***We no longer follow the companies mentioned in these backdated newsletter issues. These samples of past newsletters are generated to give you an idea of what you can expect when you subscribe. Please do not use any of the information contained in the samples below as current advice. If you would like to purchase a newsletter subscription, please click here. ***
Hello Readers,
Since the last Newsletter, we closed three more positions; two for gains and one for a loss.
ENDWAVE (1/5/09). Closed position 8/27/09 at $3.41 for a 55% GAIN.
RODMAN & RENSHAW (3/20/08). Closed position 8/24/09 at $3.16 for a 58% GAIN.
EON COMMUNICATIONS (2/5/07). Closed position 8/24/09 at $1.46 for a 78% LOSS. (price reflects reverse split)
Endwave experienced “unusual trading activity” and the company didn’t have an explanation, and neither do we, and, with a 50%-plus gain, we don’t care. Back in March, Rodman & Renshaw sunk to 19 cents during the mini crash and we placed it on the “Endangered List”, but, a few months ago, the company began a comeback, as did many of the financial stocks: RODM is our all-time Lazarus pick! We closed Eon Communications for a loss.
Frankly, this rally has had us mystified and baffled. Never in our lifetime has there been such a disconnect between the markets and the realities on the ground. An economy cannot keep sustaining itself on massive government intervention and bailouts. No country in world history that has ever attempted this has ever succeeded in doing so. The markets now go gaga over economic reports that really are lackluster at best. The higher these markets go, the scarier things get. We are now convinced that the Fed has created a massive equity bubble fueled by zero interest rates, which have forced small investors into panic buying of way-overpriced stocks.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them. We are not giving updates about companies on the “Endangered List” unless we feel the news is highly significant. NOTE: There are not many updates in this issue since the last few weeks of August is normally a slow news period.
Anadys Pharmaceuticals (ANDS)(8/20/09). Claims its Hepatitis C drug shows promise in early clinical trial. ThinkEquity gives the stocks a “buy” rating.
Occam Networks (OCNW)(8/5/09). Farmers Telephone Cooperative extends deployment of Occam’s BLC 6000 system to include fiber solutions (GigE and GPON). Company’s FTTH solutions selected by Missouri Rural Telephone for upgrade to all-fiber architecture.
Bioclinica (BIOC)(8/5/09). Recent numbers show slight revenue drop but company still is able to post earnings; balance sheet still looks good.
Performance Technologies (PTIX)(7/20/09). TynTec expands international mobile messaging network with PTIX SEGway.
Salary.com (SLRY)(7/5/09). Recent numbers show revenue growth compared to a year ago; balance sheet still looks good.
USA Technologies (USAT)(6/5/09). Announces successful conclusion of rights offering.
HealthGrades (HGRD)(5/20/09). “Compete” ranks them the #1 doctor ratings site.
The Hackett Group (HCKT)(4/20/09). 2ndQT revenue and pro forma EPS in line with guidance; balance sheet still looks good.
Durect Corp (DRRX)(4/20/09). Licenses ADHD drug candidate in selected Asian and South Pacific countries to Orient Pharmaceuticals. Recent balance sheet still appears to be good.
Ligand Pharmaceuticals (LGND)(2/20/09). To present at Thomas Weisel Partners on September 9. Agrees to buy Neurogen for $11 million in stock.
MakeMusic (MMUS)(1/20/09). SmartMusic now includes 2000 band and orchestra titles.
Akeena Solar (AKNS)(10/20/08). To present at Kaufman Brothers annual investor conference on September 10, and at the annual Ardour Capital energy tech confab on September 11.
ICAgen (ICGN)(8/5/08). To present at the Rodman & Renshaw Healthcare Conference on September 9 and at the Thomas Weisel Healthcare confab on September 10.
U.S. Geothermal (HTM)(8/5/08). Closes C$10.9 million private placement.
Applied Energetics (AERG)(7/5/08). This one is on the “Endangered List” but we like the fact it just received a $3.1 million U.S. Army contract for laser-guided energy.
Energy Focus (EFOI)(6/5/08). Awarded additional $500,000 to provide LED lighting for US Navy ships.
Amicas (AMCS)(1/20/08). Upgraded by Raymond James.
Catalyst Pharmaceutical (CPRX)(12/20/07). Stock got a nice bounce when the company announced it was licensing exclusive rights to a new class of GABA aminotransferase inhibitors from Northwestern University. This is on the “Endangered List”.
Linktone (LTON)(11/5/07). Unaudited quarterly results look good; balance sheet still appears to be strong.
XATA Corp (XATA)(9/20/07). To launch new web-based, online training tool.
TTI Team Telecom (TTIL)(3/5/07). Releases upbeat quarterly report; balance sheet still looks good.
Urologix (ULGX)(2/20/07). Recent numbers only so-so but company pares losses; balance sheet still seems okay.
Endologix (ELGX)(1/20/07). Announces publication of Powerlink XL clinical trial results.
YM Biosciences (YMI)(11/5/06). We are removing this from the “Endangered List”, for now. The stock has had a nice ride over the last few weeks, leading us to think someone knows something we don’t know.
Hydrogenics (HYGS)(9/20/06). Announces $5 million of electrolyzer orders in Saudi Arabia and Algeria. This is on the “Endangered List”.
MIND C.T.I. (MNDO)(2/5/06). Recent numbers not great; we are placing this on the “Endangered List”.
8×8 (EGHT)(1/20/06). To present at the Kaufman Brothers annual investor confab on September 10.
