2008 Update

The markets fell last week, with all the major indices down 1.3-2.3%. We managed to book a tiny .1% gain for the week.

MEDW earnings out last week. Not great, but better than last quarter and our valuation moved up to $10.99.

NASDAQ was down 2.3% last week, the DOW was down 1.3% and the S+P 500 was down 1.8%.

Last week we went 6 stocks up, 6 down and 1 even.

For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is +.1%,-27.2 and +8.3% respectively. Since inception we are now 21 stocks up and 11 down.

So far in 2008 the DOW is down 3.9%, NASDAQ is down 7.8% and the S+P 500 is down 5.5%. The NASDAQ is still down a 14.5% since October 31, 2007.

The Russell 3000 and the Wilshire 5000 are both down just about 5% this year.

Since inception we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)

The model portfolio assumes $10,000 invested in each stock (unless we double-up–then it is $20,000), less $10 commission each way (TD Ameritrade rate).

For the 19 stocks that we closed out in 2006, 2007 and 2008 the average gain was 23%.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Down $.47 to $10.16.
The company has $53.4 million in cash ($1.69 per share), and is trading at about 2.5 times 2008 revenues (net of cash)and is growing about 30% a year.
Crappy market–and short hackers at work again.
Now up 8%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (added $10,000, averaged down from $3.66), Valuation $8.47 (was $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $2.95, down $.20.
Our valuation is $8.47, so we are trading at 37% of our valuation.
No news last week.
Now down 6%. BUY

Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $4.14 (was $4.78 before $10,000 adder, $6.12 before another $10,000 added, $6.65 before double up), Valuation $11.24 (Was $10.80 $9.20, $8.63, $13.77)
PARL closed at $3.27, down $.12.
Latest earnings were very good. Stock is down.
Now trading at 29% of our valuation.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 21%. BUY.

ILOG SA (ILOG-recommended 3/26/2007)
Buy price $12.08 (was $12.92 before another $10,000 added, $13.60 before double-up), Valuation $24.06 (was $24.67, $20.51, $23.22, $20.99, $20.52)
Closed at $7.94 down $.30.
ILOG revised their 2008 guidance down from 20% sales growth and $1-6 million in operating income to double digit sales growth and breakeven operating income. ILOG’s market cap, minus cash is $80 million. This is less than 50% of annual sales, for a software company with 70%+ gross margins.
Cash is $3.84 a share (48% of market cap).
ILOG is trading at 33% of our valuation.
A buy-out is a decent possibility here.
Down 34%. BUY

Celebrate Express (BDAY-recommended 4/17/2007)
Buy Price $6.15 (was $8.38 before $10,000 adder and $8.82 before double-up), Valuation $7.82 (Was 415.51, $17.85 $18.18)
Up $.04 to $3.14.
BDAY pulled their earnings announcement four weeks ago as they apparently received interest from someone on a buy-out. Were it not for this, we would pack up the truck and sell this one as their struggles are more than we thought (and they thought too).
Trading at 40% of our valuation.
Hold for a while until this “take-over” thing flushes out. We are hoping it happens, but $7 a share looks like the most they could get.
Down 49%. HOLD.

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up) NEW Valuation $10.99 (was $10.28, $13.32, $12.89, $13.40)
Up $.57 at $6.07.
Earnings out last week. Sales dropped by 11%, but they still managed to make $.04 per share. Not “barnburing” results by any definition, but still a lot better than last quarter. Accordingly, our valuation rose to $10.99 from $10.28. With all the ruckus noted below–we still like this stock.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Most of this was purchased from Penninsula Capital at $7.03 a share. Cannell is pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
In early May Constellation increased its bank credit line to $105 million from $50 million. Looks like just about enough to swallow MEDW.
Looks like something is going to happen here.
Down 4%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up), Valuation $9.90 (was $8.69, $11.51)
Up $.06 to $2.96
No news.
Down 21%. HOLD

