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zenvesting

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zenvesting

Re: nsomniyak post# 35

Saturday, 09/22/2007 2:06:42 AM

Saturday, September 22, 2007 2:06:42 AM

Post# of 971
Nsomniyak challenge:

In the spirit of the Nsomniyak challenge, I'm posting this at 2 a.m..

My basic strategy was the same as in previous contests, to stick with little companies, low share counts, and ones that I think offer good entry points and/or have potential for a big break out. But the trick is obviously in the timing; so you'll see I picked a few of the same stocks that I picked for PSL6.....and got better entry prices this time around :( I just hope that at least one or two of them "come around" this time so that I have a more respectable performance than my 77th place finish last contest.

AMLJ.ob: I own it. I thought an entry at $1.02 looked like a good buy for this rather mundane little electrical component manufacturer. Their recent purchase of a 51% stake in a manufacturer of satellite based electrical grid control systems, Mica-Tech, adds a bit of an uncertainty here. Their first quarterly report incorporating Mica-Tech's results was ugly; so it was nice to see Mica-Tech announce an $800k order on the first day of PSL7.

But even with the relative uncertainty of Mica-Tech, AMLJ looks pretty cheap with a P/S of 1.3, a P/B of 1.2, and a P/E under 10. I know the low valuation is because their operating results haven't been too good lately; but I think their margins are going to improve in their core business in the coming quarters with these larger orders from Raytheon that are expected to begin in 2008. That should enable them to achieve some economies of scale in manufacturing under that $30M contract. Raytheon is buying microwave amplifiers that are a component of Man Air Launched Decoys (MALDs) being built for the USAF; but full scale production isn't scheduled to begin until 2008. Here's the 6/30/2005 PR about AMLJ's $30M contract with Raytheon:
http://siliconinvestor.advfn.com/readmsg.aspx?msgid=23708530

Because that contract PR doesn't mention MALDs, here's a PR to establish AMLJ's involvement in that specific program:
http://www.genengnews.com/news/bnitem.aspx?name=10457758

Finally, here's the bit on the MALD program that indicates full scale production is slated to begin in 2008:
http://www.designation-systems.net/dusrm/m-160.html

The USAF currently plans to procure up to 1500 ADM-160s, and start of full-scale production is tentatively planned for 2008.

CPHI.ob: I don't own it. I scrambled and picked this stock after another I was informed one of my picks didn't qualify. It's been on my watch list for a while because their numbers look unreal, but because they're in China, I'm not exactly 100% sure they are real....so I don't actually own any. I've had CESV and CXTI.ob on my watch list in the past, so I've got severe China stock phobia, especially for tickers that begin in “C”. But I've also seen how they can take off, irregardless of their actual state of existence, so it's fun pick for a contest.

DSCI.ob: I own it. This little company makes wound care products. Their trading near book value as their results have suffered as they've been acquiring and developing some new products to develop higher margin business. It seams they have laid their foundations and are now getting serious about expanding sales:

"In particular, sales of our ALGICELL(TM) Ag Antimicrobial Silver Alginate product were $159,000 in the quarter versus $99,000 in the previous quarter. That number would have been higher except that we have held off on fully implementing our sales and marketing efforts until we received FDA marketing clearance for our Active Manuka (Leptospermum) honey based product line. With the clearance recently received, we plan to launch the product line with a full sales and marketing effort, increasing our direct selling staff from four to fifteen in 2007, followed by substantial increases to this base budgeted for the following two years.
“

EROX.ob: I don't own it; but I like a small share count for explosive potential in this contest. But I'm not real certain of the company's fundamentals. This company develops pheromone technology, licenses it, and also sells their own line of fragrances. They signed a licensing agreement with J&J last year; but haven't introduced a product yet. Their royalty rates aren't specified anywhere, so it's a bit hard to tell what kind of financial impact that licensing agreement could have, but I think the stock could make a significant move if/when J&J introduces a product.....I just have no idea what or when that might be. The company also just announced they were going to reposition and promote their own brand with some BIG PR firm in New York....and I think this could also be a source of potential excitement if they get the packaging and marketig right:
http://biz.yahoo.com/prnews/070912/aqw171.html?.v=9

EZEN.ob: Sad to say, I still own it. This is the 7th straight contest I've picked this stock....and this is the lowest entry price of all the contests....which is also sad. It's in the gutter now trading at a P/B of 1.1 and a P/S of 1.2. I've held this stock all this time thinking the company was going to move toward the commercial market, get more exposure, and command ratios similar to that of it's peers....but that never really happened. Now their operating results and share price have taken a hit; but I'm still compelled by the prospect of them becoming a more prominent player in their market space. The most compelling thing lately is this sole source RFP from the Department of Education yieldude found:
http://investorshub.advfn.com/boards/read_msg.asp?message_id=22060523

They've also have made some references to “new products” and “commercial markets” in their recent PRs and have hired two well-qualified directors of sales and marketing. While this is a very competitive market, this company has had an advantage in some of the toughest niche markets for secure collaboration software and I think they could use that strength to expand into other niches.

TMED.ob: I own it. They've been working on developing a laser fiber for BPH treatment for HoLAP lasers that BSX and Lumenis sell (Lumenis manufactures). They collect a 7% royalty on the fibers BSX currently sells; but their new fiber is being designed to meet higher performance standards (faster ablation and lower failure rates).

The company has missed its own time frame twice now and those delays have caused investors to hammer this stock over the past several months, down to it’s current price range. But in recent CEO interviews, he's said he's confident that they'll be able to meet BSX's quality standards. It's a bit of a lottery ticket; but I think the odds are pretty good despite the market's impatience. It's only been a year since they announced this initiative, which isn't very much time at all in the development of medical devices.

Well, good luck everybody!

"Our houses are such unwieldy property that we are often imprisoned rather than housed in them." - Henry David Thoreau, Walden: Economy, 1854

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