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.

Thursday, March 08, 2007

ARI Networks (ARIS.ob)

ARI released Q2 earnings this morning. Not bad. Sales were up 5% to $3.69 million, but earnings were down to $.248 million from $.524 million as they continue to invest in additional sales and marketing resourses. Our valuation fell a bit to $5.03 per share from $5.28, mostly because they bought OC-Net in Q2, which was reflected in their balance sheet, but not their P+L in Q2. They are forecasting increasing sales gains in the second half of the year, without the impact from OC-Net. OC-Net will get them some "bulk" and maybe help get them on some radar screens--and hopefully increase their earnings. For the six months of FY2007 ARI had net income of $.07 per share, untaxed. So if they can even repeat this in the second half they are at $.14 untaxed and around $.09 fully taxed. We rate this a BUY.


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