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $2.38 (Was $2.62 before another $10,000 and was $3.00 before double up), Valuation $6.84 (was $7.58, $7.59)
Down $.07 to $1.62.
Earnings out this Monday after the market close.
For 2008 they are projecting revenue of $145-$150 million and EBITDA breakeven. But it sounds like this will not happen until the second half of 2008. If they can turn this around-a double or triple from here is possible.
If they can do what they say in 2008, a valuation of close to $8 is possible.
Trading at 25% of our latest valuation
Down 32%. HOLD

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $9.97 (Was, $10.66, $9.39)
Up $.01 to $4.55.
No news.
Trading at 46% of our valuation.
Up 6%. BUY

OB-abies (Bulletin Board Listed Stocks)

Interestingly, our OB-abies have held up better than the “higher-quality” stocks so far this year. They are down about 1.8% on average, compared to 23% for the stocks above. At least so far. As proven by OPTIO, patience is necessary with these stocks.

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up), Valuation $5.61 (was $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.53, up $.03.
Earnings were great, stock goes down. ARI does little to get any investor attention. Wake up management–you have a great little company here worth 3X what it is selling for.
Now down 5%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.93 (Was $.99 and $1.19 before adding $10,000-twice), Valuation $3.41 (was $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.82, down $.03.
Earnings due out this coming Wednesday before the market opens.
Last earnings were out in early February. Sales up only 4%, but earnings up 69%!. EPS was $.04 compared to $.02 last year. Pre-tax earnings were up over 100%. Our valuation rose to $3.41.
Now down 12%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.31 (Was $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price unchanged at $.29. Closed at $.29.
CTI issued a press release last week! Looks like they are starting up a SAAS offering(software as a service). Good idea, (Netsuite offers this as well as most ERP vendors today–rent-a-software-package). Hopefully they are doing this to estblish a recurring revenue stream to enhance shareholder value, and not because they are having trouble selling the software. Still an “undercover” company and stock.
Earnings were out at the end of March. Not bad at all. Q4 revenues were $4.8 million, gross margin was 72%, and excluding a $200,000 impairment charge, CTI actually made about $77k of income. Net cash (net of debt) grew by $350,000.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 21% of our latest valuation.
UP 7%. BUY

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Cheap Stocks, 5/3/2008 Update

The markets were strong last week, with all the major indices up 1-2%. We got hit as BDAY and DWCH got pummelled.

DWCH and ILOG earnings out last week. Neither was bad, neither was good. Adding another $10,000 to DWCH this week.

NASDAQ was up 2.2% last week, the DOW was up 1.3% and the S+P 500 was up 1.2%.

Last week we went 7 stocks up, 5 down and 1 even.

For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is -5.2%,-27.3 and +8.1% respectively. Since inception we are now 22 stocks up and 10 down.

So far in 2008 the DOW is down 1.6%, NASDAQ is down 6.6% and the S+P 500 is down 3.7%. The NASDAQ is still down a 13.4% since October 31, 2007.

The Russell 3000 and the Wilshire 5000 are both down just about 4% this year.

Since inception we have closed out the following positions:

The model portfolio assumes $10,000 invested in each stock (unless we double-up–then it is $20,000), less $10 commission each way (TD Ameritrade rate).

For the 19 stocks that we closed out in 2006, 2007 and 2008 the average gain was 23%.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Up $.12 to $10.63.
The company has $53.4 million in cash ($1.69 per share), and is trading at about 2.5 times 2008 revenues (net of cash)and is growing about 30% a year.
Now up 13%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (added $10,000, averaged down from $3.66), NEW Valuation $8.47 (was $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $3.15, down $.66.
Earnings last week were OK. Sales were down a bit from $6.1 million to $5.9 million. Earnings were $83,000 versus $424,000. Our valuation fell to $8.47, so we are trading at 37% of our valuation.
Add another $10,000 here. Average buy-price stays at $3.15.
Now up .1%. HOLD

Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $4.14 (was $4.78 before $10,000 adder, $6.12 before another $10,000 added, $6.65 before double up), Valuation $11.24 (Was $10.80 $9.20, $8.63, $13.77)
PARL closed at $3.39, up $.17.
Latest earnings were very good. Stock is down.
Now trading at 30% of our valuation.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 18%. BUY.

