Top Image Systems, BUY Recommendation

TOP IMAGE SYSTEMS (NASDAQ-TISA)
Valuation-$4.89
Price December 7, 2011-$2.03

Well we are back for this one. Last time (2007) we took a 39% loss on TISA as they cratered. We have been keeping track of them ever since and think that they have turned things around with the help of their founder who is back at the company.
TISA paid off all of their debt this year (from a not so good acquisition years ago) and is making money again.

Their last quarter sales were up 32% from the prior year to about $7.2 million and they had an operating profit of $.8 million versus a profit of $.5 million.
Nine month EPS was $.17 compared to $.04 last year. Nine month 2011 net income was burdened with $900,000 ($.02 per share for the latest quarter) of interest expense that won’t exist any longer. We think earnings next year could approach $.30 a share untaxed.

But what really put us over the edge on recommending TISA again was the interview that can be accessed at: http://www.globes.co.il/serveen/globes/docview.asp?did=1000698283&fid=1724

Cash per share is $.32 and gross margins are over 60%.

Average trading volume is about 33,000 shares a day.

Top Image Systems(TM) (TIS(TM))
is a leading innovator of enterprise solutions for managing and validating content entering organizations from various sources. Whether originating from mobile, electronic, paper or other sources, TIS solutions deliver the content to applications that drive the organization. TIS’s eFLOW Platform is a common platform for the company’s solutions. TIS markets its platform in more than 40 countries through a multi-tier network of distributors, system integrators, value-added resellers as well as strategic partners.

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