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Hello Readers,
There is no way we can spin this. Our Current Portfolio has taken its worst drubbing since the end of 2008, when we had the last market crash. Yes, this has been a crash, albeit a mini-crash, but still a crash. The markets are adjusting to what they perceive to be the new reality of the future, whatever that may be. The question we need to ask is when do our portfolio picks become screaming buys? The answer is we don’t know but we suspect that day is coming soon, real soon.
We wish we could offer more words of wisdom, but, in all honesty, we are just as befuddled as the next guy. Economic and political uncertainties abound, such as this Congressional Super Committee of 12, which is tasked with shaving the deficit even more. Our fear is that even more ridiculous ideas such as this will cause uneasiness in the markets during the next few months; and let’s not forget the European messes.
Here are the headlines since the last Newsletter about companies in the Current Portfolio; dates in parentheses are when we recommended them. We are not giving updates about companies on the “Endangered List” unless we feel the news to be very substantial.
Satcon Technology (SATC)(8/5/11). 2ndQT loss wider than expected; balance sheet still looks good. Normally, this stock probably would not have tanked on this news, but the decline, like many others, was no doubt exacerbated by the market turmoil. Company selected for 10 MW solar PV power plant in New Jersey. Law suit filed against company alleging disclosure failures, which we take with a grain of salt.
Antares Pharma (AIS)(8/5/11). Announces positive study results with VIBEX MTX in rheumatoid arthritis patients. Balance sheet still looks good.
Cover-All Technologies (COVR)(7/20/11). Announces revenue growth of 20.6% and earnings growth of 46.7% for year-to-date 2011; balance sheet still looks okay. In a better market, this sort of news may have sent the stock on a mild tear.
Somaxon Pharmaceuticals (SOMX)(7/5/11). Balance sheet still looks healthy as company announces access to up to $45 million in financing.
RXi Pharmaceuticals (RXII)(7/5/11). To present at the Wedbush Securities conference on August 17, the day after this Newsletter is posted.
Opnext (OPXT)(6/20/11). Latest numbers not bad; balance sheet still looks strong.
On Track Innovations (OTIV)(6/20/11). Posts better than expected revenues; balance sheet still looks good.
Gleacher & Co (GLCH)(6/5/11). Company shows good revenue growth but losses widen; balance sheet still looks okay.
Idera Pharmaceuticals (IDRA)(6/5/11). Balance sheet still looks good.
Neostem (NBS)(5/20/11). Balance sheet still looks good as company provides an update on Amorcyte clinical progress. Receives over $1.7 million in DOD funding for its VSEL technology being developed to treat osteoporosis.
MediciNova (MNOV)(5/20/11). To collaborate on a Phase 2 trial of Ibudilast (MN-166/AV411) in medication overuse headache. To release earnings news on August 16, the day we post this Newsletter.
Energy Recovery (ERII)(5/5/11). Latest numbers not great; balance sheet still looks strong. Board authorizes stock repurchase program of up to 5 million shares over the next twelve months.
BioStar Pharmaceuticals (BSPM)(4/20/11). Records decent-looking quarterly numbers; balance sheet still looks strong.
GSE Systems (GVP)(4/20/11). Recent numbers only so-so; balance sheet still looks good.
Jamba, Inc. (JMBA)(3/20/11). Sets earnings release for Tuesday, August 16, the day we post this Newsletter. Says 2ndQT sales at its stores rose 4.3%.
Oculus Innovative Sciences (OCLS)(3/5/11). Quarterly report looks upbeat; balance sheet seems okay.
Biodel (BIOD)(2/20/11). Latest balance sheet still looks good.
Real Goods Solar (RSOL)(1/20/11). Announces record revenue; balance sheet still looks good. Plans merger with Alteris Renewables to expand into Northeast market. Reveals financing program to fund commercial solar installations.
Great Basin Gold (GBG)(1/5/11). Provides operational update.