ILOG SA (ILOG-recommended 3/26/2007)
Buy price $12.08 (was $12.92 before another $10,000 added, $13.60 before double-up), NEW Valuation $24.06 (was $24.67, $20.51, $23.22, $20.99, $20.52)
Closed at $8.24 down $.21.
Earnings out last week. Sales were up from $40 million to $46 million. They made $.01per share versus $.04 last year.
They revised their guidance down from 20% sales growth and $1-6 million in operating income to double digit sales growth and breakeven operating income. ILOG’s market cap, minus cash is $80 million. This is less than 50% of annual sales, for a software company with 70%+ gross margins.
Our valuation fell a tiny bit to $24.06 from $24.67.
Cash rose to $3.84 a share (47% of market cap).
ILOG is trading at 34% of our valuation.
A buy-out is a decent possibility here.
Down 32%. BUY

Celebrate Express (BDAY-recommended 4/17/2007)
Buy Price $6.15 (was $8.38 before $10,000 adder and $8.82 before double-up), Valuation $7.82 (Was 415.51, $17.85 $18.18)
Down $1.00 to $3.10.
BDAY pulled their earnings announcement three weeks ago as they apparently received interest from someone on a buy-out. Were it not for this, we would pack up the truck and sell this one as their struggles are more than we thought (and they thought too).
Trading at 40% of our valuation.
Hold for a while until this “take-over” thing flushes out. We are hoping it happens, but $9 a share looks like the most they could get.
Down 50%. HOLD.

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up) Valuation $10.28 (was $13.32, $12.89, $13.40)
Down $.62 at $5.50.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Most of this was purchased from Penninsula Capital at $7.03 a share. Cannell is pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
Last week Constellation increased its bank credit line to $105 million from $50 million. Looks like just about enough to swallow MEDW.
Looks like something is going to happen here.
Down 13%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up), Valuation $9.90 (was $8.69, $11.51)
Up $.38 to $2.90
No news.
Down 23%. HOLD

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $2.38 (Was $2.62 before another $10,000 and was $3.00 before double up), Valuation $6.84 (was $7.58, $7.59)
Down $.02 to $1.69.
For 2008 they are projecting revenue of $145-$150 million and EBITDA breakeven. But it sounds like this will not happen until the second half of 2008. If they can turn this around-a double or triple from here is possible.
If they can do what they say in 2008, a valuation of close to $8 is possible.
Trading at 25% of our latest valuation
Down 29%. BUY

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $9.97 (Was, $10.66, $9.39)
Up $.02 to $4.54.
No news.
Trading at 46% of our valuation.
Up 6%. BUY

OB-abies (Bulletin Board Listed Stocks)

Interestingly, our OB-abies have held up better than the “higher-quality” stocks so far this year. They are down about 2.7% on average, compared to 23% for the stocks above. At least so far. As proven by OPTIO, patience is necessary with these stocks.

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up), Valuation $5.61 (was $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.50, up $.06.
Earnings were great, stock goes down. ARI does little to get any investor attention. Wake up management–you have a great little company here worth 3X what it is selling for.
Now down 7%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.93 (Was $.99 and $1.19 before adding $10,000-twice), Valuation $3.41 (was $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.85, unchanged.
Earnings were out in early February. Sales up only 4%, but earnings up 69%!. EPS was $.04 compared to $.02 last year. Pre-tax earnings were up over 100%. Our valuation rose to $3.41.
No immediate impact in the stock price from their “investor presentation” last week. Hopefully some will be coming soon.
Now down 9%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.31 (Was $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price up $.01 at $.29. Closed at $.28.
Earnings out at the end of March. Not bad at all. Q4 revenues were $4.8 million, gross margin was 72%, and excluding a $200,000 impairment charge, CTI actually made about $77k of income. Net cash (net of debt) grew by $350,000.
Our valuation went up to $1.31 per share.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 21% of our latest valuation.
UP 7%. BUY

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Cheap Stocks, 4/26/2008 Update

The markets managed to stay above water last week, with all the major indices up less than 1%. We continued our comeback, up 3.75% last week.

