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Buckingham Tunes in to Frequency

12/20/2002 12:00 am EST


John Buckingham

Editor, The Prudent Speculator

"We can't complain about the stock market action of late, as many of our long-suffering stocks have rebounded considerably," says John Buckingham, editor of The Prudent Speculator. In fact, the service's heavily-leveraged portfolio has risen more than 50% since October 9th. Here's a recent recommendation.

Says John Buckingham, "Although we are certainly overdue for a bit of a pullback, we are optimistic for a continuation of the rally, as we are ensconced in the seasonally-favorable time of year, valuations of many battered stocks are extremely inexpensive, and alternative investments are not very attractive.

"Frequency Electronics (FEI NYSE) is a world leader in the design, development, and manufacture of high-technology frequency, timing and synchronization products for satellite and terrestrial voice, video, and data telecommunications. While commercial telecom customers account for the lion's share of its revenues, the US government is a major customer and Frequency's products can be found in many of the most sophisticated military aircraft, satellites, and missiles. The company has manufactured the master clock for the Trident missile, the basic timing systems for the Voyager I and Voyager II deep space exploratory missions, and the quartz timing system for the space shuttle.

"Although sales and earnings have been weak of late (the firm reported a first quarter loss of $0.06 per share), the company expects to be profitable for the full fiscal year, ending 04/03. CFO Alan Miller recently said, 'We are fortunate to have a very strong balance sheet and effective cost controls in place. We are continuing our investments in research & development, which are the lifeblood of this company. We expect margins to improve during the balance of this fiscal year.'  Frequncy is in excellent financial shape as it sports a current ratio of almost 12 to 1, no debt, and more than $4 per share in cash and marketable securities. Trading at book value and yielding 2.3%, FEI is a buy up to $9 per share."

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