That is the question, which one are going to develop a following. On rare occasions, I have discussed here "Orphan value" stocks, the like of SEMI, HAUP, GTW (all three already sold at nice profits), HOOK, (nicely up, but still undiscovered and still "problematic but at a discount to book) and TAYD (a great disappointment, so far). Another value stock (PROG, not mentioned here, because it was bought few years back when I was posting on SI), is just coming back to life after almost three years of wandering in the "desert", I am looking for an exit and do not recommend buying here.
I think that the problem with such orphan stocks is that here and there they get better "tracking" and show some progress, but companies that do not have at least $10 MM in sales quarterly, do not have the resources to support a growth infrastructure, kind of a "chicken and an egg" situation, not enough money on hand, and thus inability to finance growth. Take EYDY, their business is really in some rarely applied eye movement medical tests and they are trying to get in "the enforcement" business. Sure they recently went from sub Million quarterly to above a million quarterly...but their customers (more than 50%) is a single distributor (private label) and their growth market (hoped for, enforcement) are municipalities, and for the next two years, these customers are going to be budget constraint, and if we indeed once more go into a recessionary period in 2005 (and the market will "smell" this in advance"), such a company may have difficulties surviving the funding drought that may ensue. I keep away from a company that writes in its PR ... "Our EPS ratio is very low at about 9, so there is a great deal of room for share prices to improve ", that smack of pumping, IMTO. When that PR is too lazy to present the full quarterly report (income statement and balance sheet", I get doubly suspicious. When they crow about sales every month (their "record August" release), it adds to my suspicious worries, get busy with the business, not manipulate the stock price with a stream of releases.... It seems this company has been around at least for the last 10 years, and if they cannot get this business to support a corporate infrastructure (at least $10 MM per quarter), they are going to go nowhere fast, IMTO. By the way, similar comments applies to TAYD, a stock I once thought was greatly undervalued (and still is), but it may take some time before it gets anywhere, if it ever gets there (g). By the way, if it is part of a strategy of allocating up to a given percentage of a port to "Orphan value" stocks (and harvesting those that pay and replace thm with new one), sure, finding some jewels in the BB (or low priced naz as well) is a valid strategy, but committing too much to such a strategy may catch up with difficult results over time (too many BB stocks being just P&D games).
