«
»

Potential Purchase of Oyo Geospace

I’ve been watching Oyo Geospace (NASD: OYOG) over the past couple of days decline to the low 60s. As noted in my previous post about Oyo, a price of $69 per share represents 12% earnings growth over the next 10 years. I think they can demonstrate a bit more growth than that given the demand for seismic sensors.

If Oyo can land a couple more RCS contracts, today’s shares will look like a real bargain. The thought of a contract had shares above $100 just a couple of months ago. I don’t think a contract is out of the question just yet. Their next quarter will likely see them going full steam at their new production facility with the capacity to grow earnings at a good rate and meet demands of future RCS clients.

If Oyo stays in the low 60s over the next several days, I will purchase another 3% for the Two Roads Diverged Portfolio, bringing the total holdings to 12.5% of the portfolio.

  • Share/Bookmark
Related Entries
  • Turnaround at Oyo Geospace?
  • OYO Geospace and Inventory Control
  • Two Roads Diverged Portfolio: January 2008 Holdings
  • Investors May Be Paying Too Much for Oyo Geospace’s Potential
  • Oyo Geospace First Quarter 2008 Analysis and Valuation
    		•

    This entry was posted on Wednesday, January 9th, 2008 at 5:27 am and is filed under Holdings, Oyo Geospace, Portfolios, Two Roads Diverged. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

    2 Responses to “Potential Purchase of Oyo Geospace”

    1. Todd Says:
      January 9th, 2008 at 3:13 pm

      I hope you are right. I bought after the drop from $100+, for around $85. Even as I was buying it though I was kicking myself… I have found that I should avoid anything that drops more than 7% in a day, as it more likely represents a change in trend as opposed to a correction and buying opportunity.

      All the best

    2. investorpoet Says:
      January 9th, 2008 at 4:58 pm

      Todd,

      Oyo has been one volatile stock. It started the year 2007 at $57, and then traded up to $110 per share. It’s difficult to keep from focusing on those swings. Despite this volatility, there wasn’t really much changing in their business. The only thing changing were the market’s expectations.

      I’m trying to avoid my own fixation on price and instead focus on the business and trends in the industry. This is difficult when all you see is the stock price swinging $50 per share here and there.

      Oyo still has some long-term trends in its favor. Even if their RCS sales stop producing those nice lumps in earnings, there will still be long-term demand for seismic equipment. Hopefully both of us will be richly rewarded for our patience over the next ten years.

      Thanks for reading!