I am not sure how much folks on this board have evaluated Sierra Wireless (SWIR), but I feel it is a compelling long-term investment and is very attractively valued.
They were just re-rec’d by my man David Gardner in MFSA, so that is the best place to conduct initial research. They are trading at less than 2x trailingrevenues, and 1.1x trailing revenues after factoring out cash. For a company that is a leader in the fast growing M2M IoT (Machine to Machine Internet of Things) arena that Cisco has estimated to be a $19 TRILLION market, I think this is extremely cheap and an appealing investment opportunity.
SWIR has significant strategic relationships with companies like Cisco and Philips, so they have considerable historical and current legitimacy despite their <$1B market cap. And they are well into transforming their entire business to focus on these new market opportunities as described more fully in the Fool’s research and on Seeking Alpha.
See also:
http://seekingalpha.com/article/2436755-a-few-reasons-to-inv…
http://seekingalpha.com/article/2416335-sierra-wireless-this…
I bought in originally at $14.65 upon the orig MFSA rec last year, and have added to my position through the teens and low 20s. Given my conviction, I doubled my position yesterday am at $24.70 given the re-rec and my updated research. The stock continues to rise and may becoming more visible to the investment world. Nonetheless, I believe it is a great value, and worthy of your consideration. As David Gardner said last week regarding SWIR: “Great companies give investors many chances to buy as they continue to succeed, but you don’t always get a second chance to get in near the ground floor…”
Whatever you conclude, I’d be interested in your thoughts and input.
Vic
6 Likes
This is actually quickly becoming one of my bigger holdings with the run up the past few days. I had owned some shares for a while, but did buy some more when David re-rec’d it last week and the timing has been good so far. It’s an industry that should grow by leaps and bounds in coming years
mekong
1 Like
Thanks, Vic. The first SA article that you referenced stated the following:
Sierra Wireless looks cheap at a trailing P/E ratio of 10.5.
The adj EPS for the past 4 quarters was 0.11, 0.10, 0.02, and 0.08. That’s 31 cents. Therefore, the TTM P/E ratio is 85 not 10.5!!!
Chris
3 Likes
Even using EBITDA of 11mil TTM, The P/EBITDA trailing is 78.
I agree the valuations based on P/S are good but I don’t see how they got a P/E of 10.5 either. It is listed that way on Morningstar too, maybe that is where they got it.
On their website in the Q2 results I see:
Q2 '14 Q1 '14 Q4 '13 Q3 '13
GAAP $(0.26) $ (0.13) $(0.06) $ 0.03 = $ (.42)
Non-GAAP $0.08 $ 0.02 $0.10 $ 0.11 = $ 0.31
So that gives non-GAAP PE trailing of 26.29/.31= 84
That’s why I’ve told people so many times that if you are seriously considering a company, get their trailing earnings off the last 4 quarterly reports, not off some information site like Yahoo or Morningstar.
Saul
3 Likes
Even using EBITDA of 11mil TTM, The P/EBITDA trailing is 78.
I agree the valuations based on P/S are good but I don’t see how they got a P/E of 10.5 either. It is listed that way on Morningstar too, maybe that is where they got it.
Honestly (and respectfully), I don’t believe David Gardner’s current investment thesis, and the one I base my own on, is about TTM earnings. This is a company that has transformed its company to capitalize on a major market opportunity while leveraging its impressive strategic partners and customer base. In my opinion, this is about future top line growth and a land grab, and as their CEO stated: “If we were running the business for today, we’d be spending a lot less,” admits Cohenour. “We’re not. We’re running it for the future. So the cost structure of the company is built to drive growth.” We’re fine with that."
So I suppose there is a bit of growth and venture investing here, but it is one I’m very willing to take given my assessment of their business credentials and their current share valuation.
Vic
2 Likes
Whatever you conclude, I’d be interested in your thoughts and input.
Hi Vic,
I have extensively covered both SWIR and CAMP, including running comparison between them. I have posted these on the SA and RB boards. I was initially posting about CAMP here but figured out that not many here were interested in IoT … so stopped.
Bottomline - I think this is a long term play and we are very early in the IoT game. David’s double conviction helps 
Right now, I think CAMP is cheaper than SWIR in terms of valuation because of near term execution issues. That said, IoT is probably best played via a basket of stocks.
I hold both SWIR and CAMP. They are about 4% each of my portfolio. I 'm also writing puts opportunistically.
Anirban
3 Likes
Anirban,
Please do not stop posting stocks like CAMP for us to consider.
Why do you think CAMP is better valued today than SWIR?
Appreciate your input.
Thanks,
Johnny
3 Likes
I agree, please continue posting. I am interested in SWIR and CAMP just haven’t done a lot of research myself on them but I am a believer of IoT.
Do you typically post on SA or RB?
doublexup,
As a TMF One member, you have access to both RB and SA. I just post about these there. There’s more meaningful discussion about these stocks on those boards and it also gets attention from the TMF analysts.
If you are interested, I would suggest following the boards behind the paywall. There’s some good discussions there.
Anirban
Anirban,
Please do not stop posting stocks like CAMP for us to consider.
Why do you think CAMP is better valued today than SWIR?
Appreciate your input.
Thanks,
Johnny
Hi Johnny,
Both SWIR and CAMP are official TMF recommendations. The earnings etc are covered by the analysts and I have been posting my analysis, conference call commentary there.
Are you member of Stock Advisor or Rule Breakers? If yes, you can just read about them there. If not, let me know via email and I can post it here. Also, if not, I would suggest considering at least a membership of Stock Advisor. Its inexpensive and you can get a lot out of it.
Anirban