Checkpoint Systems, Inc. (NYSE: CKP) manufactures electronic article surveillance systems, radio frequency tags, electronic security devices, closed-circuit TV systems, and electronic access control systems used by retailers.
Analysts like the fact that Checkpoint is well-positioned for the U.S. economic slowdown: about two-thirds of CKP's revenue stems from international sources. Analysts are also encouraged by a re-acceleration of longer-standing product lines, and the continued growth of CheckNet. A blue chip clientele adds to the revenue mix.
Further, cash flow should improve, and a thesis building in analyst circles argues that recent acquisitions will add more to this year's bottom line than originally thought. The Reuters FY 2008/FY 2009 EPS consensus estimates for CKP are $1.67 to $1.83.
The risks? A sustained slowdown in the global economy would hurt Checkpoint's results. Analysts are also keeping an eye on CKP's order backlog.
The First Call mean rating for CKP is: Hold [4 firms]. Mean 2008 target: $32 [high: $34, low: $29].
Stock Analysis: Checkpoint Systems is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from CKP's shares. Sell/Stop Loss if you were to purchase shares in this company: $14.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
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