SPNC earnings out last week and were good, CLZR were out also–not good, but not as bad as we thought they could be.

NASDAQ was up .8% last week, the DOW was up .3% and the S+P 500 was up .5%.

Last week we went 7 stocks up, 5 down and 1 even.

For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is +3.75%,-22.1 and +13.4% respectively. Since inception we are now 22 stocks up and 10 down.

So far in 2008 the DOW is down 2.8%, NASDAQ is down 8.7% and the S+P 500 is down 4.8%. The NASDAQ is still down a 15.3% since October 31, 2007.

The Russell 3000 and the Wilshire 5000 are both down just about 5% this year.

Since inception we have closed out the following positions:

The model portfolio assumes $10,000 invested in each stock (unless we double-up–then it is $20,000), less $10 commission each way (TD Ameritrade rate).

For the 19 stocks that we closed out in 2006, 2007 and 2008 the average gain was 23%.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Up $1.55 to $10.51.
Earnings were out last week and were good. Revenues were up 37% and they lost a penny on the bottom line. They also reaffirmed their 2008 guidance of 25-33% revenue growth and $1-$5 million of pre-tax income, which seemed to comfort investors and maybe scare the shorts a bit. The company has $53.4 million in cash ($1.69 per share), and is trading at about 2.5 times 2008 revenues (net of cash)and is growing about 30% a year.
Now up 12%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $9.03 (was $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $3.81, down $.22 DWCH is now trading at 42% of our valuation.
Earnings out Tuesday, 4/29 before the market opens.
Now up 21%. HOLD

Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $4.14 (was $4.78 before $10,000 adder, $6.12 before another $10,000 added, $6.65 before double up), Valuation $11.24 (Was $10.80 $9.20, $8.63, $13.77)
PARL closed at $3.22, up $.09.
Latest earnings were very good. Stock is down.
Now trading at 29% of our valuation.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 22%. BUY.

ILOG SA (ILOG-recommended 3/26/2007)
Buy price $12.08 (was $12.92 before another $10,000 added, $13.60 before double-up), Valuation $24.67 (was $20.51, $23.22, $20.99, $20.52)
Closed at $8.45 down $.48.
No news, just lack of interest.
For FY2008(this year) they are STILL projecting another 20% increase in sales but revised their earnings projections down. They still have $3.39 a share in cash.
A buy-out is a decent possibility here.
Down 30%. HOLD

Celebrate Express (BDAY-recommended 4/17/2007)
Buy Price $6.15 (was $8.38 before $10,000 adder and $8.82 before double-up), Valuation $7.82 (Was 415.51, $17.85 $18.18)
Down $.18 to $4.10.
BDAY pulled their earnings announcement two weeks ago as they apparently received interest from someone on a buy-out. Were it not for this, we would pack up the truck and sell this one as their struggles are more than we thought (and they thought too).
Trading at 52% of our valuation.
Hold for a while until this “take-over” thing flushes out. We are hoping it happens, but $9 a share looks like the most they could get.
Down 33%. HOLD.

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up) Valuation $10.28 (was $13.32, $12.89, $13.40)
Up $.29 at $6.12.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Most of this was purchased from Penninsula Capital at $7.03 a share. Cannell is pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable. Looks like something is going to happen here. Buy some more–new average Buy price wil be $6.33.
Down 3%. HOLD

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, NEW Valuation $9.90 (was $8.69, $11.51)
Down $.56 to $2.52
This really stinks.
Losses out last week. Sales actually went up 1/2%, and they only lost $2 million due to almost $4 million in legal expenses. Our valuation actually rose to $9.90 and they have $1.69 in cash. At this price, and even with the Palomar lawsuit, we are going to double up. New Buy price will be $3.74.
Down 65%. HOLD

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $2.38 (Was $2.62 before another $10,000 and was $3.00 before double up), Valuation $6.84 (was $7.58, $7.59)
Up $.01 to $1.71.
For 2008 they are projecting revenue of $145-$150 million and EBITDA breakeven. But it sounds like this will not happen until the second half of 2008. If they can turn this around-a double or triple from here is possible.
If they can do what they say in 2008, a valuation of close to $8 is possible.
Trading at 25% of our latest valuation
Down 28%. BUY

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $9.97 (Was, $10.66, $9.39)
Up $.10 to $4.52.
No news.
Trading at 45% of our valuation.
Up 6%. BUY

OB-abies (Bulletin Board Listed Stocks)

Interestingly, our OB-abies have held up better than the “higher-quality” stocks so far this year. They are down about 4.5% on average, compared to 23% for the stocks above. At least so far. As proven by OPTIO, patience is necessary with these stocks.

