February 9, 1999
Stocks Fools Love
by Rick Aristotle Munarriz (TMF Edible)
Trading at $17 1/2 as of February 8, 1999
Unloved. Yearning to be touched. How can a company so in tune with what tomorrow will offer find it so hard to win over Wall Street's affections today?
MicroTouch (Nasdaq: MTSI) is the leader in touchscreen technology. You will see MicroTouch systems in places like restaurants and self-service kiosks, helping to serve and inform you more efficiently. It's the necessary, lowest common denominator in the canvassing of computerized automation. You see the options. You touch the one you want. No mastery of the mouse. No Ph.D. in QWERTY. Accepting that you will never find unanimity in mouse and keyboard acumen, it's easy to understand how the demand for touchscreens will skyrocket as computers become a much more integrated part of our lives. Walk into a high-tech casino or a hip retailer -- MicroTouch is there. Yearning for your touch. Willing, eager, yet ultimately sensitive.
Wipe that wince off your face! I can already see some of you PC commandos, ye of the lightning-speed typing skills and mouse-clicking fluidity, cringing at the dumbing down of the computer. But, if only for a nanosecond, ease up on that wrist pad support and put down your copy of I, Digerati.
This is reality. The labor market is tight and it is easier to train, cheaper to acquire, and deepens the all-too-shallow talent pool when an automated touchscreen system enters the retail realm. On the consumer side, is there any better automated reference source than a computerized kiosk that informs perpetually? Incidentally, if you do happen to see more and more kiosks popping up, note that a few years ago MicroTouch bought Factura, the leader in kiosk housing.
If you're still with me, if you accept the role of touchscreen technology in the future, then let's get back to why MicroTouch is being unjustly jilted by the market. After all, by now probably all I have managed to prove is that MicroTouch has the ultimate kiss of dateless death -- it has a nice personality. What does MicroTouch look like?
Over the last five years, annualized sales growth has been running at a stunning 35% clip. While earnings have not been as consistent, the company is back on the winning track with estimates calling for MicroTouch to earn as much as $1.40 per share this year.
With the stock recently at $14 per share, you might not even need a calculator to figure out that at 10 times projected 1999 earnings, this is tomorrow calling -- at a pittance today. But, you see, good personality and good looks are not all MicroTouch has to offer. It also has a good mind.
The company has been doing what any proper company would do in a situation like this, it is buying back shares. Why not? The company is cash-rich and debt-free. That's right, I never did get around to talking about the bountiful dowry MicroTouch offers. Thanks to its top-heavy balance sheet, the company sports $4.23 per share in cash. That leaves an enterprise value of less than $10 per share, or just seven times this year's earnings.
Seven. Lucky seven. Seven times for a company on the cutting edge, providing airlines with interactive seatback screens. Seven times for a company making inroads in the consumer market with its own popular Ibid digital whiteboard, and with deeper pockets in a pact with IBM (NYSE: IBM) to produce state-of-the-art computer monitors. Seven times for a company that will ultimately play a much larger role in the globalization of computers than many dare dream of today -- oh, today, that nostalgic time we will reflect back on and wonder how MicroTouch went ignored by the masses. That peculiar time, filled with ignorance and opportunity, when MicroTouch went untouched.
MicroTouch Company Information:
Trades on the Nasdaq under symbol MTSI
Web Site: www.microtouch.com
300 Griffin Park
Methuen, MA 01844
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