Very strong numbers for ASPN. That .07 in EPS is even after taxes. Don't know how he did it, but Bob had this one pegged months ago...when the stock was still around $1. Talk about a great call!

Surprised no mention of AFPC.OB today. Nice earnings report this morning. Without some 1-time legal expenses, Q2 earnings were .07/share vs. .04/share last year! Q2 revenues up 30%. Stock got an initial pop to $1.55, now back in the $1.30's. I'm buying here and will continue to accumulate on weakness. One of the better plays I've seen recently.


AFP Imaging Reports Record Profitable Second Quarter and Six Month Results for Fiscal Year Ending June 30, 2005
Monday February 14, 9:26 am ET


ELMSFORD, N.Y.--(BUSINESS WIRE)--Feb. 14, 2005--AFP Imaging Corporation (OTCBB:AFPC - News) today reported recent record sales and earnings for the second quarter and six months ended December 31, 2004.
Net Revenues increased 30% for the quarter and 23% for the six months,
Adjusted Income from Operations increased 50% for the quarter and 20% for the six months.
Net revenues for the second quarter were $6.1 million, an increase of $1.4 million or 30%, compared to $4.7 million in the same period last year. Net revenues for the six months ended December 31, 2004 were $10.7 million, an increase of $2.0 million or 23%, compared to $8.7 million in the same period last year. The second quarter revenues were the highest quarterly revenues in four years.

Adjusted Income from Operations for the second quarter was $727,700, an increase of $243,000 or 50%, compared to $484,700 for the same period last year. Adjusted Income from Operations for the six months ended December 31, 2004 was $788,600, an increase of $130,500 or 20%, compared to $658,100 in the same period last year. Adjusted Income from Operations was calculated by excluding charges related to the settlement of environmental lawsuits from Operating Income.

During the second quarter Fiscal 2005, the Company settled one of its outstanding environmental lawsuits relating to activities in 1985. There was approximately $226,800 in associated costs, which have been excluded from Adjusted Income from Operations. During the first quarter Fiscal 2005, the Company incurred approximately $78,200 in associated costs related to the potential settlement of a separate lawsuit. These combined expenses total $305,000 for the six months ended December 31, 2004. These two complaints related to property the Company owned in New Jersey from August 1984 to June 1985, through a graphic arts camera-manufacturing subsidiary whose operations were terminated in 1986.

For the second quarter of Fiscal 2005, Adjusted Net Income, which excludes the above costs associated with the lawsuits, would have been $683,777 or $.07 per basic and diluted share, an increase of $285,300 or 72%, compared to Net Income of $398,444 or $.04 per basic and diluted share for the same period last year. Net Income for the second quarter of Fiscal 2005 was $457,024 or $.05 per basic and diluted share. For the six months ended December 31, 2004, Adjusted Net Income, which excludes the above costs associated with the lawsuits, would have been $690,358 or $.07 per basic and diluted share, an increase of $176,800 or 34%, compared to Net Income of $513,504 or $.07 per basic and $.06 per diluted share for the same period last year. Net Income for the six months ended December 31, 2004 was $385,412 or $.04 per basic and diluted share.

At December 31, 2004, the Company had $1.29 million in total debt, as compared to $1.67 million at June 30, 2004, the end of the Company's prior fiscal year. The Company continues to have positive cash flow and primarily use internally generated funds to reduce debt, and has repaid in full, one of two subordinated notes related to prior dental acquisitions. The Company's working capital was $2.83 million at December 31, 2004 compared to $2.58 million at June 30, 2004, an increase of 10%.

The Company continues to exhibit at several major national trade shows in the current quarter including the Radiological Society of North America, the American Dental Association in Orlando, the Greater New York Dental Show, the Wild Wild West Show (veterinary) in Reno, and the Atlantic Coast Veterinary Conference in Atlantic City. All costs associated with these shows were recorded in the second quarter Fiscal 2005. The Company believes that each of these shows has created significant interest in the Company's products, which is reflected in the growth of sales.

David Vozick, Chairman said, "We are pleased with the positive results the Company has achieved as a result of a strategic plan management put into effect eighteen months ago. Our new products have been well received and we continue build upon internal growth, as well as to search for additional external business opportunities."

