THE GUN: SOME VERY SIMPLE REASONS WHY SPRT IS BUY HERE
October 1st, 2012 - SPRT sold at 4.35 for +35% gain since August 7th.
August 7th, 2012 - SPRT reinitiated at 3
July 24th, 2012 - SPRT sold at 3 for +15% since June 16th.
June 16th, 2012 - SPRT reinitiated at 2.60
March 29th , 2012 - SPRT sold for +21% since posting
I've been following SPRT for about 8 years now. There are no intricacies or complicated stories to tell here. It's not a post-restructuring play like GSIG or PTGI. Plain and simple: It's a software company that is transitioning to new partnerships that will aide in recovering the revenue growth that has battered the stock price since its December 2010 highs.
SPRT has had a near 10 year history of moving between the $1.50 range and the $7 range. It managed to make it all the way up to $15 in 2004. Please see the chart below for further technical details.
click chart to enlarge
SPRT
Cash flow at the company has been erratic. However, they have no debt to speak of and about $1.20 per share in cash on the books. That means at current prices the company is selling for a little more than 2 times cash. That's for a company that has signed new service contracts recently with major companies including Comcast and Staples.
In addition, the CEO and other officers were purchasing shares on August 1st. He probably would have been better off if he would have been reading my notes on August 1st and held off until September, at least. Nevertheless, insiders know the history of the company and the cycles it is prone to going through on an ongoing basis. The addition of RGM Capital as a form 4 owner and continued buyer doesn't hurt either.
Bottomline: Very simple here...company with a substantial operating history that has a very defined business cycle is sitting at the low end of its 10 year cycle. This is while the company is transitioning to new service contracts that will increase revenue growth and profitability in 2012. It has a clean balance sheet. Insider buying by CEO and a savvy value investor throwing his support behind the company around current prices. The company is an easy double over the next 12 months, if not a three bagger. Downside risk from these levels is roughly .70 cents or 25%...worst case scenario over the next few months.
