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Topic: How To Invest

This small cap stock’s earnings soared in the latest quarter

RuggedCom, symbol RCM on Toronto, makes computer networking equipment that is used in harsh environments. The small cap stock’s products include ethernet switches, network routers, wireless devices, and software.

The company’s products are designed to reliably operate under high levels of electromagnetic interference. They can also cope with wide variations in temperature and humidity, as well as vibration and exposure to dust. They also work while exposed to such things as corrosive gases and water.

In the three months ended December 31, 2010, RuggedCom’s revenue was $25.6 million. That’s up 24.2% from $20.6 million a year earlier. Sales to clients in the transportation industry jumped 76%, and sales to the electric-power market rose 32%.

Earnings soared 72.8% in the quarter, to $2.1 million from $1.2 million. Earnings per share rose 70%, to $0.17 from $0.10, on more shares outstanding.

The company booked a record of $24.8 million of orders in the quarter. That’s up 20% from a year earlier. Ruggedcom also added 121 new business clients.

In 2010, the company formed a partnership with Itron Inc. (symbol ITRI on Nasdaq), a leading provider of smart meters, which let electric utilities collect and analyze their customers’ consumption data.

RuggedCom will install its RuggedMAX technology in Itron’s OpenWay smart meters. That will give utlilities a more complete sytem as they turn their distribution systems into “smart grids.” These grids help customers control their usage, and make it easier for them to use power when there is less demand.

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