Zig to this Zagg
Erin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Zagg Inc (NASDAQ: ZAGG), the maker of skins, audio and power accessories that make your mobile electronic devices that much better, has a lot to offer as a stock option as well.
ZAGG is second cousin accessory provider inside the growing mobile market. As long as mobile electronics keep growing, consumers stay addicted to their devices, and humans leave smudgy fingerprints, Zagg has a good future ahead of it. Sales are growing and estimates are positive for further success for the company. More than 40% of sales came from Best Buy (NYSE: BBY) last year. And most of their products are sold to enhance Apple (NASDAQ: AAPL) products. So as long as blue chip babies Best Buy and Apple stay blue chip, ZAGG has a good potential.
Recently ZAGG topped the list of Biggest Percentage Price Gainers among common stocks on the Nasdaq. Over the past five years, gross margin peaked at 73.9% and averaged 64.2%. Operating margin peaked at 22.2% and averaged 4.4%. Net margin peaked at 13.1% and averaged 2.5%. TTM net margin is 8.3%, which is better than the five-year average. In other words, they are doing just fine.
Overall, analysts are positive on the stock, and expect 56% growth in earnings per share in 2012. However, the Fool CAPS community gives it a low rating and have little nice to say about this company (probably all while typing it on a PDA protected by a ZAGG product).
ZAGG does suffer from a cash flow problem. In 2011, they spent $5.3 million in cash, with a net income of $11.7 million. Meaning they ate up their own revenue and then some. Preferably we want to see cash flow higher than the net.
No company is beyond reproach right now. No company is perfect. But right now, ZAGG has a strong foothold and no obviously fierce competitors. While their cash flow situation could be better, the rest is commendable. This is a stock to seriously consider for intermediate investment.
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