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Hello Readers,
Since the last Newsletter, we closed one position, for a gain.
NAPCO SECURITY TECHNOLOGIES (7/5/10). Closed position 6/13/11 at $2.76 for a 50% GAIN.
NAPCO Security had a nice pop over the last few weeks, despite a lousy market. One can only imagine if the stock would have gone much higher in a better environment.
With exception of a few days here and there, the last few weeks in the markets have been dreadful; actually, make that since early May. And, needless to say, our Current Portfolio has been reflective of the markets’ lethargy. As we said in the last Newsletter, investors are fearful of being weaned from the Fed’s largesse and the effects they perceive that will have on the markets. However, as we also said, we fell the Fed will continue with the easy money policy for quite some time for the simple reason that The Great Recession is far from over. The only benefactors of government stimulus have been the banks, and auto companies, to date. The Feds now need a plan to benefit the rest of us.
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 to be highly significant.
Neostem (NBS)(5/20/11). To present at the Proactive Investors forum on June 16, the day after we post this Newsletter, and at the OneMedForum on June 23. China’s State Food and Drug Administration approves new production line.
GSE Systems (GVP)(4/20/11). Announces results of annual shareholders meeting.
ThermoGenesis (KOOL)(4/5/11). FDA grants 510(k) approval for use of Res-Q in preparation of platelet rich plasma.
Pluristem Therapeutics (PSTI)(3/20/11). To be included in Mid Cap 50 TA Index on the Tel Aviv Stock Exchange.
Oculus Innovative Sciences (OCLS)(3/5/11). Year and quarterly numbers show increasing revenues and paring of losses; balance sheet still looks okay. Company foresees larger revenue growth in FY2012.
Network Engines (NEI)(2/5/11). Announces stock repurchase program. Launches new application update service for physical, virtual, and cloud deployments.
Sprint Nextel (S)(1/5/11). The usual four or five dozen releases and articles, most notable may be that Sprint is restructuring the Clearwire deal.
Trident Microsystems (TRID)(12/20/10). Names new CEO and president, which may not be a bad idea.
SuperGen (SUPG)(12/5/10). Phase III study results presented on Dacogen for patients with acute myeloid leukemia. Company developed Dacogen and receives royalties on global sales.
PixelWorks (PXLW)(11/20/10). Introduces next-generation digital projection SoC device.
RELM Wireless (RWC)(11/5/10). Completes Project 25 compliance assessment for KNG series mobile and portable radios.
Inovio Pharmaceuticals (INO)(10/20/10). To present at the VetHealth Global 2011 on June 16, the day after we post this Newsletter. Will also present at five other industry and scientific conferences by month’s end.
Adolor (ADLR)(5/5/10). Enters into pact with GlaxoSmithKline to reacquire all rights to ENTEREG (alvimopan). Completes enrollment in Phase 2 O/C program.
China Direct Industries (CDII)(4/5/10). Provides quarterly magnesium segment update.
Cerus Corporation (CERS)(3/20/10). CERS and Ilex Biotech initiate distribution agreements for the INTERCEPT Blood System in South Africa and Israel. Wedbush initiates coverage on the company.
Cytokinetics (CYTK)(2/5/10). Successfully completes Phase IIA “Evidence of Effect” clinical trial of CK-2017357 in patients with claudication associated with peripheral artery disease.
CytRx (CYTR)(1/5/10). Reports preliminary results from ENABLE Phase 2 clinical trial with Bafetinib in patients with relapsed B-Cell chronic lymphocytic leukemia.
Anadys Pharmaceuticals (ANDS)(8/20/09). Coverage initiated by Brean Murray. Issued U.S. patent covering Setrobuvir (ANA598).
Performance Technologies (PTIX)(7/20/09). Says it tranforms the Open-Standards Ecosystem with innovative platform for next-generation solutions.
USA Technologies (USAT)(6/5/09). See 4thQT revenue of $7 million.
U.S. Geothermal (HTM)(8/5/08). Signs 19,9 MW, 25 year PPA with NV Energy for the San Emidio Nevada project.
Bridgeline Digital (BLIN)(6/5/08). EverBright Energy selects iAPPS product suite for new website and business launch.
Microvision (MVIS)(5/20/08). Delivers “unmatched” gaming experience for Apple device users.
LRAD Corporation (LRAD)(10/5/07). LRAD deployed for mass communication and search and rescue operations in aftermath of Japanese earthquake and tsunami.
XATA Corporation (XATA)(9/20/07). Xata Turnpike supports Google’s Android.
YM BioSciences (YMI)(11/5/06). Reports interim Phase I/II data for its JAK1/JAK2 inhibitor CYT387 for treating myelofibrosis.
Our picks for this Newsletter are a broad line semiconductor and an Israeli electronic equipment maker, both NASDAQ-listed.
