Cheap Stocks, 8/15/2008 Update
We had a good week last week, despite Lotus. We were up 6.05% on the strenght of Parlux, IPass and Healthstream.
The DOW was down .6%, NASDAQ was up 1.6% and the S+P 500 was up .2%.
We went 8 stocks up, 5 down and 1 even.
We sold Parlux last week for a 56% gain. After their last quarter mess, we figured it was time to take a profit.
For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is +6.1%,-26.7 and +8.8% respectively. Since inception we are now 23 stocks up and 13 down, with 3 of them being down 10% or less.
So far in 2008 the DOW is down 12.1%, NASDAQ is down 7.5% and the S+P 500 is down 10.5%. The NASDAQ is still down a 14.2% since October 31, 2007.
The Russell 3000 and the Wilshire 5000 are both down just about 11% 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)
2008-BDAY -39% (long overdue takeover offer-or "take-under")
2008-DTLK +40%
2008-ILOG +26% (Buy-out offer from IBM)
2008-PARL +56%
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 23 stocks that we closed out in 2006, 2007 and 2008 the average gain was 22%.
Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Up $.21 to $9.17.
The company has $44.4 million in cash ($1.33 per share), no debt and is trading at about 2.3 times 2008 revenues (net of cash)and is growing about 30% a year.
Now down 3%. BUY.
DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.02 (was $3.21 added $10,000, averaged down from $3.66), Valuation $8.64 (was $8.47, $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $1.84, down $.07.
They have $.75 a share in cash and are profitable.
Trading at a measly 21% of our valuation.
Now down 39%. 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 $12.40 (Was $11.24, $10.80 $9.20, $8.63, $13.77)
SOLD on 8/15 for $6.45--56% gain.
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 $.30 at $5.71.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. 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.
On May 21 Constellation purchased another 586,000 shares of MEDW at prices from $5.43to $5.70 (most at $5.70). So Constellation now owns 1,056,000 shares--13.9%.
Looks like something is going to happen here--but when?
Down 9.9%. 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)
Up $.01 to $2.80
No news
Down 25%. HOLD
MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up), NEW Valuation $5.61 (was $6.42, $6.84, $7.58, $7.59)
Up $.02 to $1.04.
Blinkx, a U.K. company made an all cash offer to buy MIVA in early August for $1.20. MIVA rejected the offer almost immediately saying it was too low and they think they can do better.
They better, or there will be shareholder lawsuits on this one.
Earnings last week were another downer. Sales down from Q1 and last year and they lost $6.5 million. Cash was down to $17.2 million ($.53 per share).
Our valuation continued downward to $5.61 per share from $6.42.
Now they are saying they will reach profitability in 2009.
Even though MIVA is a money losing mess, they are at such a low price to valuation that we will hold for another quarter. Hopefully we get a better take-over offer above our cost basis.
Trading at 19% of our latest valuation
Down 36%. HOLD
Harris Interactive. (HPOL-Recommended 5/25/2008)
Buy Price $1.82 (was $2.02 before $10,000 added and $2.15 before double up), Valuation $5.96
Up $.06 to $1.45.
On 8/13 Finaciere De Sainte Marine bought 25,103 shares at $1.40 bringing their holdings to 6,640,381 shares or just over 12% of the company.
Earnings due out Friday, 8/22 before the open.
Trading at 24% of our valuation.
Down 20%. BUY
IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), NEW Valuation $4.30 (was $4.09)
Up $.19 to $2.18.
No news.
With $1.12 per share in cash (51% of market cap), we feel that this has little additional downside.
No news.
Up 15%. HOLD
Healthstream Inc. (HSTM-Recommended 8/4/2008)
Buy Price-$2.40
Valuation $4.42
Up $.21 to $2.60.
No news.
Up 8%. HOLD
CCA Industries. (CAW-Recommended 8/4/2008)
Buy Price-$7.00 (6.4% dividend)
Valuation $18.36
Down $.57 to $6.58.
Dividend yield up to 6.5%.
No news.
Down 6%. BUY
OB-abies (Bulletin Board Listed Stocks)
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 $5.63 (was $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.35, down $.05.
Earnings announced in June were impressive. $.06 per share in earnings (untaxed)for the quarter and $.14 per share for the first three quarters. Our valuation moved up to $5.63 per share. This is still way too cheap.
