Cheap Stocks, 4-19-2008 Update
The markets roaring back last week, with all the major indices up 4-5%. We were up, but not as much this week--2.6%.
We sold PDLI last week for a gain of 9%. This week we think adding another $10,000 to MEDW is a good idea. DTLK and LTUS.ob earnings out last week and both were good.
NASDAQ was up 4.9% last week, the DOW was up 5.0% and the S+P 500 was up 4.3%.
Last week we went 7 stocks up, 6 down.
For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is +2.6%,-25.9 and +9.6% respectively. Since inception we are now 21 stocks up and 11 down.
So far in 2008 the DOW is down 3.1%, NASDAQ is down 9.4% and the S+P 500 is down 5.3%. The NASDAQ is now down a whopping 19.9% since October 31, 2007.
The Russell 3000 and the Wilshire 5000 are both down just about 5.5% this year.
Since inception we have closed out the following positions:
2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn't help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
The model portfolio assumes $10,000 invested in each stock (unless we double-up--then it is $20,000), less $10 commission each way (TD Ameritrade rate).
For the 19 stocks that we closed out in 2006, 2007 and 2008 the average gain was 23%.
Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Up $.43 to $8.96.
The company has $54.4 million in cash ($1.73 per share), and is trading at about 2 times 2008 revenues (net of cash)and is growing about 30% a year.
Earnings out 4/23 before the market opens.
Now down 5%. HOLD.
DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $9.03 (was $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $4.03, down $4.12. DWCH is now trading at 46% of our valuation.
No news.
Now up 28%. HOLD
Parlux Fragrances (PARL-Recommended 11/30/2006)
New Buy price $4.14 (was $4.78 before $10,000 adder, $6.12 before another $10,000 added, $6.65 before double up), Valuation $11.24 (Was $10.80 $9.20, $8.63, $13.77)
PARL closed at $3.13, down $.08.
Latest earnings were very good. Stock is down. The market in general is anticipating that the bottom will fall out of everything.
Now trading at 28% of our valuation.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 24%. BUY.
ILOG SA (ILOG-recommended 3/26/2007)
Buy price $12.08 (was $12.92 before another $10,000 added, $13.60 before double-up), Valuation $24.67 (was $20.51, $23.22, $20.99, $20.52)
Closed at $8.93 up $.48.
No news, just lack of interest.
For FY2008(this year) they are STILL projecting another 20% increase in sales but revised their earnings projections down. They still have $3.39 a share in cash.
A buy-out is a decent possibility here.
Down 26%. HOLD
Celebrate Express (BDAY-recommended 4/17/2007)
NEW Buy Price $6.15 (was $8.38 before $10,000 adder and $8.82 before double-up), Valuation $15.51 (Was $17.85 $18.18)
Down $1.32 to $4.28.
Lots of action here. Buy-out offer, very bad quarter.
BDAY had a miserable quarter. Still struggling with their new computer systems, etc.
Sales down, big loss. Our valuation fell to $7.82.
BDAY also pulled their earnings announcement last week as they apparently received interest from someone on a buy-out. Were it not for this, we would pack up the truck and sell this one as their struggles are more than we thought (and they thought too).
Trading at 72% of our valuation.
Hold for a while until this "take-over" thing flushes out. We are hoping it happens, but $9 a share looks like the most they could get.
Down 31%. HOLD.
Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.52, (was $6.67 ($10,000 added), $6.98 after double up) Valuation $10.28 (was $13.32, $12.89, $13.40)
Up $.10 at $5.83.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Most of this was purchased from Penninsula Capital at $7.03 a share. Cannell is pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D last week, disclosing a 6.1% ownership in MEDW (499,000 shares). COnstellation has $243 million in revenues and is profitable. Looks like something is going to happen here. Buy some more--new average Buy price wil be $6.33.
Down 11%. HOLD
Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $8.69 (was $11.51)
Up $.25 to $3.08
This really stinks.
No news.
Down 58%. HOLD
MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $2.38 (Was $2.62 before another $10,000 and was $3.00 before double up), Valuation $6.84 (was $7.58, $7.59)
Down $.09 to $1.70.
For 2008 they are projecting revenue of $145-$150 million and EBITDA breakeven. But it sounds like this will not happen until the second half of 2008. If they can turn this around-a double or triple from here is possible.
Our valuation dropped to $6.84. If they can do what they say in 2008, a valuation of close to $8 is possible.
Trading at 25% of our latest valuation
Down 25%. BUY
PDL Biopharma. (PDLI-Recommended 10/21/2007)
Buy Price $12.69 (was $14.15, before $10,000 adder, $16.53 before $10,000 adder, and $20.04 before double-up), Valuation $18.00 to $20.00
SOLD at $13.84 for a 9% gain.
Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, NEW Valuation $9.97 (Was, $10.66, $9.39)
Up $.52 to $4.42.
Earnings out last week and they were good. Revenues were $47.7 million, up 17%, EPS was $.04 compared to a $.06 loss last year. Guidance for this quarter was good---$48-$52 million in sales and EPS of $.05-$.08. Backlog grew to $30 million from $23 million. Our valuation actually fell to $9.97, but this will vary based on the quarterly results.
Trading at only 44% of our valuation.
Up 3%. BUY
OB-abies (Bulletin Board Listed Stocks)
Interestingly, our OB-abies have held up better than the "higher-quality" stocks so far this year. They are down about 6% on average, compared to 23% for the stocks above. At least so far. As proven by OPTIO, patience is necessary with these stocks.
ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up), Valuation $5.61 (was $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.55, up $.05.
Earnings were great, stock goes down. ARI does little to get any investor attention. Wake up management--you have a great little company here worth 3X what it is selling for.
Now down 4%. BUY. Still a Huge valuation gap here.
Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.93 (Was $.99 and $1.19 before adding $10,000-twice), Valuation $3.41 (was $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.78, down $.12.
Earnings were out in early February. Sales up only 4%, but earnings up 69%!. EPS was $.04 compared to $.02 last year. Pre-tax earnings were up over 100%. Our valuation rose to $3.41.
Now down 16%. BUY.
CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.31 (Was $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price down $.01 at $.28. Closed at $.22.
Earnings out at the end of March. Not bad at all. Q4 revenues were $4.8 million, gross margin was 72%, and excluding a $200,000 impairment charge, CTI actually made about $77k of income. Net cash (net of debt) grew by $350,000.
Our valuation went up to $1.31 per share.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 21% of our latest valuation.
UP 4%. BUY
Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up) New Valuation-$2.28 (Was $2.08)
Closed at $.99, up $.33.
As hoped for, LTUS had a blow-out Q4. Sales up 72% to $19.2 million, EPS was $.08, (adjusted for some non-recurring income). Stock was up 50% this week but it is still far below our new valuation of $2.28 per share. For the year they made $.19 EPS on a non-GAAP basis ($.26 GAAP).
This is still a BUY.
Up 28%.
We sold PDLI last week for a gain of 9%. This week we think adding another $10,000 to MEDW is a good idea. DTLK and LTUS.ob earnings out last week and both were good.
NASDAQ was up 4.9% last week, the DOW was up 5.0% and the S+P 500 was up 4.3%.
Last week we went 7 stocks up, 6 down.
For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is +2.6%,-25.9 and +9.6% respectively. Since inception we are now 21 stocks up and 11 down.
So far in 2008 the DOW is down 3.1%, NASDAQ is down 9.4% and the S+P 500 is down 5.3%. The NASDAQ is now down a whopping 19.9% since October 31, 2007.
The Russell 3000 and the Wilshire 5000 are both down just about 5.5% this year.
Since inception we have closed out the following positions:
2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn't help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
The model portfolio assumes $10,000 invested in each stock (unless we double-up--then it is $20,000), less $10 commission each way (TD Ameritrade rate).
For the 19 stocks that we closed out in 2006, 2007 and 2008 the average gain was 23%.
Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Up $.43 to $8.96.
The company has $54.4 million in cash ($1.73 per share), and is trading at about 2 times 2008 revenues (net of cash)and is growing about 30% a year.
Earnings out 4/23 before the market opens.
Now down 5%. HOLD.
DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $9.03 (was $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $4.03, down $4.12. DWCH is now trading at 46% of our valuation.
No news.
Now up 28%. HOLD
Parlux Fragrances (PARL-Recommended 11/30/2006)
New Buy price $4.14 (was $4.78 before $10,000 adder, $6.12 before another $10,000 added, $6.65 before double up), Valuation $11.24 (Was $10.80 $9.20, $8.63, $13.77)
PARL closed at $3.13, down $.08.
Latest earnings were very good. Stock is down. The market in general is anticipating that the bottom will fall out of everything.
Now trading at 28% of our valuation.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 24%. BUY.
ILOG SA (ILOG-recommended 3/26/2007)
Buy price $12.08 (was $12.92 before another $10,000 added, $13.60 before double-up), Valuation $24.67 (was $20.51, $23.22, $20.99, $20.52)
Closed at $8.93 up $.48.
No news, just lack of interest.
For FY2008(this year) they are STILL projecting another 20% increase in sales but revised their earnings projections down. They still have $3.39 a share in cash.
