TransAct Technologies (TACT) Incorporated engages in the design, development, assembly, and marketing of transaction printers and printer-related services, supplies, and spare parts. It offers transaction printers under the Epic and Ithaca brand names.

We are bullish on this microcap stock for several reasons. The company just settled a patent litigation lawsuit with FutureLogic, which should remove some uncertainty that was hanging over the stock. FutureLogic will now license TACT’s technology for slot machine printers. Expect estimates to rise on this news.

Additionally, in April the company won default status with a subsidiary of International Game Technology which means TACT’s Epic 950(r) printer is the default Ticket-In Ticket-Out printer for all new IGT games. This is a big deal as IGT is a major player in the slot machine business.

The company reported a profit of six cents per share in the first quarter while the lone analyst covering the stock expected a break-even result. Revenues for the first quarter of 2008 were $14.3 million, compared to $11.5 million in the same period a year ago.

Remember that this is a microcap stock and only suitable for aggressive investors. That being said, many factors are in place to push this stock higher. It is attractively valued at 16.4x next year’s estimates. This is well below its long-term growth rate of 30%. The Correct Call sees this stock above $12 in a year.

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