Just when shares of Comarco (CMRO) had started heating up--from 20 in January to 50 in March--the market headed south and pulled down every tech stock in sight. Comarco tumbled to 31 in just two weeks. And it hasn't recovered much since, despite the market's rebound. Is it time to bail out?
Not according to at least one big shareholder. "We haven't sold a single share, although we got into the stock in a big way in 1990 at an average cost of just four bucks a share," says Mark Yost, managing partner at Intrinsic Capital Partners in Chicago. Comarco makes wireless technology products for telecom companies, including testing equipment for wireless system performance. AT&T, Lucent Technologies, and Sprint are customers. Comarco has been selling its nonwireless operations to focus on wireless technologies. Yost says Comarco wants to be a major player in wireless.
A new product that Yost says will be a big winner for Comarco--and isn't yet factored into the stock price--is a miniature power adapter for recharging cell phones, laptops, personal digital assistants, and other portable devices. Named ChargeSource, the adapter was introduced last year in certain markets and has generated sales of $5 million. This year, sales are expected to hit $8 million as it gets into more regions, says Comarco Chairman Don Bailey, who places the total adapter market at $1 billion.
Yost sees Comarco earning $5.8 million, or $1.20 a share, in 2000, on sales of $42 million, and $7.3 million, or $1.50 a share in 2001, on $50 million. The assets, he figures, are worth $45 a share, exclusive of ChargeSource. The adapter business alone is worth $10 a share, says Yost. It should add 35 cents to 60 cents to earnings in 12 months.