RecommendationKSI is a small company ($552M market cap) and while it is currently unprofitable, it is expecting strong growth rates in the next few years. Its margins are expected to expand in the coming years, its gross margins have been improving, and it generates a small amount of free cash flows. Price-wise, momentum has been good, and its earnings results have been strong. We expect its positive momentum to continue if results continue to impress, and although it trades at a high valuation, its growth rates remain high. At 9X sales, it will need markets to co-operate to continue to move, but we do think small caps may continue to recover nicely next year. We think this name can continue to move higher. For more aggressive small cap investors, we would consider it buyable in the $5.50 range.
(5iResearch)