Defense Firm CPI Aerostructures' Stock Price Goes on the Offensive

It has been a solid week for now former net/net CPI Aerostructures (CVU) , which has left net/net land, a strange place that no company would ever go by choice, due to a nearly 40% jump since reporting better-than-expected earnings on Tuesday. Companies typically depart net/net land for one of two reasons -- through the elevation of their stock price or the degradation of their balance sheet, either of which can lift valuations above 1x net current asset value (current assets less current liabilities), which is my definition of a net/net.

Obviously, a rising stock price is preferred. When buying a net/net, which can represent an extremely cheap valuation or a company that has seen its best days and is a value trap, the hope is that something will trigger some investor interest in the name in order to drive the stock price higher. This trigger often involves an improvement in operating performance and/or, at the very least, realization that the stock has been overly punished. This can be a slow process -- that is, if it actually plays out in your favor....211 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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