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PCTEL, Inc. (PCTI)

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4.1700+0.0300 (+0.72%)
At close: 04:00PM EDT
4.1700 0.00 (0.00%)
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  • S
    Shake n' Bake
    Wow only 3800 shares traded on an investor conference day? Was the presentation that bad?
  • E
    El Profesor
    It’s happening.
  • C
    Commandor58
    On Friday, 6/17, oil took quite a tumble-about $5-$7.00 depending on grade. Very interesting given that oil production is currently missing about 1 Mbpd of Russian production with the expectation of losing another 1-2 Mbpd by the end of the years. That suggests a lot of demand destruction. If that occurs-continued oil price declines to the $80s (WTI)would confirm-then the world economy is heading for a very quick deflationary contraction. Back in 2008, inflation went from 5%+ to -2% in 6 months time-so it can happen.

    Under this scenario, there will be pressure on corporate gross margins, profit estimates will come down, monthly job numbers will go negative. Daily financial indicators would be the DJU (utilities) moving higher the TLT will move to the mid 120s along with WTI moving below $90.

    This deflationary contraction, could be devastating for broader averages for those companies, individuals and investment managers that are leveraged-making them forced sellers of whatever it is they own.
  • S
    Shake n' Bake
    Simply Wall St commentary on the stock, excerpts below:

    “Over half a decade PCTEL reduced its trailing twelve month revenue by 1.6% for each year. That's not what investors generally want to see. The stock hasn't done well for shareholders in the last five years, falling 6%, annualized.”

    “So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, PCTEL's TSR for the last 5 years was -24%”

    “While the broader market lost about 10% in the twelve months, PCTEL shareholders did even worse, losing 34% (even including dividends).”

    Pretty consistent with what I’ve posted the last few months…some will argue management is better today than in past…I nor the numbers see it this way. Revenue decline, margin degradation, slowing US demand for test equipment, increased cost structure, higher cost per revenue dollar generated, etc etc etc

    Company needs change…
  • C
    Commandor58
    6/15, may be the start of the most everything bull market. Catalysts: ECB had an emergency meeting-didn't do anything, but QE justified by "fragmentation" is coming. PBOC adding liquidity, BOJ continues to do massive QE to peg their 10 year at 25 BPS. The TLT got to 108,59, a new low on 6/14, but now above 109.50 on 6/15. The US 10 year got to 3.498%, now about 3.40%. Import prices, X-Fuel, were down .3% for May, the strong $ is breaking the back of inflation. Even though stocks were down on 6/14, both VIX and VXN were quite a bit lower. 6/13 may have been the capitulation sell off as down volume exceeded up volume on the NYSE by 55/1 and the ARMS index was above 2.00 most of the day.

    Of course, the backdrop, for liftoff, is still a FED pivot. So, I am still operating under the 1987 game plan that the low of 6/14, 3705, will be retested in 4-8 weeks. Also, I would like the TLT to remain above 108.50.

    Another indicator of a "green light" will be the SK Kospi index stops making new lows, to start moving higher. The SK index is key to gauge what is going on in Asia and the PBOC.
  • C
    Commandor58
    6/14, after the close RFIL beat and raised which is bullish for PCTI as they have similar customers and end markets they sell to. In addition, RILY was on the CC, and follows RFIL. I expect, sometime later this year for RILY to pick up bullish coverage on PCTI.
  • C
    Commandor58
    Fun day today- US interest rates were down and the DXY was down. Normally that would be a bullish backdrop-I did a little buying today, some prices are getting interesting. G/S had a good day as those markets are "anticipating" ECB and FED pivots. It is my view, both will have to-the ECB first.

    The binary event comes after midnight tonight, 6/17, as to what the BOJ does. If they keep their 10 year peg, that is fuel (QE) into the markets. If they cave, then there could be another day like today-broader averages down.
  • C
    Commandor58
    Some thoughts on why G/S has not moved given the backdrop of high inflation, political uncertainty and the increased probability that budget deficits by most governments around the world are going to increase.

    First, the FED has done a masterful job of expectations on two fronts: increasing interest rates and reducing forward inflationary expectations. We all get the interest game, it gets pounded daily by the FED and the financial media. Although, the FF futures have come down from a 3.5% terminal rate to 3.0%.

    The inflation story is another "game". The 5 year TIP peaked a couple months ago at about 365 BPS, today it closed at 296. The 10 year TIP peaked at about 320 BPS and is down to about 266 on 5/31. All the while the CPI is still above 8% y/y. Obviously, these measures of future expectations have good odds of being fantasy. Go back a couple years ago and both 5 and 10 years TIPS were forecasting 2-2.5% inflation-so there were way off vs today's 8%+.