Sprint Nextel (S)(1/5/11). The usual several dozen news stories and releases. One of the most notable is that the company scrapped its 4G PlayBook plans.
SuperGen (SUPG)(12/5/10). Recent numbers look pretty good; balance sheet still appears to be very strong.
RELM Wireless (RWC)(11/5/10). Recent numbers not good; balance sheet still seems okay.
Inovio Pharmaceuticals (INO)(10/20/10). Latest quarterly report reflects revenue growth, less losses, and a strong balance sheet.
Blue Phoenix Solutions (BPHX)(10/20/10). Sets earnings call for August 31.
ProPhase Labs (PRPH)(10/5/10). Latest numbers show improved revenue growth and less losses; balance sheet still looks good.
CombiMatrix (CBMX)(8/20/10). Revenue growth improves as losses ease; balance sheet still looks good. Receives N.Y. State clinical laboratory permit.
Rexahn Pharmaceuticals (RNN)(7/20/10). European patent granted for neurotherapeutic compositions.
Alpha Pro Tech (APT)(7/20/10). Comes out with upbeat quarterly report; balance sheet still seems decent.
Adolor Corp. (ADLR)(5/5/10). Recent numbers looks okay, as does balance sheet. Announces positive results from Phase 2 program in opioid-induced constipation (OIC). To present at Wedbush Securities conference on August 16, the day we post this Newsletter.
American CareSource (ANCI)(4/20/10). Recent numbers not so great; balance sheet still seems okay.
NovaBay Pharmaceuticals (NBY)(4/20/10). Current cash reserves appear healthy as company gives an upbeat quarterly report.
China Direct Industries (CDII)(4/5/10). Releases pretty good quarterly numbers; balance sheet still looks strong. Enters definitive agreement to sell its 51% stake in Shanxi Pan Asia Magnesium Co. for $3 million in cash.
Novavax (NVAX)(4/5/10). Balance sheet still seems pretty decent.
Cerus Corp (CERS)(3/20/10). To present at the Wedbush Securities confab on August 17, the day after we post this Newsletter.
CytRx Corp (CYTR)(1/5/10). Balance sheet still looks pretty good. Says its INNO-206 in combination therapy induces complete remissions in aggressively growing ovarian cancer tumor model.
Anadys Pharmaceuticals (ANDS)(8/20/09). Balance sheet still looks healthy.
Performance Technologies (PTIX)(7/20/09). Revenue growth continues as losses abate; balance sheet still looks okay.
U.S. Geothermal (HTM)(8/5/08). Balance sheet still looks good. Provides update on San Emidio Project.
Bridgeline Digital (BLIN)(6/5/08). iAPPS powers new mission critical web site for global broker dealer. Releases quarterly report.
GlobalScape (GSB)(5/20/08). Revenue and earnings have nice jumps; balance sheet still looks good.
Hollywood Media (HOLL)(1/5/08). Revenue grows a little while losses widen; balance sheet still looks okay but cash position greatly weakens since end of 2010.
Move, Inc. (MOVE)(1/5/08). Revenues hold steady as company swings to a nice 2ndQT profits; balance sheet still looks strong.
LRAD Corp. (LRAD)(10/5/07). Quarterly numbers not that great; balance sheet still appears decent.
XATA Corp. (XATA)(9/20/07). Latest numbers could be better; balance sheet still looks good.
Our picks for this month are an alternative energy provider trading on the NASDAQ and a NYSE-listed sporting goods maker.
SYNTHESIS ENERGY SYSTEMS, INC. (NASDAQ: SYMX) – $1.96. Twelve-month hi-low has been $4.50 – 80 cents. Located in Houston, TX, with about 190 employees, this alternative energy provider has 48.63 million shares outstanding, $34.86 million in total current assets, $107.48 million in total assets, and $11.63 million in total liabilities, of which $4.64 million is long-term debt. Institutional ownership is around 18%. One analyst rates the stock a “strong buy” and two have it as a “hold”. www.synthesisenergy.com
Usually, we do not get overly thrilled when the word ‘synthetic’ is used in the same sentence as the word ‘energy’. How many times have we been down this road!? But, when we see that a company like Synthesis Energy Systems, Inc. has caught the attention of an international energy concern based in Switzerland, an energy company in India, and another in China, we take some notice, especially when gasification is involved. It also helps that the company is sitting on a nice pile of money.
