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, May 18, 2007


QAD released "earnings" last night. Not that bad in our opinion. The stock has taken it on the chin since last Fridays "warning" and is down $.99 since last week at $8.38. We are still up 21%, but of course would have liked to sell it at $10.

Our new valuation based on the quarter is $11.27 down from $15.92. Most of the hit came from a $10 million sales decline from last quarter which looks like the stongest seasonal quarter of the year for QAD. Based on QAD's lastest guidance, our valuation is $14.59, so if they perform as projected, there is still considerable upside here. But until they show it, this is a HOLD.

Just a note. Agile Software got a buy-out offer from Oracle last week. The offer was $8.10 a share and AGIL jumped about $1 or 15% on the offer. We have looked at AGIL before and did not think it was a compelling value, so we reran our valuation formula on their last quarterly results and came up with $7.47 a share. So prior to the offer AGIL was trading at 90% of our valuation--not enough to get us to buy.


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