Unlike previous price moves, Adacel's recent gains have come...

Unlike previous price moves, Adacel's recent gains have come with decent volumes. I think this is probably a reflection of the fact that a couple of brokers (ABN Amro and Intersuisse) have recently discovered Adacel and are carefully accumulating for clients.

Punters should keep in mind that ATM contracts (or contract extensions) typically entail higher margins than simulator contracts, so a large chunk of the recent $4.9mill Lockheed Martin contract will go straight to the bottom line.

For the FY07 full year result, I'm predicting a NPAT in the region of $6.5-7mill. Based on Friday's closing price, $7mill has Adacel trading on a PER of just 8.6. It comes as no surprise to me that the two brokers who have bothered to take a look at Adacel have immediately started to accumulate.

If Adacel's SP doubled in price tomorrow, the stock would still be undervalued. There is massive blue sky potential with this one. For example, if the FY08 NPAT result is $8mill+ (as seems likely at this stage), then a SP of $2 within 18 months is a realistic expectation.