    However, for right now, the FED has the consensus thinking inflation is coming way down. Couple that with the consensus that interest rates (FF) is going to triple in the next 9 months and you have the dynamic that "closes the gap" of what today's gold prices-approx $1850, silver $21.50-are vs gold should be at $2500+ adjusted for inflation and silver closer to $100.

    For right now, just about all the algo's that run the machines are running off the same pricing models, so this gap is not closing. The other dynamic flows from the phrase, "the futures tail, wags the spot dog" for gold and silver. Here is where I have two indicators that never turned bullish, even though G/S has good moves earlier this year and those indicators are still bearish.

    So what is going to be the catalyst to get some of the algo's to change their model? To change the language, spot dog will have to start wagging the futures tail-then those indicators will turn bullish. But that is mechanics, what happens in the world?

    Another JP pivot, like Dec of 2018 and/or a repo tantrum of 9/2019. In both cases, parts of the credit markets seized up-stopped functioning. It wasn't the stock market, although there was pain there, it was parts of credit markets. So far, as of 5/31, not much yet has happened. HYG and JNK have come under a little stress, the Euro and Yen have come under a little stress and credit losses are starting to show up from consumers that are taped out. Nothing that I see is systematic. That is the key, the tipping point is the stress has to be systematic.

    I do believe that is coming and is why I continue to suggest to harvest gains because the S&P500 is not going higher than 4300. The S&P 500 only gets above that, to then move higher would be because the FED is adding liquidity. That doesn't come until there is more pain, inducing a JP pivot.

    Back to G/S, some algo's will change their models after a JP pivot. Still, on weakness I am a buyer because right now, just about no one cares about G/S and probably won't until gold gets above $2100. Then many of the other algo's will change their models and the momentum models will start kicking in. Then it is greased lighting to $2500+.
  • C
    Commandor58
    Going back to the 4thQ of 2021 it was worthwhile to look at what some customers and competitors were doing to analyze what PCTI's results were going to be. At that time MSI, Iot, CIEN and other were commenting that their results were going to be strong. So, extrapolating that anecdotal evidence, I predicted long before PCTI reported, that the odds of a PCTI beat were very favorable. That ended up being correct. Ditto for the 1st Q-results came in higher than guidance.

    So far, Iot players DGII, SWIR suggests the Iot part of PCTI's business will be strong. Ditto MSI, in addition they just won a big contract into Taiwan, which PCTI will participate. EV charging stations anecdotal data continues to be strong, ag strong, worldwide 5G buildouts strong, CIEN's book-to-bill is at 1.5. This list is not exhaustive, but a sample.

    Scanner sales may get a boost from the DISH buildout as well as public safety and private 5G buildouts. Obviously, June's macro-econ backdrop worldwide has yet to happen-many companies giving guidance updates for the June Q will be the tell.

    All of this anecdotal evidence, although nice to know, may not matter too much until the micro-cap buyer-which has been brutalized since the 4th Q 2021-returns to the market. That may not happen until the FED pivots-inducing most everyone to get offensive vs defensive. In the interim, PCTI has some very nice niche businesses that are early in their growth life cycles. Patient money, that bought doing periods of pessimism, have always done well with this stock. That same patient money, sold into strength when RSI's sustained above 70.
  • S
    Shake n' Bake
    Well CPI came in disastrous, we’re heading into the 3s
  • S
    Shake n' Bake
    Does anyone have source to the actual reason the company grossly missed, and so late in the year, lowered their guidance in 2018?

    In a volatile environment such as now where companies like Target and others find it prudent to warn investors, this management team found it unfitting to alert investors in 2018 until late in the year after it was an almost foregone conclusion.

    My concern is that management on the last earnings publicly noted that they see sequential quarterly improvement for the year. While not confirming actual numbers, what level of confidence should we have that if there is some headwinds that management be prudent to publicly share this?

    Potential headwinds:
    - Scanner demand, specifically in the US and LATAM
    - inventories growing at distributors
    - lack of replacement project for antennas
    - slowing demand in Europe
    - inventories with contract mfg and warehouse
    - margin compression

    The company operations are not as complex as a Target so I would assume visibility into more than one quarter performance is readily available, however, company seems to only provide coverage for upcoming quarter only.
  • S
    Shake n' Bake
    Anyone going to be on the investor call tomorrow? I will be traveling for work and won't be able to make it.. Curious to see if any of the recent economic fears will make it into their presentation or if they will continue to disregard any risks to the business in their multi-year guidance. They've been spoon feeding investors revenues of $120M-$130M in 2022 from organic growth (pre Smarteq acq) since 2018 and most recently shifted down to $115M-$125M revenues in 2023 inclusive of Smarteq. Seems like they don't have a good foundation for understanding where growth is/will come from...acquisition or organic? or how much is sustainable growth?