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up), Valuation $5.61 (was $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.44, down $.11.
Earnings were great, stock goes down. ARI does little to get any investor attention. Wake up management–you have a great little company here worth 3X what it is selling for.
Now down 11%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.93 (Was $.99 and $1.19 before adding $10,000-twice), Valuation $3.41 (was $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.85, up $.07.
Earnings were out in early February. Sales up only 4%, but earnings up 69%!. EPS was $.04 compared to $.02 last year. Pre-tax earnings were up over 100%. Our valuation rose to $3.41.
AVSO is presenting at an analyst conference next Tuesday!! We have to take this as a sign that the business is doing fine, otherwise, why would they want to go tell anyone? They could just stay at home and be ignored like they have been for the last 2 years.
Now down 9%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.31 (Was $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price unchanged at $.28. Closed at $.22.
Earnings out at the end of March. Not bad at all. Q4 revenues were $4.8 million, gross margin was 72%, and excluding a $200,000 impairment charge, CTI actually made about $77k of income. Net cash (net of debt) grew by $350,000.
Our valuation went up to $1.31 per share.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 21% of our latest valuation.
UP 4%. BUY

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Cheap Stocks, 4-19-2008 Update

The markets roaring back last week, with all the major indices up 4-5%. We were up, but not as much this week–2.6%.

We sold PDLI last week for a gain of 9%. This week we think adding another $10,000 to MEDW is a good idea. DTLK and LTUS.ob earnings out last week and both were good.

NASDAQ was up 4.9% last week, the DOW was up 5.0% and the S+P 500 was up 4.3%.

Last week we went 7 stocks up, 6 down.

For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is +2.6%,-25.9 and +9.6% respectively. Since inception we are now 21 stocks up and 11 down.

So far in 2008 the DOW is down 3.1%, NASDAQ is down 9.4% and the S+P 500 is down 5.3%. The NASDAQ is now down a whopping 19.9% since October 31, 2007.

The Russell 3000 and the Wilshire 5000 are both down just about 5.5% this year.

Since inception we have closed out the following positions:

The model portfolio assumes $10,000 invested in each stock (unless we double-up–then it is $20,000), less $10 commission each way (TD Ameritrade rate).

For the 19 stocks that we closed out in 2006, 2007 and 2008 the average gain was 23%.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Up $.43 to $8.96.
The company has $54.4 million in cash ($1.73 per share), and is trading at about 2 times 2008 revenues (net of cash)and is growing about 30% a year.
Earnings out 4/23 before the market opens.
Now down 5%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $9.03 (was $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $4.03, down $4.12. DWCH is now trading at 46% of our valuation.
No news.
Now up 28%. HOLD

Parlux Fragrances (PARL-Recommended 11/30/2006)
New Buy price $4.14 (was $4.78 before $10,000 adder, $6.12 before another $10,000 added, $6.65 before double up), Valuation $11.24 (Was $10.80 $9.20, $8.63, $13.77)
PARL closed at $3.13, down $.08.
Latest earnings were very good. Stock is down. The market in general is anticipating that the bottom will fall out of everything.
Now trading at 28% of our valuation.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 24%. BUY.

