SRT - Software Radio Technology

Again, I'm going to slightly cheat and post a link to a TMF post where I've talked a little about SRT and it contains other's insightful comment:

http://boards.fool.co.uk/mello-software-radio-technology-srt-12313822.aspx?sort=whole#12335687

TLDR Version

This isn't a value play but a GARP (Growth At a Reasonable Price) play. SRT make transmitters for boats which basically provide a form of identification and tracking for other boats (to avoid collisions) and for governments (to keep an eye on who is in their waters). Government mandates are driving an increase in sales so the buyers don't really have much choice but to buy (I like it!) and SRT are currently the only company who make the RF chips required. Gross margins are huge (~50%) and the operational gearing is high so a large increase in sales potentially equals an even bigger jump in profit. Last year SRT made a profit of 2.2p per share so for my purchase price of 36.7p the P/E isn't very punchy being only 16.7 for a company which could potentially explode in profit. Equally, they could just get crushed by a larger company with big R&D muscle but in my head I can't help but see the analogy to ARM in their business model and the huge potential the company has. High risk high reward stuff.

Also, I have a lot of respect for the openness with which the CEO conducts seems investor relations. Very frank, very open. A good salesman too!

Risks

Lots!
1) A competitor eats their margins
2) Sales don't grow as expected
3) The market just doesn't exist
4) Probably a million potential ways this company could fail
5) Director sales aren't great (although the bloke does still own 15% of the company so still has big skin in the game)

Despite the risk I think the current price (even lower than when I bought it) is potentially very, very
attractive. If everything goes to plan this could be a big multibagger over the next few years. Or it could be worth nothing. Fun!

Long @ 36.7486p