Cheap Stocks

We focus on undervalued small-cap stocks. Usually with a large cash cushion. We have developed a valuation formula that has been highly successful, especially on small tech stocks. Since 2006, we have closed out 49 stock positions with an average gain of 37%. 9 stocks have been taken over.

Saturday, October 14, 2006

Better week

We went 7 up, 4 down and 2 even last week. Our model portfolio year-to-date gain, was up 1.8% to 14.1%. The mini-caps have still been lagging in our opinion. DWCH continued as our biggest dog followed by, MIVA, LINN.ob, OPTO.ob and INFT. Since the start of the year we are 11 up and 5 down.

The model portfolio assumes $10,000 invested in each stock, less $10 commission each way (TD Ameritrade rate).

SPNC-(Buy price $10.65, Valuation $18-$20). Price jumped $1.29 to $12.98 last week, on a Citicorp recommendation and shorts getting squeezed a bit. Now up 22%. HOLD

CAW-(Buy price $9.45, NEW Valuation $19.35 (was $18.40)). Closed up $.15 at $9.98. Yield about 3%. Valuation moved up to $19.35. Up 6% so far. BUY.

QADI-(Buy price $6.93, Valuation $13.73 (was $11.86). Closed at $8.49, up $.24. Yield about 1.2%. Trading at only 62% of valuation. Has $1.30 in cash also. Up 23% so far. HOLD.

PDLI-(Buy price $19.31, Valuation > $30)--Closed at $20.38, up $.20. Now up 6%. HOLD.

MIVA-(Buy price $3.80, Valuation $7.38 (was $9.10)). MIVA closed at $3.09, up $.15. Now down 19% to date. HOLD until we see their full earnings results for the quarter and update our valuation.

DWCH-(Buy price $3.66, Valuation $7.63 (was $9.31)). Closed at $2.27, down $.11, still a loser--down 38%. HOLD to see how this quarter turns out. Valuation gap is still huge, but declining.

INFT-(Buy price $4.11, Valuation $6.86 (was $7.32)). Down $.02 last week to $4.08. Still has $2.52 per share in cash. Price objective $5.50. Now down a tiny .7%. BUY.


ARIS.ob-(Buy price $2.06, Valuation $5.28 (was $5.21)). Closed at $2.10, up $.15 last week. Now up 2% so far. BUY if you can find some shares. Huge valuation gap. Valuation moved up a bit to $5.28.

Linn.ob-(Buy price $.36, Valuation $.66 (was $.79)). Closed at $.29, down $.02 last week. Still trading at only 44% of our current valuation. Down 19% YTD. HOLD until we get some revenue growth and stop losing money.

OPTO.ob-(Buy price $1.25, Valuation $2.54 (was 2.88)). Closed at $1.15, down $.05. Now back in the red with a 8% loss. BUY.

AVSO.ob-(Buy price $1.19, Valuation $3.36 (was $3.81)). Stock closed at $1.87, up $.06. Now up 57%. Still only trading at only 57% of our valuation. HOLD.

CTIG.ob-(Buy price $.27 ask, Valuation $1.05 (Was $.82)). Ask price stayed at $.32. Closed at $.32. Cash is $.28 per share. Up 19% so far (based on asked price). If you own this HOLD. If you don't-BUY.

IYXI.ob-(Buy price $1.91, Valuation--over $3.00). Closed even at $2.51, up 31%. This is still very risky, but could be a real barnburner is they do what they say they are going to do. HOLD.


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