May 12, 2006
SpeculatingStocks.com Stock Pick: Radica Games Ltd. (RADA)
Stock Price: $11.52 (long-term strong buy)
Radica Games Ltd. is a leading developer, manufacturer and distributor of a diverse line of electronic entertainment products including electronic games, youth electronics, video game accessories and high-tech toys.
Radica Games is headquartered in the Hong Kong region of China with a factory in nearby Dongguan. In 2005, RADA generated net income of $10.53 million on revenue of $162.77 million. This is a profit increase of 204% over 2004 on a revenue increase of 31.9%.
RADA is trading at a market cap of $219.80 million. Based on expected earnings moving forward, RADA is trading at a forward P/E just above 10. The picture will be clearer after Q1 earnings are released on Monday, May 15th.
RADA is currently paying out a cash dividend each quarter of $0.05 per share. The company announced last month that they are exploring a wide range of opportunities to enhance shareholder value such as seeking a buyout accretive to shareholders.
For most of the last year, RADA has traded between $8.00 and $9.50 before breaking out recently. RADA is now becoming discovered and the trend continues to be higher as more and more investors find out about this opportunity. RADA may consolidate in the short-term, but the long-term pattern will be up.
There are 19.08 million RADA shares outstanding and only 6.44 million in the float.
SpeculatingStocks.com Target Price: We expect RADA to reach $18.00 within the next 3 - 6 months.