Value Microcaps Pick Six Lotto 09

[Knowledge is King]

nsomniyak challenge....

Well, we're only a week into the contest and I've already frozen two of my six picks. Both of them (CIMT and AIDA) were rolls of the dice on my part as I knew their March quarterly earnings reports would be coming out in the first week of PSL9. I've frozen both stocks now because I was disappointed in both reports. As for my four remaining picks....


Apollo Gold (AGT-$.61) This one is that rarest of beasts, a low P/E gold mining company. Q1 results were strong, with revenues quintupling and EPS of $.02 vs a loss of $.03. AGT trailing EPS is now $.07, giving the stock a P/E of less than 9. While I don't necessarily buy into the rogue-ish "U.S. dollar as toilet paper" claptrap, it does seem prudent to have some sort of gold exposure with the dollar plumbing new depths on a weekly basis. Two negatives in the AGT story are 160+M shares outstanding and the recent announcement of yet another stock offering. Overall, I'm looking for this one to move to a 14-15 P/E, suggesting 50% upside...


Avatech Solutions (AVSO-$.85) I was very surprised not to see this one mentioned on VMC when this software/professional services company reported Q3 (March) results on 5/14. http://biz.yahoo.com/bw/080514/20080514005308.html?.v=1
AVSO has now reported EPS of $.03, $.04, and $.05 over the past three quarters, and they stated in their CC that they will again be profitable in the June quarter. This will set up a nice comp versus last year's loss of $.07. With a forward P/E of less than 6, this one seems like a no-brainer and is the pick I'm most confident of in PSL9.

Optical Cable Corp. (OCCF-$5.44) I picked this one in an effort to, hopefully, cash a quick winner in PSL9. OCCF will be reporting its April results by 6/15 at the latest, and I'm expecting a low-float surge on a comp which I'm WAGging at $.14 vs $.01. If I'm right on my guess, OCCF will be trading at book value and have a trailing P/E of about 10 at that point. With a float of about 5M, this one looks to me like it fits the low-float mania template.

Zagg, Inc. (ZAGG-$.75) This is a wild-card pick with a strong revenue growth trend. Zagg makes a protective film covering ("invisibleSHIELD") for consumer electronics, and a trip to their entertaining website www.zagg.com will show you all about it. What I like about Zagg is the revenues over the past four quarters: 6/07 $800K, 9/07 $1.4M, 12/07 $2.1M, 3/08 $2.8M. I also like that they have announced a deal to be listed on Wal-Mart's website, with an eventual move into WMT stores if the on-line test results warrant. Their Q1 earnings PR http://biz.yahoo.com/bw/080515/20080515005342.html?.v=1
and CC replay are musts if you're DDing this one. I think ZAGG might have the most upside of my picks if they can keep the momentum going and get in some big-box retailers in time for holidays orders.