AFP Imaging Corporation's quality assurance program is ISO 9001 certified, an international standard. The Company designs, develops, manufactures, and distributes radiographic imaging equipment whose products are widely utilized in dental and medical diagnostics. The Company's new products and imaging technology is providing the gateway for future growth. AFP's products are used by medical, dental, veterinary and industrial professionals. The Company's products include x-ray units, digital x-ray sensors, film processors, chemistry, and panoramic units. The Company's products are sold worldwide under various brand names, which include AFP, DENT-X, and EVA®. For additional product information please visit our web sites at www.afpimaging.com and www.dent-x.com.

Three Months Ended Six Months Ended
December 31, December 31
2004 2003 2004 2003
----------- ----------- ------------ -----------

Net Sales $6,082,235 $4,680,557 $10,737,706 $8,715,436
----------- ----------- ------------ -----------

Adjusted Operating
Income (1) $727,745 $484,744 $788,598 $658,117

Environmental
Lawsuits Charges (1) $226,753 - $304,938 -

Operating Income $500,992 $484,744 $483,660 $658,117

Income Before Taxes $461,869 $445,716 $401,352 $574,976

Provision for Taxes $4,845 $47,272 $15,940 $61,472

Net Income $457,024 $398,444 $385,412 $513,504


Environmental
Lawsuits Charges (1) $226,753 - $304,938 -

Adjusted Net Income
(1) $683,777 $398,444 $690,358 $513,504

Net Income per share
Basic $.05 $.04 $.04 $.06
Fully Diluted $.05 $.04 $.04 $.05

Weighted average
shares outstanding
Basic 9,399,702 9,271,054 9,360,507 9,271,054
Fully Diluted 9,917,431 9,522,350 9,943,100 9,402,036
----------- ----------- ------------ -----------

(1) Excluded from Adjusted Operating Income and Adjusted Net Income for the three months and six months ended December 31, 2004 respectively, are specific non-operating charges of $226,800 and $305,000 respectively, both accrued and/or incurred, associated with settling the outstanding environmental lawsuits.
The remarks contained in this press release and presented elsewhere by management from time to time contain forward-looking statements, which involve risks and uncertainties, including statements regarding the Company's plans, objectives, expectations and intentions. The Company's actual results may differ significantly from the results discussed in this press release or in other forward-looking statements presented by management. Among the factors that could cause actual results to differ materially include failure of revenue on new products to develop as estimated, regulatory delays, loss of existing customers, the Company's inability to meet increasing demand for its new products, general downward trends in the Company's industry and other risk factors as described in the Company's filings with the Securities and Exchange Commission. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company's expectation or any change in events, conditions or circumstances on which such statement is based.



--------------------------------------------------------------------------------
Contact:
AFP Imaging Corporation
David Vozick, 914-592-6100



--------------------------------------------------------------------------------
Source: AFP Imaging Corporation

wade, if you're holding a basket of undervalued stocks...I don't think you should be worried. I've never been a fan of market timing. Nobody really knows what the market is going to do. So to be fully invested or 100% cash because you think the market is going to be up or down this year doesn't make much sense to me.

I am a big believer in diversification and having a healthy cash position at all times (10% or more). I'm sitting on an unusually large amount of cash because I can't find many bargains right now. The lack of buy candidates makes me think we're a lot closer to a market top than a market bottom. Not to mention the looming specters of slowing corporate profits, rising interest rates, ballooning deficits, etc. I think we could see the Dow down 5-10% and Nasdaq down 10-15% in 2005, but who knows? Undervalued stocks with sound fundamentals should hold up significantly better than high P/E momentum plays during a market downturn.

I remember during the dark days of late 2000 through mid 2002, I was losing money because I kept averaging down on a bunch of former high-fliers. Once in a while, I'd get lucky with a double or triple...only to give it right back. Didn't occur to me that when you have minimal revenues, no profits, and a rapidly rising share count...the downside can be extreme. Followed stocks that once traded at several dollars...down to a few pennies.

Also noticed a couple of stocks I owned that actually had decent financials (how did those get in there?) were making steady advances. This was during the depths of the bear market. That's what brought me to the value microcap approach. In the summer of 2002, I jettisoned every junk stock that was dragging me down and focused exclusively on companies with strong growth, low P/E's, and solid balance sheets (they were a lot more plentiful back then!). That strategy enabled me to resurrect my dwindling portfolio and get it growing again. Haven't looked back since. Happened just in time, too. Almost had to get a real job!

