Digipass: ID Security
05/13/2005 12:00 am EST
"Can you smell the fear?" quips Jim Oberweis. "We can, and we think we are approaching a significant buying opportunity. Stocks are cheap and investors are scared, a combination that usually makes that porridge taste just right. Bon appetite!"
"There’s a whole laundry list of problems that economists, politicians, and investors are focused on and worried about. Just read the papers. We have rising interest rates, which will kill the consumer. And if that doesn’t work, $50 crude oil will finish the job. President Bush says Social Security is a mess. We have fears of inflation, and even stagflation is back from the dead. There is talk of a housing bubble. American manufacturing is on life-support.
"And the stock market doesn’t like any of it. In the immortal words of Charlie Brown, ‘Ughhhhh!’ We have always believed that market sentiment is a pendulum that swings over time from one extreme to another – from greed to fear and back again. Greed occurs when you go full throttle on margin to buy a stock your landscaper recommends. Fear occurs when you prefer Dr. Phil over CNBC and horoscopes over the stock tables in the Wall Street Journal. Can you smell the fear?" Meanwhile, here's one of our latest investment ideas:
"VASCO Data Security (VDSI NASDAQ) is a global provider of patented user authentication products for the financial world, remote access, e-business and e-commerce. Their Identity Authentication security products help organizations to manage and secure access to information assets. Its software is delivered via its Digipass security products, which are small 'calculator' hardware devices carried by the end user, or in a software format on PC’s and on various portable devices such as mobile phones. VASCO’s time based system generates a one-time password that changes with every use and is virtually impossible to hack or break. The company has sold approximately 15 million Digipass products, with clients comprised of 370 international financial institutions and 1700 blue chip corporations and governments located in more than 80 countries.
"We had previously recommended this stock in 2003, and although we pride ourselves on discovering small-caps at their very early stages of growth, we were a little early on this one. However, since that time the company has continued to demonstrate strong revenue and earnings growth and now deserves another look. In the most recent first quarter, VASCO reported revenue growth of 90% to $11.4 million form the prior year’s first quarter. Earnings grew to $04 from $.02 in the year ago first quarter. The company gave guidance for year 2005 revenue growth in the range of 55-65% over prior year revenues, citing greater visibility as they enter the second quarter with a backlog 120% higher than than when they entered the second quarter of the prior year. Clients of Oberweis Asset Management own 550,000 shares."