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Dear Readers,
No need for a double take. We did not close any positions since the last Newsletter, but, as we have often said, these things usually come in bunches. Actually, we feel pretty comfortable with most of our Open Positions, with the most glaring exceptions being those on the “Endangered List”, however, even a few of those made comebacks and were removed over the last month or so.
During the last half of January, the market gave up a lot of the gains made earlier in the month, but some consolidation is a good thing. Long-term, sans a major catastrophe somewhere on the planet, we all should feel pretty positive about the market. Even small stocks are storming the gates, once again, as the Russell 2000 takes another stab at 800 and beyond.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.
Endologix (ELGX) (1/20/07). Earnings call scheduled for February 27.
Etrails (ETWC) (1/20/07). Launches EDC 2.0.
DeltaThree (DDDC) (1/5/07). Receives Internet Telephony Magazine’s 2006 Product of the Year Award. Sets year-end earnings call for March 1.
Critical Therapeutics (CRTX) (1/5/07). Licenses rights for Vagus nerve stimulation device to Innovative Metabolics.
Neose Technologies (NTEC) (12/20/06). Gets Swiss approval for NE-180 trial.
CardioTech (CTE) (12/20/06). Reports clinical trial is underway for CardioPass after receipt of FDA export license for synthetic coronary bypass graft.
Lantronix (LTRX) (12/5/06). To report quarterly results on February 8. Launches next wave of M2M device. Brokerage Dutton Associates gives the stock a “strong speculative buy” rating.
Alfacell (ACEL) (11/20/06). Granted FDA orphan drug designation for ONCONASE for treating malignant mesothelioma. Names new CFO and vice chairman.
Target Logistics(TLG) (11/20/06). Sets earnings call for February 1, the day we post this Newsletter.
YMI Biosciences (YMI) (11/5/06). We hate it when this happens. Until a few days back, YMI was trading around 25% to 30% above our recommended price, and, then, POW! Stock got clobbered as YMI announced termination of Tesmilifene Phase III pivotal trial in advanced breast cancer. Time to panic? Company still seems to have a pile of money and two other product candidates in late-stage development.
Terabeam (TRBM) (11/5/06). World’s largest particle physics lab selects company’s wireless mesh products.
Immunogen (IMGN) (10/20/06). Sets quarterly earnings call for February 1, the day we post this Newsletter.
Autobytel (ABTL) (10/5/06). Names new CFO. Grants inducement options to certain employees.
TVI Corp (TVIN) (9/5/06). To provide tenting facilities at Pro-Am PGA tournament. Gets U.S. Army contract for its infrared raised angle marking systems. Receives order for decontamination systems from Washington State Hospital Assoc.
RiT Technologies (RITT) (8/5/06). Earnings results due February 1; once again, the day we post this Newsletter.
Curis (CRIS) (6/5/06). Treats first patient in hedgehog antagonist Phase I clinical trial.
02Diesel (OTD) (5/20/06). Acquires privately-held ethanol maker ProEco for $8 million. Asian distributor secures pact to transition 2500 buses using OTD technology. Kintera (KNTA) (5/5/06). News on several new product offerings.
Tri-S Security (TRIS) (5/5/06). Reaches deal with Cornwall Group shareholders.
Pharmos (PARS) (4/20/06). Stock takes a hit on news that pain drug was ineffective during trial.
Cytogen (CYTO) (3/20/06). European medical journal reports on new data regarding administration of Quadramet. Company updates corporate profile.
Adherex (ADH) (2/20/06). Announces equity offering of between $10 million to $25 million, which won’t help the stock’s already low price. To acquire Eniluracil rights from GlaxoSmithKline.
Gateway (GTW) (2/5/06). The usual dozen or so stories, perhaps most notable is that GTW is offering new PCs featuring Microsoft Vista.
MIND C.T.I. (MNDO) (2/5/06). Earnings call set for February 21.
8×8 (EGHT) (1/20/06). Slates earnings call for February 1, the day we post this Newsletter.
Castelle (CSTL) (1/5/06). Releases FaxPress 9.0 software for FaxPress network fax servers.
Fusion Telecom (FSN) (12/5/05). Launches Valentine’s Day promotion with the Daily News highlighting eFonica’s mobilink VoIP service
Westell (WSTL) (10/20/05). Quarterly results not what was expected and stock drops on a downgrade by Cowen and Co; balance sheet still appears to be very healthy.
RAE Systems(RAE) (10/5/05). Introduces DoseRae, an international personal electronic gamma radiation dosimeter. Stock gets upgrade from CE Unterberg. Expands sales team. Awarded contract by PetroChina project.
Nephros (NEP) (9/20/05). Receives conditional okay from the FDA of Investigational Device Exemption application.
EntreMed (ENMD) (9/5/05). Drug safety monitoring board gives breast cancer drug favorable review.
Zi Corp (ZICA) (8/5/05). To unveil new versions of Qix at expo during February 12 to 15.
Innodata (INOD) (7/5/05). Announces growth in technical writing and research services.
Commerce Energy (EGR) (6/5/05). Now offering wind-generated electricity to parts of Maryland and Texas.
Vion Pharma (VION) (5/20/05). Proceeds to second stage of pivotal Phase II trial of Cloretazine in elderly AML.
B.O.S. (BOSC) (1/5/05). Enters into pact for sale of RFID tags to a major European waste management company.
Applied Micro Circuits (AMCC) (11/20/04). Quarterly results a mixed bag; balance sheet still appears to be quite good.
Nova Measuring (NVMI) (11/5/04). Announces multiple installations of its NovaScan stand alone optical CD system. Aviza Technology (AVZA) (10/5/04). Earnings call set for February 1, the day we post this Newsletter.
Chordiant (CHRD) (9/20/04). Insurance.com deploys solution to increase competitive edge.