Our picks for this Newsletter are another Internet etailer and a robotics maker, both listed on NASDAQ.
DRUGSTORE.COM, INC. (NASDAQ: DSCM) – $2.37. Twelve-month hi-low has been $2.89 – 65 cents. Based in Bellevue, WA, with about 800 employees, this Internet services provider has 100 million shares outstanding, $83.62 million in total current assets, $145.33 million in total assets, and $47.7 million in total liabilities, of which $1.53 million is long-term debt. Institutional ownership is around 21%. Three analysts give the stock a “strong buy”, one a “moderate buy”, and one has it on “hold”. www.drugstore.com
For the better part of the last four years, the stock price of Drugstore.com, Inc. has been pretty much a flat-line; far from its 1999 high of over $70. No, we do not expect that number anytime, soon, but, the company has been turning some heads, lately, with some pretty decent and unexpected financial results, and, yes, it also has a decent balance sheet.
Founded in 1998, and public for nearly ten years, Drugstore.com is just what its name implies, an online drugstore offering health, beauty, sexual well-being, house, and other non-prescription products and prescription medications in the U.S. and Canada. The company operates in three segments: Over-The-Counter (OTC), Vision, and Mail-Order Pharmacy. The OTC segment offers non-prescription products in personal care, makeup and accessories, hair care, skin care, men’s medical cabinet, vitamins, home medical, gifts, oral care, diet and fitness, household and pets, baby and mom, food and gourmet, sexual well-being, green and natural, and prestige beauty products categories. This segment also provides personalized nutritional services to consumers and delivers the personalized vitamins, minerals, herbs, and supplements in pharmaceutical-grade daily dose packages, as well as distributing nutritional supplement programs online.
Its web stores include www.drugstore.com, www.beauty.com, www.riteaidonlinestore.com, www.visiondirect.com, www.lensmart.com, www.lensworld.com, and www.lensquest.com. The Vision segment offers contact lenses through the company’s wholly-owned subsidiary Vision Direct, as well as the just-named vision web sites and over the telephone. The Mail-Order Pharmacy provides prescription drugs and supplies online to both cash-paying and insurance-covered individuals. It also serves as a third-party provider of mail-order prescription fulfillment services for pharmacy benefit managers. This segment sells nearly 5500 prescription drugs, including various specialty drugs for treating chronic conditions, such as cancer, HIV, and MS. Drugstore.com has strategic alliances with Medco Health Solutions, General Nutrition, Amazon.com, Rite Aid, and Weil Lifestyle.
For FY2008, ending 12/28/08, revenue was $366.57 million with $8.3 million in losses compared to FY2007 revenue of $445.7 million and $11.51 million in losses. During the first six months of the current FY, ending 6/28/09, revenue was $198.65 million with $1.88 million in net income. The last quarter saw a record net sales of $100.3 million. For the current quarter (3rdQT), DSCM issued an upside guidance on revenues.
So, has Drugstore.com finally gotten out of its way? Has it gotten its act together? It appears that it has, and we can’t help but think that the recession may be helping the company as more and more people are hunting for better prices.
Our 24-month target for the stock is $4.25 to $4.50.
For more information, contact DSCM at 425-372-3200.
ADEPT TECHNOLOGY, INC. (NASDAQ: ADEP) – $2.57. Twelve-month hi-low has been $9.50 – $1.65. Located in Livermore, CA, with about 155 employees, this diversified machinery and robotics maker has 8.3 million shares outstanding, $27.24 million in total current assets, $30.9 million in total assets, little debt, and $8.62 million in total liabilities. Institutional ownership is around 74%. One analyst rates the stock a “strong buy”. www.adept.com
Not all companies have enjoyed the recent run in the market and Adept Technology, Inc. is one of them. The recession has hit their top and bottom lines hard over the last three quarters, but we can’t help but think that the company’s technology will get it through the stormy weather.
Founded in 1983, and public for nearly fourteen years, Adept Technology provides intelligent robotics systems and services for packaging, solar, medical, disk drive/electronics, and machine tool automation and automotive electronics sectors. Its product range includes application software, integrated real-time vision and multi-axis motion controls, machine vision systems and software, industrial robots, and vision-based flexible parts feeders. The company offers 4-axis Cobra family of robots, which are designed for assembly and material handling tasks; Adept Viper 6-axis articulated robots for high-speed precision assembly; Adept Quattro robots for high-speed packaging applications; and Modular Adept Python single axis robot mechanisms. More than 25,000 non-captive robots, built specifically with Adept’s customers in mind, and more than 30,000 Adept controlled robots are installed worldwide.
Adept provides support services to customers, including spare parts for remanufacture of robot mechanisms; information regarding the use of its automation equipment; ongoing support for installed systems; and training courses ranging from system operation and maintenance to programming geared towards manufacturing engineers who design and implement automation lines.
In early August, Adept expanded its distribution channel in Japan by signing Nihon Kizai as its newest distributor. Also, at that time, the company was selected by CASTEC, a major Taiwan solar cell maker, as a partner.
For the FY ending 6/30/08, revenue was $60.78 million with $3.63 in net income. During the first nine months of the current FY, ending 3/28/09, revenue was $32.96 million with $9.76 million in losses.
Adept has had to tighten its belt and make some cost cutting moves, but, in the long-run this should help the company as it rolls out new technology.
Our 24-month target for the stock is $4.50 to $5.00.
For more information, contact Lisa Cummins at 925-245-3400; investor.relations@adept.com
Look for the September 20, 2009 Newsletter to be posted on 9/16 or 9/17.
Have a safe holiday,
George