They announced a small aquisition in early July. Will add $1 million in revenue and be profitable. This is the stuff that will help get some attention for ARI.
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 16%. 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 $.81, up $.01.
Earnings out in early May. 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. For the 9 months ended March 31, earnings per share were $.12 (untaxed).
Now down 13%. BUY.
CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, NEW Valuation $1.29 (Was $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price unchanged at $.28. Closed at $.18.
Q2 earnings announced last week. Sales were ok, but they had another loss. Sales were $5.035 million compared to $6.1 million last year. Last year included about $900,000 of legal settlement income. They lost $553,000, which included $247,000 of patent enforcement costs. They indicated that there might be a litigation settlement before the end of the year. Their VOIP business continues to struggle and lose money--$707,000 in the current quarter. Gross margin % held steady at about 75%.
They might have to sell or shut this VOIP business down in our opinion. Just losing too much money, and eroding shareholder value.
Our valuation moved down to $1.29 from $1.38.
Still an "undercover" company and stock.
This is still trading at only 22% 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-$1.61 (Was $2.28, $2.08)
Closed at $.56, down $.10.
Without Lotus we would have been up 8.5% for the week.
Earnings our last week. Sales were up 51% over last year to $19.4 million. They earned $2.2 million or $.05 per share. For the 6 months, sales were up 47% to $31.1 million and they reported $.07 per share in earnings.
So why is the stock down? It looks like it is trading at at less than 4 times EPS.
Well, their legal structure, apparently uncollectible $13 million of receivables from their Chinese affiliated company and their committment to build a manufacturing plant for about $70 million with no disclosable means of financing it, are giving all investors pause. Also their "Selling Expenses" went from $800,000 last year to $5.9 million in the current quarter as they paid $3 million more commissions to sell product and $2.4 million in "bonuses" to accelerate collections. Pretty odd, almost sounds desperate.
Our valuation fell to $1.61 from $2.28.
Hopefully they will illuminate us all on their conference call on Monday. Either they have a plan that this will all work out, or they are just plain stupid.
Keep your finger on the SELL trigger on this one.
Down 33%. HOLD (weak)
The DOW was down .6%, NASDAQ was up 1.6% and the S+P 500 was up .2%.
We went 8 stocks up, 5 down and 1 even.
We sold Parlux last week for a 56% gain. After their last quarter mess, we figured it was time to take a profit.
For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is +6.1%,-26.7 and +8.8% respectively. Since inception we are now 23 stocks up and 13 down, with 3 of them being down 10% or less.
So far in 2008 the DOW is down 12.1%, NASDAQ is down 7.5% and the S+P 500 is down 10.5%. The NASDAQ is still down a 14.2% since October 31, 2007.
The Russell 3000 and the Wilshire 5000 are both down just about 11% 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)
2008-BDAY -39% (long overdue takeover offer-or "take-under")
2008-DTLK +40%
2008-ILOG +26% (Buy-out offer from IBM)
2008-PARL +56%
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 23 stocks that we closed out in 2006, 2007 and 2008 the average gain was 22%.
Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Up $.21 to $9.17.
The company has $44.4 million in cash ($1.33 per share), no debt and is trading at about 2.3 times 2008 revenues (net of cash)and is growing about 30% a year.
Now down 3%. BUY.
DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.02 (was $3.21 added $10,000, averaged down from $3.66), Valuation $8.64 (was $8.47, $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $1.84, down $.07.
They have $.75 a share in cash and are profitable.
Trading at a measly 21% of our valuation.
Now down 39%. 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 $12.40 (Was $11.24, $10.80 $9.20, $8.63, $13.77)
SOLD on 8/15 for $6.45--56% gain.
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 $.30 at $5.71.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. 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.
On May 21 Constellation purchased another 586,000 shares of MEDW at prices from $5.43to $5.70 (most at $5.70). So Constellation now owns 1,056,000 shares--13.9%.
Looks like something is going to happen here--but when?
Down 9.9%. 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)
Up $.01 to $2.80
No news
Down 25%. HOLD
MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up), NEW Valuation $5.61 (was $6.42, $6.84, $7.58, $7.59)
Up $.02 to $1.04.
