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, February 17, 2007

Flat week

Last week we went 7 up and 8 down. LINN.ob holds first place on our "biggest dog" list followed by INFT, DWCH, ARIS.ob and PDLI. For the week, 2007 year-to-date, and since we started this Blog in January 2006 our model portfolio is +.1%,+5.8% and +22.1% respectively. Since inception we are 14 stocks up and 5 down (2 of which are down 5% or less).

Avatech released earnings last week. Valuation moved up 22% and stock price barely moved.

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). Up $.52 to $11.01 last week. Shorts lost the battle last week. Earnings due out on February 22, before the market opens. We think that either this quarter or next we could see a significant revenue and stock price pop . Now up 3% so far. BUY.

QADI-(Buy price $6.93, Valuation $13.69 (was $13.73 and $11.86). Closed at $8.07, down $.09. Trading at 59% of valuation. Earnings due March 15th. No news. Has $1.07 in cash also. Up 17% so far. HOLD.

PDLI-(Buy price $19.31, Valuation > $30)--Closed at $19.16, down $.42. Earnings due out on February 21st after the market close. This remains a very volatile stock. Now down 1%. BUY.

MIVA-(Buy price $3.80, Valuation $7.52 (was $7.38 and $9.10)). MIVA closed at $4.34, down $.06. No news last week. Now up 14%. HOLD.

DWCH-(Buy price $3.21 (averaged down from $3.66), Valuation $8.32 (was $7.50, $7.63, $9.31)). Closed at $2.90, down $.16 for the week. Now down 10%. BUY.

INFT-(Buy price $4.11, Valuation $6.13 (was $6.95, $6.86)). Down $.04 to $3.60 last week. Has $2.64 per share in cash. Price objective $5.50. Now down 12%. HOLD.

MOBI-(Buy price $6.68 (averaged down from $7.08), Valuation $12.82, was $12.69). Up $.05 to $7.05 last week. We are now trading at 55% of our valuation and cash is 41% of the market cap. Up 6%. HOLD.

RITT-(Buy price $1.00, Valuation $3.36 (Was $2.69). No news. Closed up $.07 at $1.40 last week. Up 40%. HOLD.

PARL-(Buy price $6.65, Valuation $13.77). PARL closed at $6.79, down $.46 last week. Price fell last week after the $1.02 run-up the previous week. We think the stock price will vacilate for a while until we get some more news. Up 2%. HOLD.


ARIS.ob-(Buy price $2.06, Valuation $5.28 (was $5.28, $5.21)). Closed at $1.95, down $.05 last week. This stock is still illiquid, although volume does seem to be increasing over the last couple of weeks, so price moves are fairly meaningless at this point. Now down 5% so far. Still a Huge valuation gap here.

LINN.ob-(Buy price $.36, Valuation $.62 (was $.66 and before that-$.79)). Closed at $.30, up $.03 last week. Volume was a "huge" 190,000 shares on Friday. Good to see some interest here. Still trading at only 48% of our current valuation. Down 17%. HOLD until we get some revenue growth and stop losing money (same story as last quarter).

OPTO.ob-(Buy price $1.25, Valuation $2.89 (was $2.54 and 2.88)). Closed at $1.70, up $.05. Has $.44 in cash per share also. Price continues to creep up and there seems to be a lack of sellers. Maybe we will see north of $2.00 this year. 36% gain so far. HOLD.

AVSO.ob-(Buy price $1.19, NEW Valuation $3.29 (was $2.69, $3.36, $3.81)). Stock closed at $1.66, up $.03. Now up 40%. See our post earlier this week on their earnings release. Valuation jumped 22%, which is a good sign after 2 previous drops. HOLD.

CTIG.ob-(Buy price $.27 ask, Valuation $1.13 (Was $1.05, $.82)). Ask price fell $.01 to $.34. Closed at $.34. Cash is (was) $.24 per share. Eight 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. Seven 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 26% so far (based on ask price). HOLD until we see what we just bought.

IYXI.ob-(Buy price $1.91, Valuation--over $3.00). Closed up $.04 at $2.30, up 20% to date. Still waiting for the "attractive cash offer" that management says is coming in February. Hopefully 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. HOLD.


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