RE:RE:Assessment
CandyC wrote: I once owned a significant position but sold. The acquisition seemed good at first but the market dictates the price. The price before the acquisition was $3.90 before the split. So it's down 23% since in 11 months. In my opinion about a 20% downside risks outweigh upside due to chip shortages and upcoming higher interest rates. If the stock price was on a steady pace to be over $5 at today's date if they never aquired. I'm still watching the stock as it has potential great upside. Much better investment in oil imo. If Sangoma drops to $18 I might jump back in. Potential of $40 in 2 years if all goes well.
If you look around, most of the Canadian small caps were absolutely hammered this year. Sangoma is trading significantly cheaper than peers on a relative and absolute basis.
If interest rates rise on an economic recovery then this is not a bad thing for small caps. When people are optimistic about where the economy is heading they tend to gravitate towards the smaller players . When times are tough people place their bets on more secure larger companies. On the other hand, if a company has a lower interest coverage ratio then higher interest rates make the investments "riskier" then the average basket of companies. This is not an issue for Sangoma as their cash flow is significantly higher than their interest expense payments.
The chip shortage should not be a deterrent for investing. This will get resolved as will inflation and I suspect the company will get re-rated once people become more upbeat about the state of the economy.
I'll sign off on $40 in 2 years time any day of the week given current share price. All the reason to hold on and make this a part of your portfolio.