Livin, I'm kind of in the same boat as Len. Cash position over 60%. Just can't find many bargains these days. Think we're close to a top and the market may be in trouble later this year.

At the beginning of the week, my largest holding was actually a short on ANTP. Stock really tanked this week after several Form 4 filings showed the CEO had dumped most of his shares. I covered most of my position yesterday and today. Still think it could drop to $10 when they announce earnings in April (should be breakeven to a small loss), but I didn't want to get too greedy. I shorted heavily at an avg. of $40 and was sweating bullets when it flew to the $50's. Knew the fundamentals would catch up with them at some point. Ironically, I made more money shorting ANTP than I have on any of my value microcaps.

I'm down to about 20 stocks, which is the lowest in years. At current prices, I can't say there's anything I'm extremely bullish on. I do think JMIH is a solid little company that could see a pop to .40+ on next month's earnings. I'm still accumulating under .30. Also trying to get more USOO on a dip to $1. They should have a strong Q4 report next month.

In the meantime, I'll be scanning the newswires (and this board!) for new candidates. Something always seems to come along...

Congrats on FPWR. I can't believe that when they announced Q4 earnings of .14/share last September, with backlog rising from $7.6M to $39M, the stock could still be bought in the $3's during the following weeks.

BNSO becoming an interesting balance sheet play. Trading below tangible book value. Stock is at $4.60 and they're sitting on $2.30/share in cash. Revenues and EPS have been flat for the past few quarters after huge growth last year. They've earned .35/share for the first 9 months. Last quarter was a little better than it looked as they paid more in income taxes. Pre-tax income was up 35% from last year.

wade, re PIHC TMFZ CKCM

These were all big positions for me at one time. Should have held my shares as I bought them at much lower prices. Since I remember how cheap they used to be, it would take a pretty sizable drop for me to be interested in buying them back.

sskillz1, re WMCO

I bought a few, but am hoping for a dip to $1. Pretty impressive bottom line improvement in Q1, even though they paid a lot more in taxes in the recent quarter. Subtracting that gain of $355K, it looks like they would have earned a fully taxed .031/share in Q1. Doesn't make the stock that cheap considering the weak balance sheet and high shares O/S. But looking at the financials over the past few years, Q1 seems to be the seasonally slowest of the year.

stock peeker, re CTIG

There was some decent buying volume yesterday. Earnings won't be out until late March. Q4 revenues probably flat vs. last year, but should be a favorable bottom line comp. Did you listen to that interview on WallStreetReporter from earlier this month? CEO said we'd be suprised by the good results we'd see. And that they had $8M cash in the bank and were expecting to grow that by at least 25% this year.

wade, re PIHC

Up to a new 52-week high today...right on cue...we both sold, so I don't know who deserves the credit. LOL

I did listen to the CC. Never heard them quantify the start-up costs. A caller guessed between $200-$300K, but I don't think the CEO would pinpoint the number.

One of the positives I heard was that fiscal Q2 is typically their slowest quarter. So should be some good revenue growth ahead. I'm less sure about earnings, so I'll be interested to see how they do in Q3. Apparently the buyers in the $1.80's have more confidence that I do.

Footwedge, re SWTX

When I saw it drop below $1, I was tempted. The company could face some serious margin pressure this year, but they should have a strong Q4. Plus they've got an easy comp vs. last year. So if guidance on the CC isn't too negative, there could be a pop when they announce Q4 results in a couple weeks.

rrat, re PIHC

Boy, I'll say the CEO was optimistic on the CC! He seemed pretty ecstatic to be reporting record Q2 earnings of .02/share. I don't know if that's a good thing or a bad thing.

Next quarter will be telling. If earnings rebound to the .04-.05/share level, the stock should move higher. I hope it goes to the $2's for you guys (the fact that I sold should bode well for a short-term pop!). I just found the stock much more attractive in the $1.30's after Q1 earnings of .043/share with guidance for continued top and bottom line improvements.

wade, re CKCM

I thought earnings would be down last quarter when I saw the 8K on the bTrade acquisition...their financials were ugly! Yet somehow they delivered a strong bottom line performance. Really surprised me. So I wouldn't know what to expect tomorrow. With my conservative nature, I would probably sell before earnings given the huge run-up the last few months. Expectations are going to be VERY high...

