Wednesday, December 22, 2010

Gennum Corp 2

I had held this stock (TSX-GND) for more than 5 years between 1998 and 2006 and I sold it because I felt it was going nowhere. I did make a profit, but only of 5.5% per year. I did not think it would break out of its current band anytime soon, so I sold half my stock and the stock only when lower, so I sold the rest. But it is good to look at a number of different stocks, some doing badly and some doing well to be able to properly judge stocks.

The interesting thing about this stock is that there is net buying by insiders. In the insider trading report, I find net buying at $1M, with buying at $1.1M. Most of the buying is by the CEO. Selling is by some officers of the company. However, for this company, all insiders with the exception of the directors have more stock options than shares.

The 5 year median low P/E is 20 and the 5 year median high P/E is 37. Except for the last few years, the P/E has been high as this was considered to be a growth stock. In 2008, when it last made a profit, the P/E had a low of 4 and a high of 13. I get a current one of 12.7. The current P/E is a good one and shows a relatively good stock price. Until 2008, the Graham Price was always a lot lower than the stock price. Currently, the stock price at $7.04 is 6% below the Graham Price of $7.48.

The 10 year average Price/Book Value ratio is 3.54 and the current one is 1.56. The current one is only 45% of the 10 year average. The current dividend yield of 2% is a good one for this stock. Until 2008, the dividend yield was closer to 1%. This is because the stock price fell in 2008 and it is just now recovering.

When I look at analysts’ recommendations, I find Strong Buy, Buy, Hold, Underperform and Sell recommendations. There are not that many analysts following this stock, so no recommendation dominates. However, the consensus recommendation would be a hold. (See my site for information on analyst ratings.)

Analysts talk about the recent run up in stock price and therefore do not expect much over the next year. The 12 month stock price is given as $7.50 to $8.00. Analysts seem to think Gennum is well managed and that it is positioned to grow its business for the next few years. There have been some recent recommendation changes from Buy to Hold because of the recent run up in price. I am not interested in buying this company at the present time, but I will continue to track it.

Gennum Corporation designs innovative semiconductor solutions and intellectual property (IP) cores to serve the rising global demand for high-speed data transmission products in the broadcast, networking, storage and telecommunications markets. They sell in North America, Europe and Asia Pacific. Its web site is here Gennum. See my spreadsheet at gnd.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

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