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.

Friday, March 23, 2007

3/24/2007 Update

Last week we went 7 up and 7 down and 2 even. LINN.ob holds first place on our "biggest dog" list followed by INFT, PARL, DWCH, BDR, and MIVA. For the week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is +1.8%,+6.8% and +23.2% respectively. Since inception we are 14 stocks up and 6 down (4 of which are down less than 10%).

We managed almost a 2% gain last week and are up 6.8% so far in 2007, while the DOW, NASDAQ and the S+P 500 all jumped last week by 3%-3.6%, and are now up .2% to 1.7% for the year.

Nothing much in the way of news last week other than INYX. RITT paused last week and is now only up 70%.

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

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Up $.13 to $10.73 last week.
This is a great company with great prospects that is executing well--but the stock continues to lag.
No news.
Now up 1% so far. BUY.

QAD Inc. (QADI-Recommended 6/14/2006)
Buy price $6.93, Valuation $15.92 (was $13.69 $13.73 and $11.86)
Closed at $9.27, up $.66.
No news.
Trading at 58% of our valuation.
Up 34% so far. BUY.

PDL BioPharma Inc. (PDLI-Recommended 5/21/2006)
Buy price $19.31, Valuation > $30
Closed at $20.04, up $1.32.
Activist investment firm Third Point LLC, which owns 8 million shares or 7.5% of the company, continues to lurk in the background. We think that PDLI is a bargain at this price. This however, remains a very volatile stock.
No real news last week.
Now up 4%. BUY.

MIVA Inc. (MIVA-Recommended 3/18/2006)
Buy price $3.80, NEW Valuation $7.37 (was $7.52, $7.38 and $9.10)
MIVA closed at $3.79, up $.14.
Now down .3%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $8.32 (was $7.50, $7.63, $9.31)
Closed at $2.95, down $.03 for the week.
No news.
Now down 8%. BUY.

Inforte Corp. (INFT-Bought January 13, 2006)
Buy price $4.11, Valuation $6.13 (was $6.95, $6.86)
Closed unchanged at $3.44 last week.
No news.
Has $2.64 per share in cash. Price objective $5.50.
Now down 16%. HOLD.

Mobius Management Systems (MOBI-Recommended 11/12/2006)
Buy price $6.68 (averaged down from $7.08), Valuation $12.82, was $12.69
Down $.13 to $7.23 last week.
No news.
Up 8%. HOLD.

RiT Technologies (RITT-Recommended 11/12/2006)
Buy price $1.00, Valuation $3.36 (Was $2.69)
Closed down $.07 at $1.70 last week.
No news. RITT finally paused last week. Still trading at only 51% of our valuation.
Normally this would still be a "buy", but with the fast run-up, we are cautious.
Up 70%. HOLD.

Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $6.65, Valuation $13.77)
PARL closed at $5.99, up $.19 last week.
We think the stock price will continue to vacillate for a while until we get some positive news. Even a 10Q filing might cause this one to spike up.
Down 13%. BUY.

Blonder Tongue Laboratories (BDR-Recommended 3/4/2007)
Buy price $1.83, Valuation $5.88.
Closed at $1.79 down $.01 for the week.
No news.
Down 2%. BUY

OB-abies (Bulletin Board Listed Stocks)

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $2.06, Valuation $5.03 (was $5.28, $5.28, $5.21)
Closed at $2.10, unchanged last week.
This stock is still illiquid, so price moves are fairly meaningless at this point.
Now up 2%. BUY. Still a Huge valuation gap here.

Lion Inc. (LINN.ob-Recommended 4/15/2006)
Buy price $.36, Valuation $.57 (was $.62, $.66 and before that-$.79)
Closed at $.22, down $.02 last week.
Still trading at only 42% of our current valuation. We will give LION another quarter ot two to see if they can turn things around. They are still "cheap" compared to our valuation (and unfortunately getting cheaper).
Down 39%. HOLD until we get some revenue growth and stop losing money (same story as last quarter).

OPTIO Software Inc. (OPTO.ob-Recommended 3/22/2006)
Buy price $1.25, Valuation $2.89 (was $2.54 and 2.88)
Closed at $1.60, up $.16 last week.
No news and volume has dried up. Has $.44 in cash per share.
Still hoping we will see north of $2.00 this year.
28% gain so far. HOLD.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $1.19, Valuation $3.29 (was $2.69, $3.36, $3.81)
Stock closed at $1.60, down $.10.
I was wrong last week as the "block" reappeared for sale on Monday, at least 10,000 shares of it.
Now up 35%. HOLD.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.28 (Was $1.13, $1.05, $.82)
Ask price dropped $.01 to $.34. Closed at $.32.
No news.
Up 26% based on the ASK price. BUY

INYX Inc. (IYXI.ob-Bought January 3, 2006)
Buy price $1.91, Valuation--over $3.00)
Closed at $2.60, up $.37 last week.
Still waiting on the "attractive cash offer" that was promised by the end of February. They put out a press release this past Monday saying that they would make the offer by the end of this week. Well, it is late on Friday and nothing yet. Hopefully the offer will come, and it will be attractive by our standards and be at least $3 per share--so we can book a a 50% gain on this one. Bank debt is now scheduled for repayment by March 31, 2007 and they have arranged financing for their latest acquisition.
Up 36% HOLD.


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