ChartWatchCentral Stock Picks

Ironing Out Their Problems

Date: May 23, 2003
Company: Intermet Corp.
Ticker: INMT
Price: $3.35
Target Price(s): $4.00, then possibly $4.70, $5.58 and $7.10
Opinion: Bullish
Comments: Intermet Corp. (INMT) plunged 72% over the past year and almost 86% since peaking in April 1998. Now the shares are sitting near the bottom of a seven month base. (chart #1)

After declining by about 30% this year, Wall Street expects INMT's bottom line to rebound 40% in 2004 and 37% in 2005. The price/earnings multiple based on estimated full-year 2003 earnings of $0.25 is 13. And based on projected 2004 and 2005 earnings of $0.45 and $0.62, the respective p/e's are 7 and 5.

Since INMT hit its most recent low last October, five insiders bought a total of 113,898 shares between $3.85 and $4.16. We believe INMT's insiders are optimistic about the future, otherwise those option-related purchases would have probably been followed up with open market sales.

On October 28, 2002, Peter Richards (director) provided his vote of confidence after the shares plunged 60% in one month, when he purchased 5,000 shares on the open market. The very next day INMT bottomed at $3.25. (chart #1) In February, Alan Miller (officer) bought 14,529 shares, one-third of which took place on the open market.

Over the past seven months, INMT has been consolidating between $3.15 and $5.59, with most of the price action being confined between $3.30 and $4.25. Overhead resistance is situated near $4.00, $4.70 and $5.59. (chart #1) Support can be found between $3.15 and $3.30, with additional support at $2.50. (chart #2)

Sometime over the next several months we expect Intermet to eventually surmount the resistance levels mentioned above, opening the door for a more pronounced move to $7.10 or higher. The company pays a hefty 4.7% dividend ($0.16 per share), so even if the rebound takes some time to materialize, you will be compensated for the wait.


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