ILOG SA (ILOG-recommended 3/26/2007)
Buy price $12.08 (was $12.92 before another $10,000 added, $13.60 before double-up), Valuation $24.67 (was $20.51, $23.22, $20.99, $20.52)
Closed at $8.93 up $.48.
No news, just lack of interest.
For FY2008(this year) they are STILL projecting another 20% increase in sales but revised their earnings projections down. They still have $3.39 a share in cash.
A buy-out is a decent possibility here.
Down 26%. HOLD

Celebrate Express (BDAY-recommended 4/17/2007)
NEW Buy Price $6.15 (was $8.38 before $10,000 adder and $8.82 before double-up), Valuation $15.51 (Was $17.85 $18.18)
Down $1.32 to $4.28.
Lots of action here. Buy-out offer, very bad quarter.
BDAY had a miserable quarter. Still struggling with their new computer systems, etc.
Sales down, big loss. Our valuation fell to $7.82.
BDAY also pulled their earnings announcement last week as they apparently received interest from someone on a buy-out. Were it not for this, we would pack up the truck and sell this one as their struggles are more than we thought (and they thought too).
Trading at 72% of our valuation.
Hold for a while until this “take-over” thing flushes out. We are hoping it happens, but $9 a share looks like the most they could get.
Down 31%. HOLD.

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.52, (was $6.67 ($10,000 added), $6.98 after double up) Valuation $10.28 (was $13.32, $12.89, $13.40)
Up $.10 at $5.83.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Most of this was purchased from Penninsula Capital at $7.03 a share. Cannell is pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D last week, disclosing a 6.1% ownership in MEDW (499,000 shares). COnstellation has $243 million in revenues and is profitable. Looks like something is going to happen here. Buy some more–new average Buy price wil be $6.33.
Down 11%. HOLD

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $8.69 (was $11.51)
Up $.25 to $3.08
This really stinks.
No news.
Down 58%. HOLD

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $2.38 (Was $2.62 before another $10,000 and was $3.00 before double up), Valuation $6.84 (was $7.58, $7.59)
Down $.09 to $1.70.
For 2008 they are projecting revenue of $145-$150 million and EBITDA breakeven. But it sounds like this will not happen until the second half of 2008. If they can turn this around-a double or triple from here is possible.
Our valuation dropped to $6.84. If they can do what they say in 2008, a valuation of close to $8 is possible.
Trading at 25% of our latest valuation
Down 25%. BUY

PDL Biopharma. (PDLI-Recommended 10/21/2007)
Buy Price $12.69 (was $14.15, before $10,000 adder, $16.53 before $10,000 adder, and $20.04 before double-up), Valuation $18.00 to $20.00

SOLD at $13.84 for a 9% gain.

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, NEW Valuation $9.97 (Was, $10.66, $9.39)
Up $.52 to $4.42.
Earnings out last week and they were good. Revenues were $47.7 million, up 17%, EPS was $.04 compared to a $.06 loss last year. Guidance for this quarter was good—$48-$52 million in sales and EPS of $.05-$.08. Backlog grew to $30 million from $23 million. Our valuation actually fell to $9.97, but this will vary based on the quarterly results.
Trading at only 44% of our valuation.
Up 3%. BUY

OB-abies (Bulletin Board Listed Stocks)

Interestingly, our OB-abies have held up better than the “higher-quality” stocks so far this year. They are down about 6% on average, compared to 23% for the stocks above. At least so far. As proven by OPTIO, patience is necessary with these stocks.

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up), Valuation $5.61 (was $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.55, up $.05.
Earnings were great, stock goes down. ARI does little to get any investor attention. Wake up management–you have a great little company here worth 3X what it is selling for.
Now down 4%. BUY. Still a Huge valuation gap here.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.31 (Was $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price down $.01 at $.28. Closed at $.22.
Earnings out at the end of March. Not bad at all. Q4 revenues were $4.8 million, gross margin was 72%, and excluding a $200,000 impairment charge, CTI actually made about $77k of income. Net cash (net of debt) grew by $350,000.
Our valuation went up to $1.31 per share.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 21% of our latest valuation.
UP 4%. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up) New Valuation-$2.28 (Was $2.08)
Closed at $.99, up $.33.
As hoped for, LTUS had a blow-out Q4. Sales up 72% to $19.2 million, EPS was $.08, (adjusted for some non-recurring income). Stock was up 50% this week but it is still far below our new valuation of $2.28 per share. For the year they made $.19 EPS on a non-GAAP basis ($.26 GAAP).

