Zack Miller
IsraelNewsletter.com

As we’ve said repeatedly, Israel has a stable of really interesting microcap/smallcap companies trading under most investors’ radars. Cimatron (CIMT) is one of these plays worth a look.

Sporting a micro-cap of less than $25M, Cimatron provides investors with a profitable microcap with cash on the books, poised to see some nice growth in the future. CIMT competes in the competitive CAD/CAM space for the tooling and manufacturing vertical. As much of manufacturing is pushed offshore, Cimatron continues to see nice growth from foreign markets — so much so, that they’ve purchase two tranches of their Italian distributor, Microsystem, with a call option to purchase the remaining shares.

Cimatron was up almost 15% yesterday (and over 125% on the year) off of the strength of their conference call, held in China.

I thought it’d be useful to highlight some points from the conference call that got the market excited.

• Microsystem had $10.5M in revenue in 2006 and poised to continue to grow profitably. Looks like earnings will become accretive in Q32007.
• Launch of Cimatron 8.0 appears to be really interesting for the company, as it positions them in a new market, the die design market. The company expects organic growth from this new target market in the quarters ahead.
• In terms of geographical sales, CIMT sells 57% in Europe, 23% in the Asia Pacific, 12% in North America and 8% in the rest of the world.
• The company said that they are focused on increasing shareholder value. Look for some more M&A in the future.

Interesting little play deserving doing the work.

Disclosure: Author’s fund has no position in any stock mentioned as of 10/28/2007.

Please see our Disclaimer HERE.

Like what you see? Sign up to receive daily updates from IsraelNewsletter here.

*******************************

Zack Miller is the lead equity analyst for America Israel Investment Associates, LLC. and a former equity analyst for a leading multinational hedge fund. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email zack@profile-financial.com

Share with others: