POKER FACE?

ADD CWH @5.20
I bid a little CWH @ 5.20. (1) Tremendous growth: top-line: 91% in FY03, 40% for Q1, Q2/04, 83% Q3/04; sequential growth is strong as well (17% Q2/Q1, 32% Q2/Q3); EPS: over 300% Q2 and Q3; (2) Profitable and cash flow positive; generating positive free cash; ROE consistently above 25%; (3) Margin improved consistently quarter after quarter; (4) $0.46/share cash balance, no debt; (5) It is in a nascent industry with significant growth potential and a few established competitors; (6) Currently traded at about 20 times of its 2004 earnings and 15X of its 2005 forward earnings; Given it expects EPS to growth by 90% in FY04 and another 40% in FY05, the valuation remains reasonable; (7) Trend appears strong and should continue; Drawbacks: another small-cap which I would prefer not to add presently, given my exposure to the small cap space, which I believe will likely be out of favor for 2005. All other drawbacks related to the small caps, lack of coverage, liquidity, and notoriety. Overall, the stock seems too good to pass. Target 7.50, representing about 22X of its FY05 EPS estimate. Portfolio position: less than 2%.