This is still a BUY.
Up 28%.

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Cheap Stocks, 4/12/2008 Update

We came roaring back last week, up 8.4% on the back of nice gains in PDLI and DWCH. The markets slumped again last week as all the major indices were off about 3%.

We are recommending selling PDLI for a gain of 9% at the closing price of $13.84. We think it has more upside over the next few years, but in this market we will take a gain when we can get it.

NASDAQ was down 3.4% last week, the DOW was down 3.0% and the S+P 500 was down 2.7%.

Last week we went 8 stocks up, 5 down and 1 even.

For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is +8.4%,-28.5 and +7.0% respectively. Since inception we are now 19 stocks up and 13 down.

So far in 2008 the DOW is down 7.8%, NASDAQ is down 13.7% and the S+P 500 is down 9.2%. The NASDAQ is now down a whopping 19.9% since October 31, 2007.

The Russell 3000 and the Wilshire 5000 are both down just about 9% this year.

Since inception we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3% (Waited too long to sell)
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)

The model portfolio assumes $10,000 invested in each stock (unless we double-up–then it is $20,000), less $10 commission each way (TD Ameritrade rate).

For the 18 stocks that we closed out in 2006, 2007 and 2008 the average gain was 23%.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Down $.50 to $8.53.
The company has $54.4 million in cash ($1.73 per share), and is trading at about 2 times 2008 revenues (net of cash)and is growing about 30% a year.
No news.
Now down 9%. BUY.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $9.03 (was $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $4.15, up $.50. DWCH is now trading at 46% of our valuation.
No news.
Now up 32%. HOLD

Parlux Fragrances (PARL-Recommended 11/30/2006)
New Buy price $4.14 (was $4.78 before $10,000 adder, $6.12 before another $10,000 added, $6.65 before double up), Valuation $11.24 (Was $10.80 $9.20, $8.63, $13.77)
PARL closed at $3.21, up $.14.
Latest earnings were very good. Stock is down. The market in general is anticipating that the bottom will fall out of everything.
Now trading at 29% of our valuation.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 22%. BUY.

ILOG SA (ILOG-recommended 3/26/2007)
Buy price $12.08 (was $12.92 before another $10,000 added, $13.60 before double-up), Valuation $24.67 (was $20.51, $23.22, $20.99, $20.52)
Closed at $9.45 down $.55.
No news, just lack of interest.
For FY2008 (this year) they are STILL projecting another 20% increase in sales but revised their earnings projections down. They still have $3.39 a share in cash.
A buy-out is a decent possibility here.
Down 30%. HOLD

Celebrate Express (BDAY-recommended 4/17/2007)
NEW Buy Price $6.15 (was $8.38 before $10,000 adder and $8.82 before double-up), Valuation $15.51 (Was $17.85 $18.18)
Up $.32 to $5.60.
Lots of action here. Buy-out offer, very bad quarter.
BDAY had a miserable quarter. Still struggling with their new computer systems, etc.
Sales down, big loss. Our valuation fell to $7.82.
BDAY also pulled their earnings announcement last week as they apparently received interest from someone on a buy-out. Were it not for this, we would pack up the truck and sell this one as their struggles are more than we thought (and they thought too).
Trading at 72% of our valuation.
Hold for a while until this “take-over” think flushes out. We are hoping it happens, but $9 a share looks like the most they could get.
Down 9%. HOLD.

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.52, (was $6.67 ($10,000 added), $6.98 after double up) Valuation $10.28 (was $13.32, $12.89, $13.40)
Up $.29 at $5.73.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Most of this was purchased from Penninsula at $7.03 a share. Cannell is pushing MEDW management to sell the company. It seems the only was any stock can go up these days is on a buy-out. Hopefully they are working on this
Down 12%. HOLD

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $8.69 (was $11.51)
Down $.39 to $2.83
This really stinks.
No news.
Down 61%. HOLD

