Wednesday, June 22, 2005


Bye Bye WSCI

Up $2,700 today thanks to an afterhours surge in WSCI. I sold my position at $5.10. The earnings report was solid, but not unexpected for anyone who has been following the company closely. WSCI has a bad habit of gapping up on good news and then selling off. This has happened each time in the past two quarters, and I don't think this quarter will be any different. Also, WSCI's valuation has become stretched. The company should generate about $15 million in revenue this year. At $5 a share, that implies a price to sales ratio of about 0.9. That's very high for a contract manufacturer. Very high. As a point for comparison, the other three contract manufactures that I own (KTCC, NSYS, and SMTX) have price to sales ratios of only 0.2, 0.15, and 0.05, respectively. I think those companies now represent much better values than WSCI.

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