    Interesting to see the market's early positive reaction to Kellogg to break up into 3 independent businesses. Can you imagine if PCTI did the same? They would no longer be public but the value of the independent pieces is definitely greater than the whole currently....the only risk is that might highlight how much of a challenge the Antenna business is with the increase in R&D, Sales and Mktg , and G&A costs that have been built over the past few years while margins have declined.
  • C
    Commandor58
    6/2, it looks like the S&P500 pivot point/resistance area of 4150 has been breached-the next one is 4250-4300.

    Until the FED pivots by adding liquidity, the rise to 4250-4300, if it occurs, will be a good one to raise cash. The backdrop being the FED is going to tighten until there is a credit market systematic event and/or main street gets brutalized. 6/2's ADP number did suggest hiring is slowing, 6/3's May jobs number will confirm or deny.

    Still is is my view, with oil moving net/net higher in recent weeks, the FED is going to do 50 BPS in June and 50 BPS is July. The July rate increase will be the one that either sets off a credit market systematic event and/or or main street reaches tipping point pain. I have indicators that suggests the US 10 year get to near 3.5%-the recent prior high was about $3.21%.

    Bottom line, the broader averages moving higher are a gift for those that are too far out over their skies. Good time to still play defense, to wait for the FED's mistake to create bigger/better opportunities.

    In the universe of stocks I follow, insider buying is still weak and only "bullish" in my view for three stocks: ALTG, RILY and RKT.
  • S
    Statesrip
    Commomer58 (the preferred spelling of your posting name)--Looks like yet another mistake that in your bragging--Bitcoin currently trading around $19,100!!!
  • S
    Shake n' Bake
    One of the things that was appealing to me as an investor, and probably most PCTI shareholders, is the nice dividend yield. Given the current environment as well as some of the headwinds I see in the business (1) declining scanner demand in US (2) mix shift to lower gross margin business/products (3) inflationary impact on materials and wages (4) buildout for an executive staff that management is on record noting is for a much larger business...what happens to the share price if cash flow starts to compress and the company needs to re-evaluate and potentially lower its dividend to maintain/continue to reinvest internally?

    My thought all along was that at current prices in the low $4s, there was decent upside to ~$6/share and then management and Board would get smart to understand the best course of action to maximize the value of the business would be split up the business and sell to strategics who want to vertically integrate or PE that wants to buy/build especially given the fragmentation of the industry. A 25% premium on $6 would net a decent/fair $7.50/share price.

    The company is not actively presenting at investor conferences, are not putting out meaningful PRs, missed using the pandemic to fix org/cost structure, buy company that don't contribute to the bottom line, etc.

    Hard to see any positive catalysts in sight that would move the needle on this stock in the near future. I believe we are riding the $4.00-$4.25 range pending any significant news before next earnings call.
  • C
    Commandor58
    It looks like NATO stan has its false flag event with Lithuania cutting off Kaliningrad-no doubt to provoke R to act "aggressively" to Lithuania.

    As speculated in a prior post, the West-now losing the war in the East-is opening a new front with which to "win" the propaganda war.

    The West is waging a propaganda war, R is waging the real war. R does not want to play by the West "rules" anymore as the West is off in some world of delusion.

    Unfortunately, it is a negative for PCTI and the broader averages as well-should be bullish for G/S, although not immediately.
  • C
    Commandor58
    Interesting internals today, 5/25, cyclical, housing and financials got a bid today. VVIX hit a 13 month low, MOVE has been down in recent weeks from 140ish to 105ish.

    FED minutes had language that 75 BPS interest rate increases are off the table and after two 50 BPS hikes in June and July, Sept may only be 25 BPs vs 50.

    Atlanta FED's GDP now keeps cutting 2ndQ GDP estimates-today from 2.4%, down to 1.8%. Analysis of post WWII bear markets (down 20%+) shows bear markets never occur before recessions, but more often after they start 2-3 months. Since the S&P 500 hit a bear market, intraday, on 5/20 suggests historically that the US is already in recession.