Founded in 2003 and public for over six years, Synthesis Energy Systems, or SYMX, provides technology, equipment, and engineering services for converting low rank, low cost coal and biomass feed stocks into energy and chemical products through its proprietary U-GAS fluidized bed gasification technology, which the company licenses from the Gas Technology Institute. SYMX claims that U-GAS gasifies coal cost effectively, without many of the harmful emissions normally associated with coal combustion plants. It also says that the primary advantages of U-GAS relative to other gasification technologies are greater fuel flexibility provided by the ability of SYMX to use all ranks of coal, many coal waste products, and biomass feed stocks; and the ability of SYMX to operate efficiently on a smaller scale, which enables the construction of plants more quickly, at a lower capital cost, and, in many cases, in closer proximity to coal sources.
The company’s U-GAS technology is currently operating on a commercial scale at its Zao Zhuang joint venture plant in China. In early June, SYMX announced a $5 million strategic equity investment from Zuari Industries of India with the idea of introducing the U-GAS technology to that country. In late June, SYMX entered into a 50/50 joint venture with Swiss-based Midas Resources AG so as to provide additional avenues of commercializing U-GAS technology.
For the FY ending 6/30/10, revenue was $9.3 million with $21.75 million in losses. During the first nine months of the current FY, ending 3/31/11, revenue was $6.62 million with $10.96 million in losses.
The gasification of coal has been the dream of alternative energy proponents for nearly a hundred years. SYMX seems to be in the right place at the right time, and it may take a little more time.
Our 24-month target for the stock is $3.50 to $3.75.
For more information, contact SYMX at 713-579-0600; ir@synthesisenergy.com
NAUTILUS, INC. (NYSE: NLS) – $1.67. Twelve-month hi-low has been $3.45 – $1.25. Based in Vancouver, WA, with about 330 employees, this sporting goods maker has 30.74 million shares outstanding, $44.13 million in total current assets, $70.15 million in total assets, and $38.31 million in total liabilities, of which $5.25 million is long-term debt. Institutional ownership is around 21%. Two analyst rate the stock a “strong buy”. www.nautilusinc.com
You have to be something of a gym rat to appreciate Nautilus, Inc. You also need to appreciate that baby boomers are just now becoming more health conscious and that could add to the fortunes of Nautilus, Inc., which, by the way, had two successful back to back quarters.
Founded in 1986, and public for a dozen years, Nautilus makes cardio and strength fitness products and related accessories. These include cardio equipment, including treadmills, specialized cardio, exercise bikes and ellipticals, and strength equipment under the Nautilus brand; fitness equipment, including TreadClimber specialized cardio machines, treadmills, PowerRod home gyms, and SelectTech dumbbells for home use under the Bowflex brand; exercise bikes, including the Airdyne, ellipticals, and treadmills under the Schwinn brand; and various kettle bell weights and weight benches under the Universal brand. It sells its equipment through retailers, TV ads, the Internet, and independent dealers.
Of particular note is that Nautilus installed a new executive team, including a new CEO, which could be a reason for the company’s recent successes.
For FY2010, ending 12/31/10, revenue was $168.45 million with $22.84 million in losses. During the first quarter of the current FY, ending 3/31/11, revenue was $48.3 million with $1.6 million in net income.
Yes, old-time name brands can be boring, except when they are in turnaround situations, in which Nautilus appears to be.
Our 24-month target for the stock is $3.00 to $3.25.
For more information, contact NLS at 800-628-8458; PublicRelations@nautilus.com
Look for the September 5, 2011 Newsletter to be posted on 9/1 or 9/2.
Thank you,
George