Collins: Nam Tai

12/26/2003 12:00 am EST


Jim Collins

Chairman and CEO, Insight Capital Research & Management, Inc.

"Upside potential still heavily favors stocks," says Jim Collins, editor of Listed Insight. "The elections will help stocks in 2004, the economy should continue to strengthen, and the outlook for profits is expected to improve." His latest buy is the highly-volatile Nam Tai Electronics.

"Nam Tai Electronics (NTE NYSE) manufactures electronic components and subassemblies for original equipment manufacturers (OEMs), including liquid crystal display (LCD) panels, LCD modules, and radio frequency modules. Nam Tai also manufactures finished products, including cordless phones, palm-sized personal computers, personal digital assistants, electronic dictionaries, calculators, and digital camera accessories for use with cellular phones. Nam Tai is based in Hong Kong, and its strategy is to focus its manufacturing capacity in China, which has lower costs. The company bids for small-form factor-product programs. These types of products are easier to ship globally directly from the manufacturing centers in China.

"For the quarter ended Sept. 30, Nam Tai reported earnings of $0.24 a share, $0.07 better than the year-ago period. Revenues increased 64% to $93 million. The quarter’s sales were driven by strength in PC cameras for video games as well as in telecom components. "The company makes the EyeToy USB camera for Sony’s Playstation 2. On November 17, 2003, Nam Tai announced an order from Sony to build the USB microphones and converter box for a Playstation 2 singing game. The game, currently in development, challenges players to sing along with several hit licensed music tracks and provides feedback based on the pitch, tone, and rhythms of their performance. The stock has performed strongly since closing at a 52-week low of $6.31 in April. The company has a relative strength rating of 97."

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