Value Microcaps Pick Six Lotto 10

[Knowledge is King]

Nsomnyiak Challenge:


Cobra Electronics (COBR-$2.97) This company makes and markets consumer electronics such as CBs, two-way radios, and mobile navigation products. The last of these come from COBR's Performance Products Ltd. unit, a recent acquisition that is generating solid sales and income gains. COBR's Q2 results were impressive, with EPS of $.26. I don't see Q3 nearly that good, but the company has forecast improved profits vs last year's EPS of $.06. Q4 is traditionally the company's strongest quarter and EPS approaching Q2 levels is not out of the question. COBR also features an impressive balance sheet, with a hard book value of over $5.50/share. I think you could make a case that the Cobra namebrand alone is worth the current market cap of the company. COBR is one of my largest personal holdings.

China NE Petroleum (CNEH-$2.43) This PR is all you need to know about this rapidly-growing Chinese oil company. Trading at a P/E of about 4 and a P/CF of less than 2, CNEH appears to be a "no-brainer". Of course I thought that at $3.50, $3.10, $3, $2.80...ugh. http://biz.yahoo.com/prnews/080916/cntu034.html?.v=15 CNEH is my second largest personal holding (after UVE).

DAC Technologies (DAAT-$.76) Once again, this PR gives you the story. With only $.01 in EPS through six months, the company is looking for second half EPS of $.10-.12, suggesting nice comps versus the $.02 each recorded in Q3 and Q4 of 2007. http://biz.yahoo.com/iw/080815/0425391.html

IMI Global (INMG-$.25) I reviewed the IMI story in this post. http://investorshub.advfn.com/boards/read_msg.aspx?Message_id=31057278&txt2find=inmg
I'll need to see the Q3 results to be sure, but I believe new COOL (Country of Origin Labeling) regulations represents a huge market opportunity for the company. One important note: the company originally said it would be taking a $1.6M gain on sale of assets in Q3; this has been reduced to $350K, with the balance to be recognized over an undetermined period of time.

Security National Financial (SNFCA-$2.40) I don't know which is more baffling to me about SNFCA--how cheap the stock is on fundamentals or how little interest there is in it on the VMC board! The past three quarters show EPS of $.15, $.18, and $.27. Even better is the upcoming September comp of a loss of $.09. Needless to say, I expect them to blow that away. Being very conservative and giving them a dime for the 9/08 quarter results in trailing EPS of $.70 for a rock-bottom PE of less than 4. Like COBR, the book value here is very attractive at $7.76. Admittedly financial stocks are like anthrax for your portfolio, but come on, the valuation on this one is toooo cheap. One other unique feature of SNFCA is that they pay a 5% stock dividend every January and, from my multi-year experience with the stock, I've noticed that the stock price rarely adjusts much if at all when the dividend is paid...strange but true...and essentially representing a 5% yield.

Stamford Industrial Group (STMF-$1.48) This is another one that I'm surprised didn't catch the attention of fellow VMCers. This 8/11/08 PR (which is one of the most detailed I've ever seen from a pink sheet company) gives you the STMF story. The highlights are that the company has raised its 2008 revenue forecast from $125-135M to $130-140M, and its EPS forecast is $.23-.27 (suggesting a P/E of about 5 or 6). Sounds like a China microcap forecast, right? :) But STMF is based and operates in, of course, Stamford CT, USA.