Livin, re DGIX

I'm not sure why the increased volume in recent weeks. I agree that someone seems to be accumulating. The stock still looks cheap based on its fundamentals. My main concern is the lack of PR. Could at least give us 4 earnings PR's per year. With more and more stocks delisting in the wake of escalating Sarbanes-Oxley expenses, I just can't imagine companies that do nothing to take advantage of their public status (like DGIX) would pay a lot more to keep their listing. For that reason, I took some profits around .90 on some shares I was lucky enough to buy in the .60's after the last 10Q.

Len, re GMAI

I don't quite understand your post. GMAI collapsed in 2000 along with thousands of other Nasdaq stocks when the bubble burst...not because the auction markets disappeared.

Then you make comparisons to the seasonality in 2000-2002? They were unprofitable then on a MUCH lower revenue base. Completely different company now.

And I'm not sure why you think there is rampant speculation in the coin/stamp auction market? In my experience, coin/stamp collectors are a pretty conservative bunch. Some prefer to buy rare coins because they find stocks too risky.

As for the negatives on GMAI, I would agree with the points made by abh3vt. But I still bought more under $11 and would buy quite a few if it dropped under $10. We'll see how the CC goes tomorrow.

wade, re PIHC

That would be nice, but I didn't get that impression from the PR. They announced the first phase of the expansion (30 beds) and said the total capex would be $500K (for all 114 beds).


Pioneer Behavioral Health Announces Opening of First Phase of Expansion at the Detroit Medical Center
THURSDAY, OCTOBER 14, 2004 2:27 PM
- PR Newswire


PEABODY, Mass., Oct 14, 2004 /PRNewswire-FirstCall via COMTEX/ -- PHC, Inc., d.b.a. Pioneer Behavioral Health (PIHC) , a leading provider of inpatient and outpatient behavioral health services and pharmaceutical research today announced the opening of the first 30 beds at the Detroit Medical Center. The Company also received its Michigan state approval for the final 54 acute beds completing the necessary steps to open all 114 beds.

This represents the first 30 of 114 planned acute and long-term psychiatric beds at this leased facility. Alexander Luvall, who joined the Company during September as Executive Vice President, will oversee the facility and ensure a smooth commencement of operations.

Bruce A. Shear, Pioneer Behavioral Health's President and Chief Executive Officer, commented, "This announcement represents a milestone achievement for Pioneer, as we have dramatically expanded our inpatient capabilities and capacity in Wayne County with this cooperative lease agreement with the Detroit Medical Center. We will nearly double the number of beds we operate with minimal capital expenditure. In total we estimate capital expenditures of approximately $500,000 to expand the total of number of beds operated from 130 to 244. Once fully operational, we expect this facility to contribute $14 million in annualized incremental revenue, and we anticipate contributions during the Company's second fiscal quarter."

Mr. Shear commented, "These new facilities expand our abilities to meet the significant demand we are seeing for our services in Wayne County. More importantly, we are better positioned to serve the clinical needs of Wayne County residents by providing high quality psychiatric services while allowing our patients to stay close to their families throughout their treatment. We have hired and trained the staff, begun admitting patients, and we look forward to providing this important service to the citizens of Wayne County."

About Pioneer Behavioral Health

Pioneer Behavioral Health's core business provides inpatient and outpatient behavioral healthcare services. The company contracts with national insurance companies, major transportation and gaming companies to provide behavioral health services. Pioneer also owns and operates Wellplace.com, a leading Internet-based provider of behavioral health services to consumers and professionals, and Pivotal Research Centers, Inc. a Nationally recognized clinical research company. For more information, please visit our web site at www.phc-inc.com or www.haydenir.com.

This press release may include forward-looking statements that are subject to risks and uncertainties. Forward-looking statements include information about possible or assumed future results of the operations or the performance of the company and its future plans and objectives. Various future events or factors may cause the actual results to vary materially from those expressed in any forward-looking statements made in this press release. These factors and risks are discussed in the company's annual report on Form 10-KSB for the years ended June 30, 2003 and 2002, copies of which were filed with the Securities and Exchange Commission, and in our quarterly reports on Form 10-Q filed with the Securities and Exchange Commission since October 2003.

