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Hello Readers,
We hate to keep playing the same old song and dance, but the markets really don’t look much better than they did a few weeks ago. Sure, some modest gains have been made, including in our own Current Portfolio, which is still mostly in the red. Small stocks are in the dumper and could remain there for a little while longer. Keep in mind that when the subprime carnage hit last month, the mutual and hedge funds sold off many of their small caps in a desperate scramble to raise cash. What can help the situation right now? Good question. The consensus seems to be the Fed rate cut, expected any day now, but that may already be factored into the markets very recent upturn. Now may be a time to step back, but still do a little bottom fishing.
Here are the headlines since the Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.
Wave Systems (WAVX) (9/5/07). To demonstrate how applications for trusted platform modules will be an integral part of the enterprise IT roadmap.
IOMAI ((IOMI) (8/20/07). Launches Phase 1 / 2 safety study of dose-sparing patch for use with pandemic influenza vaccine.
A.P. Pharma (APPA) (8/5/07). To present at Merriman Curhan Ford’s investor confab on September 17, the day we post this Newsletter.
Heska (HSKA) (7/5/07). Slates 3rd QT earnings call for November 7.
Pharmacyclics (PCYC) (6/20/07). Announces encouraging Phase 2 data with Xcytrin in recurrent non-small cell lung cancer patients.
Alphatec(ATEC) (6/20/07). Plans eight million share offering; usually this sort of news would send a stock in a tailspin, but so far, price seems to be holding steady. Keep your fingers crossed. Acquires exclusive license to technology for guided lumbar interbody fusion system.
Xenonics (XNN) (6/5/07). Receives $1.5 million NightHunter order.
Oncolytics Biotech (ONCY) (6/5/07). Collaborators to present research at cancer institute conference on October 2. Company is issued 22ndU.S. patent.
ECtel (ECTX) (5/5/07). Announces multilingual version of RAP – first installation already deployed in China. Wins order for expanding its revenue assurance solution from AT&T.
UQM Technologies (UQM) (2/5/07). To present at Merriman investor conference September 17, the day we post this Newsletter.
Endologix (ELGX) (1/20/07). Announces improved financial outlook.
Neose Technologies (NTEC) (12/20/06). Announces initiation of Phase II renal trial of NE-180.
Lantronix (LTRX) (12/5/06). Post 4th QT loss, but sees profit on 2008 operations; balance sheet still looks okay. Brokerage house downgrades the stock. Introduces first USB-to-ethernet device server to support synchronized audio/video transfer.
Target Logistics (TLG) (11/20/06). Sets earning call for September 19.
YMI Biosciences (YMI (11/5/06). Announces positive preliminary results from Phase I/II lung cancer trial of Nimotuzumab combined with radiation. To present at A.G. Edwards confab on September 18, the day after we post this Newsletter.
Terabeam (PRXM) (11/5//06). Please note new stock symbol is PRXM. Also, name of company has changed to Proxim Wireless. To present at ThinkEquity growth conference on September 19, and at America’s Growth Capital confab on September 20. Mesh charts in at #3.
Advanced Life Sciences (ADLS) (7/20/06). To present data on selected Cethromycin therapeutic studies at antimicrobial and chemotherapy conference.
02Diesel (OTD) (5/20/06). Dutton Associates gives the stock a “Speculative Buy” rating. This is still on the “Endangered List”.
Tri-S Security (TRIS) (5/5/06). Subsidiary awarded $13 million contract for federal facilities in South Carolina. Names new CFO.
Pharmos (PARS) (4/20/06). Issues letter to shareholders.
ThermoGenesis (KOOL) (4/5/06). Recent balance sheet still looks healthy.
Cytogen (CYTO) (3/20/06). Outcomes data demonstrating prognostic value of PROSTASCINT published in peer-reviewed journal Urology.
Lipid Sciences (LIPD) (2/20/06). To present at A.G. Edwards confab on September 19.
8×8 (EGHT) (1/20/06). To present at A.G. Edwards confab on September 18, the day after we post this Newsletter, and, again, at the Merriman investor conference on September 18.
Digital Angel (DOC) (12/20/05). USDA approves DOC’s LifeChip.
RAE Systems (RAE) (10/5/05). South Carolina purchases GammaRAE II radiation detector and MultiRAE Plus toxic gas monitors. Introduces third generation PID to EU market at A+A in Dusseldorf.
EntreMed (ENMD) (9/5/05). Presents data for Phase 2 study of MKC-1 in metastatic breast cancer. To present at ThinkEquity confab on September 19.
Zi Corporation (ZICA) (8/5/05). Application to trade on the NASDAQ Capital Market approved.
N.A. Scientific (NASI) (8/5/05). Several news releases including rescheduling earnings call to September 21. This one is on the “Endangered List”.
Innodata (INOD) (7/5/05). Announces option exercise and increase in stock holdings by CEO, usually a good sign.
B.O.S. (BOSC) (1/5/05). Receives new orders for over $500,000 for CCD cameras from an Israeli hitech company.
Aviza Technology (AVZA) (10/5/04). Provides update or property purchase agreement with Morley Bros. To present at the ThinkEquity confab on September 19.
Network Engines (NENG) (6/5/04). Announces virtual appliance solution offering.
Palatin (PTN) (4/5/04). We are placing this on the “Endangered List”, since the news isn’t getting any better.
OpenTV (OPTV) (3/20/04). Integrated browser solution picked by Jupiter for video-on-demand launch. Another Netherlands’ operator selects OPTV. Collaborates with Broadcom on new platforms..