A buy-out is a decent possibility here.
Down 26%. HOLD
Celebrate Express (BDAY-recommended 4/17/2007)
NEW Buy Price $6.15 (was $8.38 before $10,000 adder and $8.82 before double-up), Valuation $15.51 (Was $17.85 $18.18)
Down $1.32 to $4.28.
Lots of action here. Buy-out offer, very bad quarter.
BDAY had a miserable quarter. Still struggling with their new computer systems, etc.
Sales down, big loss. Our valuation fell to $7.82.
BDAY also pulled their earnings announcement last week as they apparently received interest from someone on a buy-out. Were it not for this, we would pack up the truck and sell this one as their struggles are more than we thought (and they thought too).
Trading at 72% of our valuation.
Hold for a while until this "take-over" thing flushes out. We are hoping it happens, but $9 a share looks like the most they could get.
Down 31%. HOLD.
Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.52, (was $6.67 ($10,000 added), $6.98 after double up) Valuation $10.28 (was $13.32, $12.89, $13.40)
Up $.10 at $5.83.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Most of this was purchased from Penninsula Capital at $7.03 a share. Cannell is pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D last week, disclosing a 6.1% ownership in MEDW (499,000 shares). COnstellation has $243 million in revenues and is profitable. Looks like something is going to happen here. Buy some more--new average Buy price wil be $6.33.
Down 11%. HOLD
Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $8.69 (was $11.51)
Up $.25 to $3.08
This really stinks.
No news.
Down 58%. HOLD
MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $2.38 (Was $2.62 before another $10,000 and was $3.00 before double up), Valuation $6.84 (was $7.58, $7.59)
Down $.09 to $1.70.
For 2008 they are projecting revenue of $145-$150 million and EBITDA breakeven. But it sounds like this will not happen until the second half of 2008. If they can turn this around-a double or triple from here is possible.
Our valuation dropped to $6.84. If they can do what they say in 2008, a valuation of close to $8 is possible.
Trading at 25% of our latest valuation
Down 25%. BUY
PDL Biopharma. (PDLI-Recommended 10/21/2007)
Buy Price $12.69 (was $14.15, before $10,000 adder, $16.53 before $10,000 adder, and $20.04 before double-up), Valuation $18.00 to $20.00
SOLD at $13.84 for a 9% gain.
Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, NEW Valuation $9.97 (Was, $10.66, $9.39)
Up $.52 to $4.42.
Earnings out last week and they were good. Revenues were $47.7 million, up 17%, EPS was $.04 compared to a $.06 loss last year. Guidance for this quarter was good---$48-$52 million in sales and EPS of $.05-$.08. Backlog grew to $30 million from $23 million. Our valuation actually fell to $9.97, but this will vary based on the quarterly results.
Trading at only 44% of our valuation.
Up 3%. BUY
OB-abies (Bulletin Board Listed Stocks)
Interestingly, our OB-abies have held up better than the "higher-quality" stocks so far this year. They are down about 6% on average, compared to 23% for the stocks above. At least so far. As proven by OPTIO, patience is necessary with these stocks.
ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up), Valuation $5.61 (was $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.55, up $.05.
Earnings were great, stock goes down. ARI does little to get any investor attention. Wake up management--you have a great little company here worth 3X what it is selling for.
Now down 4%. BUY. Still a Huge valuation gap here.
Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.93 (Was $.99 and $1.19 before adding $10,000-twice), Valuation $3.41 (was $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.78, down $.12.
Earnings were out in early February. Sales up only 4%, but earnings up 69%!. EPS was $.04 compared to $.02 last year. Pre-tax earnings were up over 100%. Our valuation rose to $3.41.
Now down 16%. BUY.
CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.31 (Was $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price down $.01 at $.28. Closed at $.22.
Earnings out at the end of March. Not bad at all. Q4 revenues were $4.8 million, gross margin was 72%, and excluding a $200,000 impairment charge, CTI actually made about $77k of income. Net cash (net of debt) grew by $350,000.
Our valuation went up to $1.31 per share.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 21% of our latest valuation.
UP 4%. BUY
Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up) New Valuation-$2.28 (Was $2.08)
Closed at $.99, up $.33.
As hoped for, LTUS had a blow-out Q4. Sales up 72% to $19.2 million, EPS was $.08, (adjusted for some non-recurring income). Stock was up 50% this week but it is still far below our new valuation of $2.28 per share. For the year they made $.19 EPS on a non-GAAP basis ($.26 GAAP).
This is still a BUY.
Up 28%.
posted by Cheap Stock Investor | 7:51 AM
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