For further information please contact Bruce A. Shear of PHC, Inc., +1-978-536-2777; or Investors, Matthew Hayden of Hayden Communications, Inc., +1-843-272-4653.

SOURCE Pioneer Behavioral Health

Bruce A. Shear of PHC, Inc., +1-978-536-2777; or Investors,
Matthew Hayden of Hayden Communications, Inc., +1-843-272-4653

wade, re ZONS

I listened to the call. Didn't hear anything that made me want to buy more. Plus they said Sarbanes-Oxley costs will have a negative effect on EPS. I'm holding and hoping for a bounce. Still think today's selloff is overdone. I was worried about that 1-time gain in last year's Q4. If they had reported Q4 earnings of .09/share vs. .04/share last year on a 100%+ increase in net income, I think the stock would be down a lot less today.

Not a good day for earnings. I thought GMAI had a nice report. Q2 fully-taxed earnings of .27/share vs. .14/share last year. Now entering seasonally stronger Q3 and Q4. Stock gapped up, and is now down around $11.

bigpike, re PIHC

I don't like the way they forgot to mention those start-up costs in previous PR's. All they did was tell us about the favorable impact the Detroit facility would have on revenues and earnings. Maybe they'll quantify those start-up costs in the CC. I can't imagine it was more than .01/share, but we'll see.

PIHC earnings were pretty disappointing. Not sure how management can guide for continuing improvements in profitability...then post a sequential drop in earnings from .04/share to .02/share. I'm glad the stock stayed in the $1.60's so I could sell. Even now it's in the $1.50's...holding up well considering the earnings number.

bucfan, re MNDO ZONS

MNDO had a great Q4 with earnings of .10/share vs. .05/share last year. Q4 revenues up 34%. Strong balance sheet still strong with over $2/share in cash. Paying an annual dividend next month. The problem is the guidance (or lack thereof). Order flow seems good with 4-5 new customer wins per quarter, just some timing issues on a couple of large contracts. Still would have been nice to see something in terms of guidance. That'll probably keep a lid on the stock tomorrow.

I'm not sure why the Q4 revenue shortfall on ZONS. On the last CC, they said October had started slow and was still tracking 15% ahead of last year. I thought we'd see revenues closer to $150M. Gross margins rebounded to 11.6%. So if revenues had been $150M, earnings probably would have been the .15+/share we were hoping for. Will have to listen to the CC tomorrow to see if some large orders were delayed at the end of the quarter. I'm sure management will be bullish on 2005, but their forecasting ability is now a little suspect. With all that said, I'm surprised the stock took such a hit in AH. Not many $4 Nasdaq stocks with solid balance sheets that earned a fully taxed .09/share last quarter. Depending on the explanation of the lower Q4 revenues on the CC, I may try to buy some more at that level tomorrow.

Started buying USOO.OB again. Apparently a newsletter reco is what caused the run to $1.65 last week. Now back to $1.10. Based on the strength in the trucking sector, I think they can improve on the Q3 earnings of .042/share. If they can post Q4 earnings of .05-.06/share next month, stock should see a big pop. Should be a very favorable comp vs. last year.

gilead, re KPCG

I was pretty disappointed in the numbers. Had a feeling they weren't going to be good when the CEO stopped his monthly purchase of 2500 shares in October. But I didn't think they'd actually lose money in Q4. Was hoping the .21 number would give the stock a brief pop so I could sell.

researcher and footwedge, re TCCO

I was holding this one into the annual earnings report in November and was surprised to see it rocket to $7 on the news. They earned .11/share in fiscal Q4 and basically warned for Q1. With a little over a month left in Q1, the CEO said:

"The engineering services component of revenue slowed during the current quarter, but we anticipate that it will improve during the later quarters of fiscal 2005."

Then when the 10K was released at the end of December, it was revealed that backlog had dropped sequentially from $1,390,000 to $950,000. Seemed pretty risky to hold into the Q1 report.

Knowledge, re ARIS

I sold it a few weeks ago...and the stock hasn't done anything since. That's why I was worried I was losing my touch!

