Can Radyne (NASDAQ:RADN) get a little love here? Sure, it's not a big company (only about $200 million in market cap), but it has effectively no analyst coverage, pretty good growth, and a valuation that seems downright reasonable. But no matter, right? I mean, who cares if that's precisely the sort of formula that Peter Lynch sold millions of books on.
If you're reading this, odds are you're either already onto the Radyne story, or you're a member of my family (hi Mom!). But if you're new, here's a quick rundown. Radyne is basically in the business of satellite communications (modems, converters, transceivers and the like), HDTV transmission/reception, and high-power amplifiers for communications. In other words, it provides communications gear for both private firms like AT&T (NYSE:T) and Disney (NYSE:DIS) and military contractors like Raytheon (NYSE:RTN).
Like other satellite communications companies, including Comtech (NASDAQ:CMTL) and ViaSat (NASDAQ:VSAT), Radyne enjoys decent growth these days. Reported sales were up 68% this quarter, and while much of that came from an acquisition, the base business was up more than 18%. Margins came down slightly, but bookings were pretty strong.
While small-cap growth stocks in hot sectors are often overpriced, satellite communications isn't all that hot, and I don't think Radyne is overpriced. I'd like to see stronger insider ownership, and managers buying shares for themselves in the open market, but the absence of insider buying doesn't automatically make a stock "bad."
Moreover, the possible uses of satellite communications (and amplifiers) around the world make an appealing argument for the company's long-term growth. Radyne already gets more than 40% of its revenue abroad, and given the discrepancies in infrastructure between the developed and developing worlds, there could be a lot of future demand for satellite systems as a way of bypassing outdated or simply nonexistent ground-based infrastructure.
Potential is a tricky thing, and few firms ever completely live up to it. But if Radyne can, it won't be an overlooked company forever.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares). Disney is a Motley Fool Stock Advisor pick, and AT&T was a former Stock Advisor selection. The Fool has a disclosure policy.
