Sigmatron Intl (NASDAQ:SGMA)

	Re-pricing of risk premium
	Significant development

Added to the GeoSpecial list on July 13, 2010 @ 7.05. Was previously coded as a GeoSpecial on the radar at $5.20.

Catalyst: Fiscal 2010 fourth quarter EPS may have experienced a break out; Was selling below its book value per share of $12.28; Upbeat about the future; Strong commentary; We believe technology stocks will experience strong financials in the near term. 

Peak performance: Stock just added to the GeoSpecial list

Current Price: $7.05

Current road block: SGMA operates in a volatile industry where trends can change quickly; Company has an erratic EPS history.

The Key to finding success in a stock like SGMA is to consider it when it is entering a unique point in its growth cycle.  Fiscal 2010 fourth quarter revenue increased 28.8% to $34.98 million.  This was SGMA's first revenue gain of over 15% in seven quarters.  Fourth quarter operating EPS grew 500.0% to $0.24  and was the best quarter of its year which easily eclipsed any of the previous six quarters where the highest  EPS achieved was $0.13.

Also consider:

• Results substantially exceeded expectations outlined in the fiscal 2010  third quarter:

  "Heading into our fourth quarter, we see many customers adjusting inventory levels short term. My current expectation is that revenue during the fourth quarter will be lower than that of the third quarter ($30.6 million)."

• Additional third quarter comments insinuated that SGMA's first two quarters of fiscal 2011 would show growth:

  "I also believe that the second half of calendar 2010 will be stronger than the same period of 2009."

The fourth quarter results solidify this position. With trailing EPS of $0.49 investors need to ask themselves if SGMA can experience P/E expansion to about 20 and approach its book value per share.  This would imply a price target of $9.60 to $12.28

We are still awaiting the release of the 10K to determine if liquidity is intact.