Can ZAGG Zig Upward Again?

Today, Motley Fool analyst Rex Moore continues his look at poorly performing stocks and their chances of turning things around. ZAGG has lost nearly half its value over the past year. Rex says the stock looks very cheap, but there are many questions to be answered.

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Rex Moore has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Best Buy, Corning, and Logitech International. Motley Fool newsletter services recommend Apple, Corning, and Logitech International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On August 24, 2012, at 3:14 PM, Gary03mw wrote:

    For the most part this is a good informative video. However, I'm slightly annoyed that some false information is still being perpetuated by The Motley Fool. This marks at least the third article where I've found this misinformation:

    "Now Zagg recently was whomped at earnings time as profit came in below expectations"

    The truth is that revenue came in at 61.6 million which handily beat expectations of 58.4 million by 5%. This is 59% revenue growth year over year. EPS came in at 0.18 which met expectations of 0.18 and represents 80% YoY growth. In addition margins were much improved across the board and management upped guidance for the remainder of the year.

    Basically the entire earnings report was positive and I'm becoming more annoyed that analysts have put a negative spin on it. The short interest in this stock, combined with the false and negative news, just screams manipulation to me.

    Anyway, most of what you say here is correct. Zagg does sell a commodity that could be easy to compete against. Management has been a somewhat sketchy group. There are certainly questions to be answered before going long the stock. That being said, the absolute truth is that this stock is reporting stellar growth and is trading insanely cheap. It trades at multiple of 9 when its size and growth rates imply a multiple of 50+. Applying this, fair value for the stock is $36 which is 414% higher than it is currently trading. While there is inherent risk in the business, that's still a margin of safety that's hard to ignore.

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