    Today's bid in cyclicals, housing and financials suggest some money is anticipating that the FED will have to stop tightening way before their current projections. Of course, if 2ndQ GDP is negative, the US will be in recession-nipping the FED's plans in the bud and consistent with past WWII bear markets. More data on the recession call is Citi's Macro-surprise index has been falling for weeks and now at -37.3 a low since 10/21. Today's soft durable goods numbers vs expectations continues to drive this index down-increasing the odds 2ndQ GDP will be negative.

    Still, it is my view, that what ever low is made, will be retested 4-8 weeks later because the FED needs cover-lower inflation and labor slack to change policy.

    5/26's unemployment claims and 5/27's PCE data be helpful in sorting out the macro and the FED's likely future responses.
  • C
    Commandor58
    From the CC, PCTI was not specific w/r to the 2nd Q except to say it would sequentially stronger vs the 1st Q. In addition, world wide rollout of 5G is at 40% of what is expected of networks to come on-line. Also, there was commentary, indirectly, that the dividend is safe.
  • C
    Commandor58
    Going back to July 2008, on this venue I called the top-within days-on oil on a single unrelated event-oil (WTI) peaked at just under $150. The unrelated news was the Seattle Supersonics moving from Seattle to OKC. At that time OKC was flush with cash and as human nature tends to do, used that new found wealth to "make a statement of ego".

    We have a similar situation setting up in June/July 2022 with the new LIV golf tour sponsored by the Saudi Public Investment Fund. Same statement of ego the Saudis have today as the oil/NG community of OKC back in 2008. The LIV's first tournament is this week in London, their first US tournament is the 2nd week of July.

    Implications? 1) Suggests a rolling top in oil, so take partial gains on oil/NG stocks.
    2) If oil is going down either the world economy is slowing down faster than expectations or
    3)UKR war will soon end and/or sanctions will be lifted in some way such that more Russia oil finds its way onto world markets-currently they are producing about 1.1 mbp/d less with expectations that sanctions will curtail production by 2-3 mbp/d by the end of 2022.

    Of course, most will think these are all totally unrelated events. However, human nature-especially herd thinking-remains very similar and sometimes a "bell" rings when an investment becomes a very good one or when an investment becomes very bad. I think the LIV tour is the "bell" ringing to lighten up on oil/NG positions over the course of June/July.
  • C
    Commandor58
    Nietzsche, had a lot of in insights into the human condition. A couple are particularly useful in today's world.

    To predict the behavior of ordinary people in advance, you only have to assume they will always try to escape a disagreeable situation with the smallest possible expenditure of intelligence. Sometimes people don't want their to hear the truth because they don't want their illusions destroyed.

    Psychological studies in recent decades, have expanded on Nietzsche's observations by fleshing out some numbers behind intellectual laziness and not wanting to know the truth.

    Those studies found that for must issues/subject matter/problems, about 75% of people will not analyze a situation further than their initial emotional response. I call them the 75%ters, a disparaging term is "lizard brain" among others.

    For anyone that has historical perspective, the whole PC/woke/progressive/green orthodoxy fits that narrative. It has become an orthodoxy, that demands total purity from its followers without any thought for implications and/or or other level 2 type analysis.

    For example: CO2 is now considered pollution, yet is is food for plants-it is necessary for all life. CO2 from the burning NG/oil/coal is considered bad, but NG/coal and oil are just solar energy in a different form, from millions of years ago. Humans are just recycling it. With the CO2 con, humans think they will produce less CO2 with wind and solar. Wind and solar require: backup, NG/coal/other power sources because their power is intermittent, require CO2 producing activity to build those systems and the infrastructure to put wind/solar into service. EVs if broadly adopted don't, during their whole life cycle emit less CO2 than ICE vehicles-there are dozens of studies on this. The mining of EVs metals and minerals is energy intensive. EVs depend on the grid-mostly NG/coal-for fuel, will require massive buildout for fueling stations and grid expansion. Most of the buildout is unnecessary duplication. Plus a gas station can service 50X more vehicles/day than an EV station. What a waste of resources, that produce more CO2, to duplicate infrastructure that is already built for ICE.

    I could go on but my larger point is, the PC/woke/green narrative drones on and on without question because, at least 75% of people are accepting of its false pretenses. They don't want to think it through, they don't want to add in all the costs, they don't want to know the truth. Those that question are considered blasphemous. The "narrative" is a movie, designed to invoke emotional responses, just like any other "movie".

    There are a lot of "movies" playing right now, 6/7/2022, that are all lies. Governments and insiders are banking on the vast majority of subject populations to remain intellectually lazy and avoid the truth. Folks will wake up, but only after their standards of living will severely degrade and the process to reverse the damage will take a generation.