AssessmentPNG had 2.4 mil shares change hands the other day. Also there have been positive contracts recently and the share price is rising. How would you evaluate the risk vs opportunity at this point?
Momentum in the name has been positive, and for a company that is growing quickly, its valuation of 14.3X forward earnings appears relatively cheap. Its balance sheet is small, but growing, and it is cash flow positive. It's a small name, $155M market cap, but it has recently become profitable and its recent orders from NATO Science and Technology have been beneficial to the company. It operates in a growing field, and sales are reflecting this, however, it is a small name, with revenues that are highly dependent on continuing to enter into contracts, profitability that is currently thin, and due to its size it can be outcompeted by larger peers. We consider it to be a high risk name, but also its positive momentum and growing fundamentals are positive. We consider it interesting for very aggressive small cap investors, while being mindful of position sizing and volatility. (5iResearch)