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, March 03, 2007

Beating all the Averages!

Last week we went 5 up and 8 down and 2 even. LINN.ob holds first place on our "biggest dog" list followed by INFT, PARL, DWCH, SPNC and PDLI. For the week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is -2.3%,+4.3% and +20.4% respectively. Since inception we are 13 stocks up and 6 down (3 of which are down less than 10%).

What a nasty week last week. While we got hit some, we are still up 4.3% so far in 2007, while the DOW is down 2.8%, NASDAQ is down 2% and the S+P 500 is down 2.2%. Really no significant news about any of our stocks last week. RITT and AVSO.ob continued to barrel along and are now up 56% and 47% respectively.

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
Down $.57 to $10.05 last week. Shorts won the battle last week as the markets obviously didn't help. This is a great company with great prospects that is executing well--but the stock continues to lag.
Now down 6% so far. BUY.

QAD Inc. (QADI-Recommended 6/14/2006)
Buy price $6.93, Valuation $13.69 (was $13.73 and $11.86)
Closed at $8.07, down $.46. QAD lost all the gain from the previous week when it jumped due to the Robinson Humphrey upgrade. Trading at 59% of valuation. Earnings due March 15th. No news. Has $1.07 in cash also.
Up 17% so far. HOLD.

PDL BioPharma Inc. (PDLI-Recommended 5/21/2006)
Buy price $19.31, Valuation > $30
Closed at $18.26, down $1.23. We still think that PDLI is a bargain at this price. This however, remains a very volatile stock.
Now down 5%. BUY.

MIVA Inc. (MIVA-Recommended 3/18/2006)
Buy price $3.80, Valuation $7.52 (was $7.38 and $9.10)
MIVA closed at $4.00, down $.35. Now up 5%. 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 $3.03, up $.02 for the week.
Now down 6%. BUY.

Inforte Corp. (INFT-Bought January 13, 2006)
Buy price $4.11, Valuation $6.13 (was $6.95, $6.86)
Down $.01 to $3.56 last week. Has $2.64 per share in cash. Price objective $5.50.
Now down 13%. Like watching "moss grow". HOLD.

Mobius Management Systems (MOBI-Recommended 11/12/2006)
Buy price $6.68 (averaged down from $7.08), Valuation $12.82, was $12.69
Up $.03 to $7.15 last week. Holding up well.
Up 7%. HOLD.

RiT Technologies (RITT-Recommended 11/12/2006)
Buy price $1.00, Valuation $3.36 (Was $2.69)
No news. Closed up $.08 at $1.56 last week.
Looks like this one wants to go higher.
Up 56%. HOLD.

Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $6.65, Valuation $13.77)
PARL closed at $5.88, down $.65 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 12%. BUY.

OB-abies (Bulletin Board Listed Stocks)

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $2.06, Valuation $5.28 (was $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. Thankfully, ARI went back to sleep as far as trading volume goes last week--less than 20,000 shares traded all week. Not a bad week to "sit-out". Earnings due March 8th after the market close. Hoping for some revenue growth here. No very concerned with the bottom line as long as any loss is not BIG.
Now up 2% so far. HOLD. Still a Huge valuation gap here.

Lion Inc. (LINN.ob-Recommended 4/15/2006)
Buy price $.36, Valuation $.62 (was $.66 and before that-$.79)
Closed at $.27, down $.01 last week. Still trading at only 44% of our current valuation. Earnings due March 8th, after the close. Unfortunately we are not expecting great things here.
Down 25%. 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, unchanged last week. There was a 30,000 share bid sitting there on Friday at $1.58, but after trading about 5,000 shares the bid "went away". But it shows there is decent buying interest out there. We managed to snag a few shares at $1.51 on Wednesday. Has $.44 in cash per share also. We are now stuck in the $1.60-$1.70 range. Maybe 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, NEW Valuation $3.29 (was $2.69, $3.36, $3.81)
Stock closed at $1.75, up $.05. Price keeps creeping up, even in a crummy market like last week.
Now up 47%. HOLD.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.13 (Was $1.05, $.82)
Ask price fell $.03 to $.30. Closed at $.30. Cash is (was) $.24 per share. Ten weeks ago CTI announced the purchase of Ryder Systems LTD. an international provider of electronic and on-line billing solutions and developer of VoIP business applications. Nine weeks ago they filed an 8-K, with details of the financing they got to fund the $11 million purchase--but still no details of what they bought.
Now up 11% so far (based on ask price). HOLD until we see what we just bought.

INYX Inc. (IYXI.ob-Bought January 3, 2006)
Buy price $1.91, Valuation--over $3.00)
Closed at $2.40, up $.10 last week. Well no announcemnt on the "attractive cash offer" by the end of February as promised. There seemed to be some anticipation of it last week as the price rose as high as $2.55, but nothing happened and then the market crashed. Hopefully the offer will come, and it will be attractive by our standards and be at least $3 per share--so we can book at least 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 26% HOLD.


Blogger tchannon said...

You may also want to look at SCMR. Trading at $3.67. $3.20 in cash. Reported strong growth in sales in last report. Company is also profitable and reported positive cash flow for the ttm.

6:52 AM  
Blogger Cheap Stock Investor said...

Thanks. Hard to get all the current numbers for SCMR, but based on what I can find, my valuation is still less than $4 a share. Not my cup of tea. With these kind of "name" tech stocks, good news can drive it up, and it has a great cash base to minimize the downside. Good luck with it.

2:23 PM  

Post a Comment

<< Home