giant leap ahead of current productivity solutions in the market today”.
The Global Electronics segment spent $440 billion during 2016 and is expected to reach $600 billion by 2021.
There are only 10.2 million shares outstanding, and management owns 45%. The stock is trading at its 52 week low.
CETX recently reported $120 million in revenue for fiscal 2017 and had net income/sh of $0.31, fully diluted. CETX’s current earnings yields an actual PE of 8X. The company grew by 29% this past year, and in our opinion, could easily sport a 18X PE or a share price of $5.58, more than double the current share price. The current book value is $3.80, and CETX could easily trade 1 1/2 to 2x book. At that level, the stock would be valued at $7-$8/sh. a far cry from currently depressed levels. The PSR is just as ridiculous—currently sporting a .2x! If we traded at 1x sales, CETX would trade at $10.
There was a share buyback of 300,00 shares during March 2017.
This has to be one of the cheapest and overlooked investment opportunities out there. Don’t forget the $0.02 dividend that surely could be increased dramatically. This company is growing rapidly either via organically and/or aggressively by acquisition. We see little downside risk at current levels and have placed an $8 target for 2018 and a very Strong Buy rating at current levels.
William Velmer, S.A. Advisory, www.saadvisory.com, 949-922-9986, January 2, 2018