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July 10, 2006 Stock Pick: PEMSTAR, Inc. (PMTR)

Stock Price: $3.477

PEMSTAR, Inc. provides a comprehensive range of engineering, product design, manufacturing and fulfillment services to customers on a global basis through facilities strategically located in North America, Asia and Europe. The company's service offerings support customers' needs from product development and design, through manufacturing to worldwide distribution and aftermarket support.

On May 18th, PMTR reported strong Q4 financial growth with the company growing revenue to $196.2 million, up from $145.5 million in the same quarter a year ago. Net income came in at $1.9 million compared to a net loss of $12.3 million in Q4 fiscal 2005. The company has implemented a system of creating turnkey sales to grow revenue from $659.7 million in fiscal 2005 to $871.0 million in fiscal 2006. Net loss for fiscal 2006 was reduced by $5.5 million over fiscal 2005.

PMTR has yet to be rewarded for their rapid revenue acceleration and net income improvements. PMTR is sitting at a market cap of only $154.66 million trading at only 0.177 times fiscal 2006 sales.

PMTR is forecasting sales of $200 - $220 million for Q1 with net income expected to be positive. The company has renewed focus on operating profitably by confirming their intentions through restructuring lease obligations.

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