Network Engines (NENG) (6/5/04). Sets earnings call for February 1, the day we post this Newsletter. To present at growth capital confab on February 5. Wins Microsoft business.
TMNG Global (TMNG) (4/20/04). Launches interactive content hub for media, et al, executives.
Palatin Technologies (PTN) (4/5/04). Inks $300 million deal with AstraZeneca for obesity drug. Stock got a nice lift, but we thought it should have gone higher. Brokerage firm Next Generation gives the stock a “buy”.
Socket Communications (SCKT) (3/20/04). To rollout mobile computing devices. This is on the “Endangered List”, but we may reconsider if next P&L improves and balance sheet is still viable.
OpenTV (OPTV) (3/20/04). Kudelski Group completes voting control of company. To be candid, we’re not sure if this is a good thing or a bad thing. We may close this position, soon.
Our picks for this Newsletter are NASDAQ-traded telecom services provider, and an alternative energy play listed on the AMEX.
EON COMMUNICATIONS CORPORATION (NASDAQ: EONC) – $1.35. Twelve-month hi-low has been $3.07 – 79 cents. Located in San Jose, CA, with around 75 employees, this telecom services provider has 14.1 million shares outstanding, $11.21 million in total current assets, $12.4 million in total assets, little debt, and $2.47 million in total liabilities. Institutional ownership is around 9%. www.eonc.com
So, why does a company with a decent looking balance sheet and five consecutive quarters of profitability see its stock trading at these levels? Probably because Eon Communications Corporation saw hefty slumps in revenue growth over the last few years; however, the downslide may be tapering off.
Founded in 1957, and public for nearly seven years, Eon (the company spells it eOn) develops and markets communications solutions, namely IP telephony and advanced contact center technologies. Its two major domo products are the Millennium Converged Communications Platform and the eQueue Multimedia Contact Center Solution. The Millennium platform provides voice over Internet protocol (VoIP), flexible desktop solutions and options, advanced call routing, multimedia messaging, automatic call distribution, voice mail and unified messaging, and computer/telephony integration solutions. The eQueue solution offers comprehensive applications, including automatic call distribution with skills-based routing, private branch exchange with VoIP capabilities, email and Web chat applications, integrated voice response, voice mail with unified messaging, quality assurance recording, work force management, and a range of desktop devices and applications.
Eon has a varied customer base, including the Sacramento City School District, Disney’s Celebration School, Rockhurst University, U.S. Immigration and Customs Enforcement, deployments at nearly 100 international airports, the U.S. Army and Air Force, Coast Guard, National Park Service, Lillian Vernon, U-Haul, Circuit City, PETsMART, Call Tech, Intercall, China’s 95Teleweb, CON-WAY, and the organizer of the New York City Marathon,
For the FY ending 7/31/06, revenue was $12 million with $1.63 million in net income compared to the previous FY revenues of $21.37 million and $1.9 million in losses. During the 1stQT of FY2007, ending 10/31/06, revenue was $2.7 million with $40,000 in net income.
Yes, revenue has dropped, but some of that can be attributed to discontinued operations. The company feels it has positioned itself to leverage rapidly expanding markets, notably, it appears, in China. At the current price, the stock may be worth a stab.
Our 24-month target for the stock is $2.50 to $2.75.
For more information, contact EONC at 800-955-5321; investorrelations@eonc.com
UQM TECHNOLOGIES, INC. (AMEX: UQM) – $3.65. Twelve-month hi-low has been $6.46 – $2.19. Located in Frederick, CO, with about 45 employees, this electrical equipment maker/alternative energy provider has 25.3 million shares outstanding, $11.25 million in total current assets, $14.53 million in total assets, little debt, and $1.94 million in total liabilities. Institutional ownership is around 25%. www.uqm.com
With the Democrats controlling Congress, and even the President joining the chorus, you need to believe that they all will be throwing even more tons of money/tax incentives toward alternative energy. A company that could benefit from this is UQM Technologies, Inc., which has a very good looking balance sheet and includes the U.S. government as a customer.
Founded in 1967, and public for nearly six years, UQM develops and manufactures power dense, electric motors, generators, and power electronic controllers for the automotive, aerospace, medical, military, and industrial markets. A major thrust for UQM is developing products for the alternative energy technologies sector including propulsion systems for electric, hybrid electric and fuel cell electric vehicles, under-the-hood power accessories, other vehicle auxiliaries, and distributed power generation applications.
The company operates in two segments: Its Technology arm conducts customer-funded and internally-funded research and engineering activities aimed at developing new motors, generators, and power electronics to meet customer specs; while its Power Products segment manufactures those motors, generators, etc. Over 39,000 motors have been made and fielded since 1998.
In mid-January, the company received a $9.25 million production order from Phoenix Motorcars, Inc. for UQM electric propulsion systems to power Phoenix’s newly introduced all electric sport utility truck; this order raises UQM’s current product backlog to nearly $14 million. In November, 2006, the company delivered an electric motor/generator system that was selected for a long-haul class 8 hybrid truck development program. The month before, UQM announced a $3 million follow-on production order for vehicle auxiliary motors.
For the FY ending 3/31/06, revenue was $4.32 million with $2.79 million in losses. During the first six months of the current FY, ending 9/30/06, revenue has been $2.9 million with $1.7 million in losses.
Over the last six months or so, UQM appears to have made giant leaps toward future revenue growth, i.e. the $14 million backlog. This doesn’t seem to be one of those pie-in-the sky alternative energy startups; this company is happening, right now.
Our 24-month target for the stock is $5.75 to $6.50.
For more information, contact UQM at 303-278-2002; investor@uqm.com
Look for the February 20, 2007 Newsletter to be posted on 2/16 or 2/19.
Thank you,
George