Even though ARIS should have a couple of terrific bottom line comps coming up, I was disappointed to read in the 12/16 PR that they're only expecting low-mid single digit revenue growth for the year. That, combined with the weak balance sheet, made me think the stock might be stuck in the mid-$2's for awhile.

footwedge, re WIRX

I don't know. That news had the opposite effect on me. An alliance with a pink sheet company trading at .002 made me feel less confident about WIRX. Maybe because they've been promising a PR campaign since that interview last summer...and that news with HPON is all they have to show for it.

WIRX up 31%!?! I was starting to think I was losing my touch of selling a stock right before it zoomed. Whew!

livin, you can use stock screeners or if you're really gung ho, check the news wires each day. I scan businesswire, prnewswire, and marketwire each morning and night...as well as have a news streamer on my Level II screen during the trading day.

VSTY seems fairly valued. Before the tax benefit, it looks like they earned .31/share last quarter. That's their big quarter, so don't know if the other earnings reports will move it much. Good growth and a solid balance sheet, but it looks like they'll earn .30-.35/share for the year (before tax benefits), so current P/E of 20-25 seems appropriate.

Len, I used to pay more attention to what a stock had done...but I found I was often missing the boat. If a $1 stock announces a huge turnaround with quarterly earnings of .10/share and they're confident that the numbers will continue to improve...I don't care if the stock was at .25 last month...I'm jumping on it because I think it could be trading at $2-$3 next month. If it does drop below $1, I'll gladly add more shares.

Now when I'm accumulating a stock, and the news I expect to move the stock is several weeks off...then I will pay more attention to the chart. No need to chase it if there is plenty of time for a pullback. Also depends on how undervalued I think the stock is. If only slightly undervalued, definitely no rush. If I think it's extremely undervalued, I may buy a few just in case it keeps going up...but hoping it drops so I can take a larger position.

wade, re CFK and WSTF

I'm surprised CFK has done so well after earnings. They had a great quarter, but I think traders are ignoring the seasonality. The figures were presented in Canadian dollars, so Q4 earnings were more like .13/share. Q1 should be about .14-.15/share (on the CC, they said Q1 may be slightly better than Q4). But then they enter their 2 weak quarters. Earnings will drop to more like .05-.08/share.

WSTF had a strong Q4 as expected. If you take away a couple of charges, they actually earned closer to .30/share. But that's their seasonally best quarter. Upcoming Q1 is typically the weakest. 10K had an interesting nugget of info...said first 2 months of Q1 were tracking 14% ahead of last year. So should have a favorable comp coming up, but earnings probably in the .05-.10/share range. With the stock in the low $5's, I don't see much of a pop on that report.

noligfromwithin and bucfan, re ACY

Without the $1,727,000 gain in Q4 from sale of aircraft and aircraft engines, they would have reported a large loss in the quarter. So not the next AIRT from a fundamentals standpoint. But with its tiny shares O/S, traders may have some fun with it.

rrat, re PIHC

I'm looking forward to the numbers on Wednesday. Hoping for Q2 earnings of .05/share on $8M+ in revenues. Would be a very favorable comp vs. last year. If they're bullish on the CC about further growth in the second half of the fiscal year, think the stock could see $2. As you noted, the stock has risen from the $1.30's to $1.60 in recent weeks. Hopefully the accumulation is by someone in the know!

wade, re FORD

Yes, the insider selling is a concern. Michael Schiffman has been selling for awhile (and at much lower prices), so I don't think he's a good indicator. But other insiders (including the CEO) are now selling. If you look at where the stock has been for the last few years, it certainly would make sense for them to take some profits. Or maybe they believe last quarter's results aren't sustainable? But we were thinking the same thing...so should be no surprise. I wouldn't hold into the next report as I think Q2 earnings will be more like .15/share...and then even lower in Q3 and Q4.

crk, I wish there was a simple valuation model to use! I rely on my experience of looking at thousands of stocks over the years and seeing how they performed after a good earnings report. What made some of them go up while others were left in the dust?

There are many criteria to use when evaluating a stock. Even when investors have similar strategies, they can be equally excited about one stock and in total disagreement about another. For me, P/E ratio is the most important metric. When a company reports a sharp increase in profits, I ask myself where would this stock trade if they can sustain (or hopefully further improve) the numbers. I like to use an annualized P/E of 10 (trailing P/E would be better...but harder to find) for my projections. Others may prefer P/E's of 15 or 20, but I'd rather be conservative.