Blinkx, a U.K. company made an all cash offer to buy MIVA in early August for $1.20. MIVA rejected the offer almost immediately saying it was too low and they think they can do better.
They better, or there will be shareholder lawsuits on this one.
Earnings last week were another downer. Sales down from Q1 and last year and they lost $6.5 million. Cash was down to $17.2 million ($.53 per share).
Our valuation continued downward to $5.61 per share from $6.42.
Now they are saying they will reach profitability in 2009.
Even though MIVA is a money losing mess, they are at such a low price to valuation that we will hold for another quarter. Hopefully we get a better take-over offer above our cost basis.
Trading at 19% of our latest valuation
Down 36%. HOLD
Harris Interactive. (HPOL-Recommended 5/25/2008)
Buy Price $1.82 (was $2.02 before $10,000 added and $2.15 before double up), Valuation $5.96
Up $.06 to $1.45.
On 8/13 Finaciere De Sainte Marine bought 25,103 shares at $1.40 bringing their holdings to 6,640,381 shares or just over 12% of the company.
Earnings due out Friday, 8/22 before the open.
Trading at 24% of our valuation.
Down 20%. BUY
IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), NEW Valuation $4.30 (was $4.09)
Up $.19 to $2.18.
No news.
With $1.12 per share in cash (51% of market cap), we feel that this has little additional downside.
No news.
Up 15%. HOLD
Healthstream Inc. (HSTM-Recommended 8/4/2008)
Buy Price-$2.40
Valuation $4.42
Up $.21 to $2.60.
No news.
Up 8%. HOLD
CCA Industries. (CAW-Recommended 8/4/2008)
Buy Price-$7.00 (6.4% dividend)
Valuation $18.36
Down $.57 to $6.58.
Dividend yield up to 6.5%.
No news.
Down 6%. BUY
OB-abies (Bulletin Board Listed Stocks)
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 $5.63 (was $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.35, down $.05.
Earnings announced in June were impressive. $.06 per share in earnings (untaxed)for the quarter and $.14 per share for the first three quarters. Our valuation moved up to $5.63 per share. This is still way too cheap.
They announced a small aquisition in early July. Will add $1 million in revenue and be profitable. This is the stuff that will help get some attention for ARI.
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 16%. 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 $.81, up $.01.
Earnings out in early May. 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. For the 9 months ended March 31, earnings per share were $.12 (untaxed).
Now down 13%. BUY.
CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, NEW Valuation $1.29 (Was $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price unchanged at $.28. Closed at $.18.
Q2 earnings announced last week. Sales were ok, but they had another loss. Sales were $5.035 million compared to $6.1 million last year. Last year included about $900,000 of legal settlement income. They lost $553,000, which included $247,000 of patent enforcement costs. They indicated that there might be a litigation settlement before the end of the year. Their VOIP business continues to struggle and lose money--$707,000 in the current quarter. Gross margin % held steady at about 75%.
They might have to sell or shut this VOIP business down in our opinion. Just losing too much money, and eroding shareholder value.
Our valuation moved down to $1.29 from $1.38.
Still an "undercover" company and stock.
This is still trading at only 22% 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-$1.61 (Was $2.28, $2.08)
Closed at $.56, down $.10.
Without Lotus we would have been up 8.5% for the week.
Earnings our last week. Sales were up 51% over last year to $19.4 million. They earned $2.2 million or $.05 per share. For the 6 months, sales were up 47% to $31.1 million and they reported $.07 per share in earnings.
So why is the stock down? It looks like it is trading at at less than 4 times EPS.
Well, their legal structure, apparently uncollectible $13 million of receivables from their Chinese affiliated company and their committment to build a manufacturing plant for about $70 million with no disclosable means of financing it, are giving all investors pause. Also their "Selling Expenses" went from $800,000 last year to $5.9 million in the current quarter as they paid $3 million more commissions to sell product and $2.4 million in "bonuses" to accelerate collections. Pretty odd, almost sounds desperate.
Our valuation fell to $1.61 from $2.28.
Hopefully they will illuminate us all on their conference call on Monday. Either they have a plan that this will all work out, or they are just plain stupid.
Keep your finger on the SELL trigger on this one.
Down 33%. HOLD (weak)
posted by Cheap Stock Investor | 7:39 AM
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