Cheap Stocks, 5/17/2008 Update
The markets all rose last week, with all the major indices up 2-3%. We, on the other hand were down 1.2%.
MIVA, CTIG.ob and AVSO.ob earnings out last week. DWCH current price is stupid and we are adding even more here.
NASDAQ was up 3.4% last week, the DOW was up 1.9% and the S+P 500 was up 2.7%.
Last week we went 6 stocks up, 6 down and 1 even (again).
For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is -1.2%,-28.4 and +7.1% respectively. Since inception we are now 21 stocks up and 11 down.
So far in 2008 the DOW is down 2.1%, NASDAQ is down 4.7% and the S+P 500 is down 2.9%. The NASDAQ is still down a 11.5% since October 31, 2007.
The Russell 3000 and the Wilshire 5000 are both down just about 2.5% 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 $.41 to $10.57.
SPNC announced a new product last week and a small acquisition ($5 million in annual revenue). Hopefully these small "add-ons" will not distract management from the great opportunity they already have in front of them.
The company has $53.4 million in cash ($1.69 per share), and is trading at about 2.5 times 2008 revenues (net of cash)and is growing about 30% a year.
Crappy market--and short hackers at work again.
Now up 12%. HOLD.
DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (added $10,000, averaged down from $3.66), Valuation $8.47 (was $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $2.68, down $.27.
Our valuation is $8.47, so we are trading at 32% of our valuation.
This price is pretty stupid in our opinion--adding another $10,000 here. New avg. buy price will be $3.02
No news last week.
Now down 15%. BUY
Parlux Fragrances (PARL-Recommended 11/30/2006)
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 $3.40, up $.13.
Latest earnings were very good. Stock is down.
Now trading at 30% 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 18%. 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 $24.06 (was $24.67, $20.51, $23.22, $20.99, $20.52)
Closed at $8.78 up $.84.
ILOG revised their 2008 guidance down from 20% sales growth and $1-6 million in operating income to double digit sales growth and breakeven operating income. ILOG's market cap, minus cash is $80 million. This is less than 50% of annual sales, for a software company with 70%+ gross margins.
Cash is $3.84 a share (44% of market cap).
ILOG is trading at 34% of our valuation.
A buy-out is a decent possibility here.
Down 27%. BUY
Celebrate Express (BDAY-recommended 4/17/2007)
Buy Price $6.15 (was $8.38 before $10,000 adder and $8.82 before double-up), Valuation $7.82 (Was 415.51, $17.85 $18.18)
Up $.16 to $3.30.
BDAY pulled their earnings announcement five weeks ago 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 42% of our valuation.
Hold for a while until this "take-over" thing flushes out. We are hoping it happens, but $7 a share looks like the most they could get.
Down 46%. HOLD.
Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up) NEW Valuation $10.99 (was $10.28, $13.32, $12.89, $13.40)
Down $.22 at $5.85.
Earnings out in early May. Sales dropped by 11%, but they still managed to make $.04 per share. Not "barnburing" results by any definition, but still a lot better than last quarter. Accordingly, our valuation rose to $10.99 from $10.28. With all the ruckus noted below--we still like this stock.
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 in April, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
In early May, Constellation increased its bank credit line to $105 million from $50 million. Looks like just about enough to swallow MEDW.
Looks like something is going to happen here.
Down 8%. BUY
Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up), Valuation $9.90 (was $8.69, $11.51)
Down $.21 to $2.75
No news.
Down 27%. 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), NEW Valuation $6.42 (was $6.84, $7.58, $7.59)
Down $.01 to $1.61.
Earnings out last week. Nothing exciting unfortunately.
Sales were down to $33 million from $42.7 million last year and $34.6 million last quarter. They lost $5.1 million compared to $5.3 million last year.
For 2008 they lowered their outlook slightly and are projecting revenue of $140-$150 million and EBITDA breakeven to an EBITDA loss of $3 million. 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 fell again to $6.42.
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 33%. HOLD
Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $9.97 (Was, $10.66, $9.39)
Up $.08 to $4.63.
No news.
Trading at 46% of our valuation.
Up 8%. 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 2.7% 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 $1.45, down $.08.
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 10%. 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), NEW Valuation $4.00 (was $3.41, $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.85, up $.03.
Earnings out last week. Sales weak, but earning were great.
Sales dropped from $14.6 million to $12.8 million. But, net income was $1.005 million compared to a $224,000 loss last year. EPS was $.05 versus a loss of $.02 last year. Despite this, and some small insider buys, we managed to go up $.03 for the week.
For the 9 months ended March 31, earnings per share were $.12 (untaxed).
Our valuation rose to $4.00 from $3.41.
Now down 9%. 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 unchanged at $.29. Closed at $.25.
CTI announced earnings last week. Sales were good, but they had another loss. Sales were up to $5.339 million from $5.054 million. They managed to reduce their loss to $180,000 from $587,000 last year. Their VOIP business continues to struggle and lose money--$729,000 in the current quarter. Gross margin % rose to 75% from 72%. Still an "undercover" company and stock.
Our valuation rose slightly to $1.38 from $1.31.
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 7%. 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 $1.13, down $.03.
The stock got up to $1.24 last week before getting hit a bit on Friday. Looking good.