Then I modify my fair value target based on my factors. How fast is the company growing revenues and earnings? Obviously, companies with faster growth rates deserve higher P/E's. I think bottom line growth is more preferable to top line growth, as a big EPS improvement with minimal revenue change will still attract attention. The problem is when there is no growth in sales or earnings. In that case, a P/E of 10 is probably too ambitious.

Then you have to look at the balance sheet. What's the tangible book value (goodwill is meaningless)...how much cash per share? Companies with lots of cash on the books should trade at a premium to their balance sheet-challenged peers. Some people like to look at the debt/equity ratio, current ratio, etc. I haven't found those measures particularly useful, but if it's working for them...then great!

When determining if the last earnings report was sustainable or a 1-quarter wonder...what caused the sharp increase in the numbers? Did management provide some bullish commentary in the last earnings PR? If there was a conference call, did they offer any guidance? Any seasonality to the business? Any 1-time gains/losses? If backlog and/or new order rates are provided, how do they compare to the last few quarters?

Still so many things to look at. Where is the stock traded? Listed stocks almost always trade at a premium to their OTC:BB brethren. What sector are they in? This is less important than it used to be. The biggest winners typically came from the tech sector, but look at how apparel stocks like TRLG.OB and ISAC.OB have surged over the last year. Are the earnings taxed...if not, when will they be? Are insiders buying or selling? Any potential negatives buried in the SEC filings...such as a bunch of options now in the money that will dilute EPS? Are the upcoming comps going to be easy or tough?

That should be enough to get you started. Happy hunting! Let us know what you find...

Nice find, gilead. Not only did they highlight the outperformance of microcaps, but particularly value microcaps! Looks like the word may be getting out about our successful strategy. The upside potential that exists with smaller stocks is tremendous. Why buy a large cap fund that MIGHT be up 5-10% this year (and probably won't even beat the S&P 500)...when you can trounce the market averages if you're willing to put in the time. And by focusing on microcaps with fundamentals, we're eliminating 95% of the junk on the OTC:BB...and limiting our downside risk considerably.

The microcap market is often inefficient, allowing investors who do their homework an opportunity to get in early. Also easier to research a smaller company...as you can read all the company's news, crunch the financial numbers, make sense of the SEC filings, email the CEO, etc. Individual investors can actually be on a level playing field with Wall Street for a change. I can't possibly know more about what's happening at IBM or MSFT than the legions of Harvard MBA's covering each company for the big brokerage houses. Instead of buying their recommendation...a stock with 10% growth and a P/E of 30, I'd much rather buy a stock with 30% growth and a P/E of 10.

Nice close on PDGE! Right at the high of the day. Wouldn't surprise me to see this one bust out further next week to $2. Can't believe we were able to load up in the low $1's after the company posted Q3 earnings of .09/share in December on 103% revenue growth and a huge backlog.

I just picked up some JMIH as well. Was hoping for a dip to the .20's before what should be a good earnings report next month.

Wow! LMIA at $5.90 and still going strong. Some sizable blocks at the ask...while I'm taking profits. Where were all these buyers last week? Could have had all the shares they wanted in the low $4's. Guess they weren't reading this board.
:)

Knowledge, re JMIH

EPS unchanged due to rounding, but revenues would be up 20% with net income up over 100%. Plus they should provide some upbeat comments about the rest of the fiscal year.

LMIA up in the $5.40's! Was in the low $4's last week. Apparently there was a segment on CNBC that talked about the soaring demand for business jets.

From last earnings PR:

Sales for the Sheet Metal segment in the third quarter of 2004 were $19.4 million, an increase of 34.7 percent from $14.4 million in the third quarter of 2003. The increase was primarily due to higher sales of business jet components. As previously reported, weakness in demand for business jets in 2003, reflected by production stoppages by several LMI customers and their subsequent aggressive inventory reduction strategies significantly reduced business jet sales in 2003 and the first quarter of 2004. However, increasing production rates of business jets commencing in the second quarter of 2004 as well as an award of significant new work by Gulfstream to several LMI plants resulted in higher business jet component sales in the third quarter of 2004.