I’m finding it harder and harder to find attractively valued small caps as the Russell 2000 keeps charging ahead, but I believe I have uncovered a nice one. Some uncertainty has knocked this stock down into clear value territory, and the relative underperformance has made the valuations even more tempting. I am talking about Brightpoint Inc. (CELL).
According to Yahoo! Finance, CELL provides supply chain solutions to the wireless technology industry. The company offers customized logistic services, including procurement, inventory management, software loading, kitting and customized packaging, fulfillment, credit services and receivables management, call center and activation services, Web site hosting, e-fulfillment solutions, repair and remanufacture services, reverse logistics, transportation management, sale of prepaid airtime, and other services within the wireless industry.
Nice Upgrade
A few weeks ago, the stock got a key upgrade from Jeffries & Co. saying the stock is cheap and mentioning a stabilization in phone demand. Analyst Peter Misek thinks that strong demand for smartphones will help the company since these phones are pricier than regular ones. Additionally, he mentioned an overreaction to the downside after AT&T made a bid for T-Mobile USA. The fear among investors was that Brightpoint would lose T-Mobile as a customer.
Despite a slight hiccup last quarter, the company has exceeded estimates in three out of the past four quarters by an average margin of almost 16%. For the current year, estimates have ticked up a penny over the past month to 82 cents per share. Next year’s estimates have also inched up a penny as well.
The ultra-low price/sales ratio of 0.14x caught my eye and appears to be in strong bargain territory. Additionally, the stock is trading at a cheap 8x forward earnings. CELL does carry some debt on the balance sheet, but its debt/equity ratio of about 75% isn’t dangerous, especially with solid operating cash flow to help pay it down if necessary. I think this stock is worth at least $11-$12 at the current time.
An Attractive Small Cap For The Weekend is an article from: 