HOLD
Up 35%.
MIVA, CTIG.ob and AVSO.ob earnings out last week. DWCH current price is stupid and we are adding even more here.
NASDAQ was up 3.4% last week, the DOW was up 1.9% and the S+P 500 was up 2.7%.
Last week we went 6 stocks up, 6 down and 1 even (again).
For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is -1.2%,-28.4 and +7.1% respectively. Since inception we are now 21 stocks up and 11 down.
So far in 2008 the DOW is down 2.1%, NASDAQ is down 4.7% and the S+P 500 is down 2.9%. The NASDAQ is still down a 11.5% since October 31, 2007.
The Russell 3000 and the Wilshire 5000 are both down just about 2.5% 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 $.41 to $10.57.
SPNC announced a new product last week and a small acquisition ($5 million in annual revenue). Hopefully these small "add-ons" will not distract management from the great opportunity they already have in front of them.
The company has $53.4 million in cash ($1.69 per share), and is trading at about 2.5 times 2008 revenues (net of cash)and is growing about 30% a year.
Crappy market--and short hackers at work again.
Now up 12%. HOLD.
DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (added $10,000, averaged down from $3.66), Valuation $8.47 (was $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $2.68, down $.27.
Our valuation is $8.47, so we are trading at 32% of our valuation.
This price is pretty stupid in our opinion--adding another $10,000 here. New avg. buy price will be $3.02
No news last week.
Now down 15%. BUY
Parlux Fragrances (PARL-Recommended 11/30/2006)
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 $3.40, up $.13.
Latest earnings were very good. Stock is down.
Now trading at 30% 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 18%. 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 $24.06 (was $24.67, $20.51, $23.22, $20.99, $20.52)
Closed at $8.78 up $.84.
ILOG revised their 2008 guidance down from 20% sales growth and $1-6 million in operating income to double digit sales growth and breakeven operating income. ILOG's market cap, minus cash is $80 million. This is less than 50% of annual sales, for a software company with 70%+ gross margins.
Cash is $3.84 a share (44% of market cap).
ILOG is trading at 34% of our valuation.
A buy-out is a decent possibility here.
Down 27%. BUY
Celebrate Express (BDAY-recommended 4/17/2007)
Buy Price $6.15 (was $8.38 before $10,000 adder and $8.82 before double-up), Valuation $7.82 (Was 415.51, $17.85 $18.18)
Up $.16 to $3.30.
BDAY pulled their earnings announcement five weeks ago 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 42% of our valuation.
Hold for a while until this "take-over" thing flushes out. We are hoping it happens, but $7 a share looks like the most they could get.
Down 46%. HOLD.
Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up) NEW Valuation $10.99 (was $10.28, $13.32, $12.89, $13.40)
Down $.22 at $5.85.
Earnings out in early May. Sales dropped by 11%, but they still managed to make $.04 per share. Not "barnburing" results by any definition, but still a lot better than last quarter. Accordingly, our valuation rose to $10.99 from $10.28. With all the ruckus noted below--we still like this stock.
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 in April, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
In early May, Constellation increased its bank credit line to $105 million from $50 million. Looks like just about enough to swallow MEDW.
Looks like something is going to happen here.
Down 8%. BUY
Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up), Valuation $9.90 (was $8.69, $11.51)
Down $.21 to $2.75
No news.
Down 27%. 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), NEW Valuation $6.42 (was $6.84, $7.58, $7.59)
Down $.01 to $1.61.
Earnings out last week. Nothing exciting unfortunately.
Sales were down to $33 million from $42.7 million last year and $34.6 million last quarter. They lost $5.1 million compared to $5.3 million last year.
For 2008 they lowered their outlook slightly and are projecting revenue of $140-$150 million and EBITDA breakeven to an EBITDA loss of $3 million. 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 fell again to $6.42.
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 33%. HOLD
Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $9.97 (Was, $10.66, $9.39)
Up $.08 to $4.63.
No news.
Trading at 46% of our valuation.
Up 8%. 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 2.7% 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 $1.45, down $.08.
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 10%. 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), NEW Valuation $4.00 (was $3.41, $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.85, up $.03.
Earnings out last week. Sales weak, but earning were great.
Sales dropped from $14.6 million to $12.8 million. But, net income was $1.005 million compared to a $224,000 loss last year. EPS was $.05 versus a loss of $.02 last year. Despite this, and some small insider buys, we managed to go up $.03 for the week.
For the 9 months ended March 31, earnings per share were $.12 (untaxed).
Our valuation rose to $4.00 from $3.41.
Now down 9%. 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 unchanged at $.29. Closed at $.25.
CTI announced earnings last week. Sales were good, but they had another loss. Sales were up to $5.339 million from $5.054 million. They managed to reduce their loss to $180,000 from $587,000 last year. Their VOIP business continues to struggle and lose money--$729,000 in the current quarter. Gross margin % rose to 75% from 72%. Still an "undercover" company and stock.
Our valuation rose slightly to $1.38 from $1.31.
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 7%. 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 $1.13, down $.03.
The stock got up to $1.24 last week before getting hit a bit on Friday. Looking good.
HOLD
Up 35%.
posted by Cheap Stock Investor | 7:52 AM
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