SRT – Software Radio Tech – down 7.2% today. YTD, the share price is down 19%, compared with +8.5% for the ASX.
SRT make radio tracking systems for boats and ships.
I had high hopes for this share at the beginning of the year – although miraculously, I never touched it. It garnered a lot of votes for NFSC 2012, and looked like a sure thing. If there’s one thing that the stock market teaches you it is that there’s no such animal as “can’t lose”. AIS (Automatic Identification System) was being mandated around the world, the company raised money to increase working capital so that it could produce goods to serve anticipated demand. We’re still waiting. Orders for equipment are “lumpy”, making sales timings difficult to predict.
SRT has been chosen for NFSC 2013, so maybe the selector will have better luck than the previous selector. We shall see if SRT receives bumper orders, or if the inventory remains stacked on the shelves gathering dust.
On major fly in the ointment is that SRT appears on Stockopedia’s Montier Unholy Trinity Screen, which is a shorting screen. Those shorting screens have been remarkably telling over the last year. If you had invested in The Unholy Trinity over the last year, you’d be down 26%, compared with +11% for the Footsie. SRT appears on the screen due to high valuation (PSR>4), weak fundamentals (the Piotroski score is 1), and poor capital discipline (asset growth > 10%).
Analyst forecasts are very positive for y/e Mar 2014, though.
All very interesting, and I have no idea how all this will turn out. It should be interesting to see how predictive the algorithm is, though. Personally, it seems too “50:50” to me to take a punt on. If there has not been definite progress on sales by June, I would consider the investment case to be broken seriously.
Death Or Glory.