Gene Logic (GLCC) (4/20/07). Teams with FDA to explore genomic data quality.
Kodiak Oil & Gas (KOG) (9/5/07). BMO Capital Markets gives the stock a “outperform” rating; this is a good thing.
Neurobiological Technologies (NTII) (2/20/07). We are placing this on the “Endangered List” for several reasons. The most recent balance sheet has weakened. Next, on September 17, the day we post this Newsletter the stock will do a planned 1-for-7 reverse split; and seldom do reverse splits help current shareholders.
Our picks for this newsletter area a well-known oil services company listed on the AMEX and a NASDAQ-listed computer services company focusing on the transportation industry.
BOOTS & COOTS INT’L WELL CONTROL, INC. (AMEX: WEL) – $1.20. Twelve-month hi-low has been $2.99 – $1.11. Based in Houston, TX, with about 390 employees, this oil and gas services company has 75.5 million shares outstanding, $67.94 million in current assets, $118.3 million in total assets, and $49.2 million in total liabilities, of which $26.1 million is long-term debt (ouch!). Institutional ownership is around 22%. One analyst rates the stock a “strong buy”, one as a “moderate buy”, and one has it on “hold”. www.bootsandcoots.com
There are some stocks when you hold your nose because of the debt and just go with the story. We’ve been watching “Boots and Coots” as it is known for a long while, and as many already know this is the outfit that helped doused Saddam’s oil field fires during the Kuwati War and in Iraq in 2003. The stock seems to swing up and down depending upon the next threat to energy supplies, and it is now trading at the lower end if its range.
Founded in 1988, and public for over ten years, Boots and Coots provides a suite of integrated pressure control and related services to onshore and offshore oil and gas exploration and development companies, mainly in North and South America, North and West Africa, and, of course, the Middle East. The company’s two segments are Well Intervention and Response.
The Well Intervention segment offers hydraulic workover/snubbing, such as well drilling, well completions, and plugging and abandonment services; SafeGuard program, including risk assessment, loss mitigation, contingency planning, and continuous training, and education in well management; and WELLSURE, a program that includes well control and blowout insurance with post-event response services, including company-wide and/or well specific contingency planning, personnel training, safety inspections, and engineering consultation. It also offers pre-event engineering services, such as consultation, well planning, dynamic kill modeling, and intervention planning; firefighting equipment sales and service; and inspections services. WEL’s Response segment offers well control services, including critical event response, firefighting pumps, pipe racks, athey wagons, pipe cutters, crimping tools, and deluge safety systems on rental basis; and provides hydraulic workover units for emergency well control situations.
In early August, Boots & Coots signed a new two-year contract with Algeria’s national oil company worth $21 Million.
For FY2006, ending 12/31/06, revenue was $97 million with $11 million in net income. During the first six months of the current FY, ending 6/30/07, revenue was $44.2 million with $738,000 in net income.
Sad to say that in the near future, it is a good bet that there will be trouble at some oil patch or gas field somewhere on the planet.
Our 24-month target for the stock is $2.00 to $2.25.
For more information, contact WEL’s Jennifer Tweeton at 281-931-8884; jtweeton@boots-coots.com
XATA CORPORATION (NASDAQ: XATA) – $3.05. Twelve-month hi-low has been $5.50 – $2.71. Located in Burnsville, MN, with about 100 employees, this computer solutions company has 8.5 million shares outstanding, $21.23 million in total current assets, $25.4 million in total assets, little debt, and $14.31 million in total liabilities. Institutional ownership is around 18%. One analyst rates the stock a “moderate buy”. www.xata.com
Sometimes we add to the Current Portfolio what may be called a “snorer” or “boring” company, and, perhaps, that is what Xata Corporation is; but, it has a decent looking balance sheet and seems to have a good foothold in its market.
Founded in 1995, and public since 2001, Xata provides fleet management solutions to the truck transportation industry; its computer systems are used by manufacturing, distribution, petroleum, and other operators of trucking fleets. Its products include XATANET, a web-based fleet management system, and is hosted by the company; and OpCenter, developed in partnership with the nation’s largest private fleets, is a comprehensive enterprise fleet management solution providing what XATA claims to be the best in fleet intelligence, management, and utilization capabilities.
The company’s products provide functions such as two-way messaging and real-time vehicle location (GPS), automation of the Department of Transportation driver log requirements and state fuel tax reporting, vehicle and driver performance reporting, routing, trip optimization and stop activity scheduling, and diagnostic and accidental data capture.
Since its founding, XATA has partnered with the nation’s largest private fleets and leasing companies, including BP Amoco, Coca Cola, and Penske to develop technologies so as to optimize their fleets’ performances. The company has a strategic alliance with John Deere Special Technologies Group. Xata systems have been deployed in over 45,000 vehicles, representing more than 1000 locations in North America.
XATA is not prone to churning out many press releases, but of interest in the latest quarterly report is that the company’s recurring business model generated 71% of total revenue for the first nine months of FY 2007, ending 6/30/07, compared to the corresponding period last FY of 48%.
For the FY ending 9/30/06, revenue was $30.62 million with $1.74 million in losses. During the first nine months of the current FY, ending 6/30/07, revenue was $23.9 million with $3.26 million in losses.
Yes, we’d like to see the losses recede and the company back in the black, again, but the recurrent revenue of 71% of total sales could bode well for the future.
Our 24-month target for the stock is $5.50 to $6.00.
For more information, contact XATA’s Mark Ties at 952-707-5600; mark.ties@xata.com
Look for the October 5, 2007 Newsletter to be posted on 10/1 or 10/2.
Thank you,
George