Genomic Health Inc. (GHDX)

[bpvitale]

NGNM – worth a look...

I hope GHDX shareholders are feeling pretty good about GE's announcement last week to purhcase CLRT for over 5x sales, I know I am. Another small cancer diagnostics company worth taking a hard look at is NGNM.

The company just reported solid third quarter results, with revenue growth of 19% YoY and volume growth of 29% YoY. I think management did a great job on the conference call and seem to be making all of the right moves. With much of the heavy lifting now behind the company, business should begin to improve each quarter going forward, and probably one of the reasons why management was comfortable enough to provide 2011 estimates. NGNM now expects 2011 revenues to be in the range of $41-45 million, which would imply a 25-30% increase in sales next year.

Clearly, the business has bottomed and the business model has reached critical mass.

At 5x 2011 sales of $41 million, NGNM would fetch between $4-5 per share from a strategic buyer.

So at $1.10, the stock appears to be way undervalued and a great opportunity for any small-cap investor, and I still believe NGNM is going to be a big winner, even more than ever, after listening to the third quarter conference call.