SPECIAL ALERT: Exiting CalAmp shares and booking another hefty win
Key Points from This Alert:
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We are issuing a Sell rating on shares of CalAmp Corp. (CAMP) and exiting the position on the Tematica Investing Select List.
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With this action, CAMP shares have generated a blended return of 39% vs. 14.8% for the S&P 500 since we first added the CAMP position in August 2016.
Over the last few weeks, we’ve seen a sharp rise in CalAmp (CAMP) shares. This likely reflects the pending compliance mandate with Electronic Logging Devices (ELDs) that is currently set for later this year. We say “currently set” because there are efforts underway to derail the December 18th deadline, and more mega-fleets are requesting exemptions to the mandate.
Generally speaking, compliance with regulatory mandates tends to pull demand forward, after which is tails off and hits both revenue and profits. In the case of CalAmp, the shares are now less than 5% from our $21 price target, and we would rather book these stellar returns than keep hanging on for modest upside, only to be burned. Call it the prudent investor in us, but the market issues we recently highlighted are still intact, and we’re seeing GDP estimates for the current quarter revised lower following hurricanes Harvey and Irma. We expect the coming weeks will see corresponding EPS cuts that could weigh on the market. Rather than wait for that to happen, let’s take the money and be patient for our next recommendation.