Relm Wireless Corp. (RWC) is registering its highest technical reading in The PPT since the scores have been recorded for this name beginning in late 2009. The stock is up about 40% for the year, and demand for the stock has been rising. Average daily trading volume has more than tripled since I first profiled the name in December of last year, now approaching 50,000 shares per day. Three contract wins and a stock repurchase plan announcement in March provide me strong comfort that first quarter results will be solid. Year over year results will look quite strong, as I expect revenue to grow from $4.4 million in 2012Q1 to north of $7.0 million this year. I expect earnings of at least $0.03 for the quarter.
Management is continuing to work on ways to increase its market share against Motorola Solutions (MSI) and other competitors such as Harris Corporation (HRS). With expanded software features on its land-mobile radio equipment, RWC offers a very compelling value proposition to potential customers. RWC’s radios are compatible with existing infrastructure and can be purchased at a discount to MSI’s competing products. In a world where budgets are tight but when new radios are needed, RWC’s products make a lot of sense. RWC’s business model is improving, and the outlook for higher earnings and cash flow is in sight. I’ll be watching for more contract wins in the coming months and remain optimistic that a $7.00 price target can be achieved as investors recognize RWC’s potential.
