CDs and DVDs are fast becoming media of choice for storing and distributing business data and commercial products. One well-known maker of the devices that businesses use to "burn" their own is headquartered in Minneapolis, Minnesota.
Rimage Corporation (NASDAQ:RIMG) is a leading provider of CD and DVD publishing systems used by businesses to produce discs with customized digital content. The firm's products integrate robotics, software and surface label printers into a complete publishing system. Clients use the devices to record commercial software programs, customer transaction data, digital photos, X-ray/CT/MRI images, digital satellite information, music and video programs. Rimage offers a full line of consumables and support programs to ensure the quality of finished discs and system longevity.
The company surprised investors late last month, when it reported fourth quarter EPS of 34 cents and revenues of $30.5 million.
The Street had been looking for 25 cents and $24.2 million. Dougherty raised its price target on the shares from $27 to $33, saying that the firm's cash position and core growth trends create a favorable outlook for RIMG shares. The news kept the issue cycling through a positive five-month trading channel. The price is currently consolidating near the base of that channel, where oversold Momentum, CCI and MACD technical parameters suggest the potential for a rise back toward the top. Correspondence of the stock's 90-day moving average to the base of the channel backs the rebound notion.
The brokerage community recommends RIMG with a "strong buy." The Street sees a 17% average annual growth rate, through the next five years. The RIMG P/E ratio (20.58), PEG ratio (1.25), Price to Sales ratio (2.49), Sales Growth rate (25.77%), EPS Growth rate (57.99%) and Net Profit Margin (12.67%) compare favorably with industry, sector and S&P 500 averages.
Institutional investors hold about 57% of the outstanding shares. Over the past 52 weeks, the stock has traded between $17.52 and $28.74. A stop-loss of $22.60 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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