OPNEXT, INC. (NASDAQ: OPXT) – $2.13. Twelve-month hi-low has been $4.45 – $1.29. Based in Fremont, CA, with about 550 employees, this broad line semiconductor has 89.9 million shares outstanding, $297 million in total current assets, $374.36 million in total assets, and $138.2 million in total liabilities, of which $6.86 million is other long-term liabilities. Institutional ownership is around 38%. Two analysts rate the stock a “strong buy”. www.opnext.com
When looking around for companies that appear to be making turnarounds, Opnext, Inc. seems to be a good prospect. In the last FY, the company added nicely to the revenue line and pared its losses by over half. And yes, it is a boring company, but many times the snorers turn out to be good stock plays.
Founded in 2000, and public for over four years, Opnext makes optical subsystems, modules, and components for communication uses primarily in North America, Europe, Japan, and the Pacific Rim. The company’s components consist of transmitters and receivers that include a hermetically packaged compound semiconductor laser or photo detectors, which utilize internally fabricated lasers or photo detectors built from indium phosphide or gallium arsenide compound semiconductor materials systems. Its optical transceiver modules convert signals between electrical and optical for transmitting and receiving data over fiber optic networks, and provide the physical communications interface for data communications and telecommunications systems. The optical transceiver modules are used for client-side interfaces consisting of short distance dedicated fiber cables, as well as line-side interfaces, which include long distance transmission with shared fiber cable and amplification media.
Opnext subsystems provide 40Gbps or 100Gbps long-distance communications. The company’s customers include designers and manufacturers of laser-based products, including medical and scientific systems, industrial bar code scanners, professional grade construction and surveying tools, gun sights and other security equipment, display and projection systems for mini-projectors and other projection applications, sensors for robotics and industrial automation, and printing engines for high-speed laser printers and plain paper copiers. Some of their more well-known customers include Cisco Systems, Huawei Technologies, and Alcatel.
For the FY ending 3/31/11, revenue was $357.64 million with $31.83 million in losses compared to the previous year’s revenues of $319.13 million with $78.51 million in losses. And, despite the earthquake in Japan in which Opnext experienced some manufacturing delays, the company is still expecting between $93 million and $97 million in revenues during the current quarter.
As we said, this is a yawner, but one that could have a good run.
Our 24-month target for the stock is $4.00 to $4.25.
For more information, contact OPXT’s Steve Pavlovich at 510-743-6833; spavlovich@opnext.com
ON TRACK INNOVATIONS LTD (NASDAQ: OTIV) – $2.20. Twelve-month hi-low has been $4.25 – $1.55. Based in Rosh-Pina, Israel, with about 285 employees, this electronic equipment maker has 30.34 million shares outstanding, $59.26 million in total current assets, $77.55 million in total assets, and $34.08 million in total liabilities, of which $4.84 million is long-term debt. Institutional ownership is around 21%. One analyst rates the stock a “strong buy”. www.otiglobal.com
On Track Innovations LTD could be another one of those turnaround situations. Like Opnext above, it too has a healthy balance sheet, increased revenues, and nice paring of the losses.
Founded in 1990 as De-Bug Innovations, and public for public for nearly ten years, On Track designs and makes contactless microprocessor-based smart card technology products in the Americas, Israel, Europe, Africa, and the Far East. Its products include payments solutions, petroleum solutions, and smart ID solutions. The payment solutions comprise PayPass, a contactless payment program for financial institutions; E-purse, a product that enables a person to load pre-paid value on a card; EasyPark, an electronic parking payment system; and mass transit payment system for fare collection from passengers in various types of mass transportation systems. Its petroleum systems consist of EasyFuel, a wireless petroleum solution, which incorporates options for retail and private fleets, as well as a pay-at-the-pump solution; and a gasoline management system that records and monitors the identification of the driver and the vehicle, the drivers or fleets credit status, the vehicles fuel consumption, and other information determined by the customer, such as periodic vehicle maintenance.
Finally, On Track’s smart ID solutions include enrollment and personalization infrastructure comprising image and data enrollment, ePassport personalization, secured materials management system, digital signature certificate generator, and ePassport quality assurance and issuing stations; a border control system based on passenger biometric identification applications, electronic passport identification, and optical and electronic means to detect forged passports; and a MediSmart product to process and manage medical information, including patient’s identity, medical history, insurance coverage, and payment history.
For FY2010, ending 12/31/10, revenue was $53.62 million with $6.2 million in losses compared to FY2009 revenues of $31.43 and $23.2 million in losses. During the last QT, ending 3/31/11, revenue was $12.02 million with $1.11 million in losses.
This is one of those “what’s not there to like” situations.
Our 24-month target for the stock is $4.00 to $4.25.
For more information, contact OTIV’s Galit Mendelson at 732 429 1900, ext. 111; galit@otiglobal.com
Look for the July 5, 2011 Newsletter to be posted on 7/1 or 7/5.
Thank you,
George