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $2.38 (Was $2.62 before another $10,000 and was $3.00 before double up), Valuation $6.84 (was $7.58, $7.59)
Up $.12 to $1.79.
For 2008 they are projecting revenue of $145-$150 million and EBITDA breakeven. But it sounds like this will not happen until the second half of 2008. If they can turn this around-a double or triple from here is possible.
Our valuation dropped to $6.84. If they can do what they say in 2008, a valuation of close to $8 is possible.
Trading at 26% of our latest valuation
Down 25%. BUY

PDL Biopharma. (PDLI-Recommended 10/21/2007)
Buy Price $12.69 (was $14.15, before $10,000 adder, $16.53 before $10,000 adder, and $20.04 before double-up), Valuation $18.00 to $20.00
Up $2.71 to $13.84.
Up 3 weeks in a row!
PDLI announced a $4.25 special dividend, and a spin-off of their biotech business. So we will get cash, a royalty company and a R+D biotech company with $375 million in cash. Hard to value all that but our understanding is that the royalty company will have a bit of cash, and a $250 million revenue stream for at least the next 6 years. It has to pay off the PDLI debt of say $500 million though and we are not sure of the tax situation yet either. So say, $4.25 for the dividend, $8 for the royalty stream, net of expenses and taxes, and say $4 for the biotech spin-off=$16.25 total. We think there could be quite a bit of upside here over the next few years, but we recommend cashing out here unless you have a long-term horizon.
Up 9%. SELL

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $10.66 (Was, $9.39)
Up $.05 to $3.90.
Earnings out Wednesday, April 16th, after the close.
Trading at only 37% of our valuation.
Down 9%. BUY

OB-abies (Bulletin Board Listed Stocks)

Interestingly, our OB-abies have held up better than the “higher-quality” stocks so far this year. They are down about 10% on average, compared to 21% for the stocks above. At least so far. As proven by OPTIO, patience is necessary with these stocks.

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up), Valuation $5.61 (was $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.50, down $.15.
Earnings were great, stock goes down. ARI does little to get any investor attention. Wake up management–you have a great little company here worth 3X what it is selling for.
Now down 7%. BUY. Still a Huge valuation gap here.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, NEW Valuation $1.31 (Was $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price up $.02 at $.29. Closed at $.22.
Earnings out at the end of March. Not bad at all. Q4 revenues were $4.8 million, gross margin was 72%, and excluding a $200,000 impairment charge, CTI actually made about $77k of income. Net cash (net of debt) grew by $350,000.
Our valuation went up to $1.31 per share.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 22% of our latest valuation.
UP 7%. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up) Valuation $2.08
Closed at $.66, up $.07.
No apparent reason for the recent decline. More sellers than buyers.
LTUS announced a $5 million private placement of stock in late February. 5,547,000 shares and warrants to purchase another 2.9 million shares at $1.20. Also in the agreement, the current big holders have to put up a chunk of their personal stock in escrow, which will be released on hitting certain earnings target. The target for 2007 is $8.5 million. For the 9 months ended September 30, they made $6.1 million. So this should make $2.4 million Q4 earnings a slam dunk–$.05 per share. Target for 2008 is $13.8 million (about $.28 a share) and 2009–$17.5 million or about $.35 per share.
Earnings should be out soon.
This is still a BUY.
Down 21%.

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Cheap Stocks, 4/5/2008 Update

Markets came roaring back last week, cutting the major indices losses for the year quite a bit.

We were up 2.3% last week. NASDAQ was up 4.9% last week, the DOW was up 3.2% and the S+P 500 was up 4.2%.

Last week we went 7 stocks up, 6 down and 1 even.

For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is +2.3%,-36.9 and -1.4% respectively. Since inception we are now 19 stocks up and 13 down.

So far in 2008 the DOW is down 5%, NASDAQ is down 10.6% and the S+P 500 is down 6.7%. The NASDAQ is now down a whopping 17.1% since October 31, 2007.

The Russell 3000 and the Wilshire 5000 are both down just about 6.6% this year.

Since inception we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3% (Waited too long to sell)
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)

The model portfolio assumes $10,000 invested in each stock (unless we double-up–then it is $20,000), less $10 commission each way (TD Ameritrade rate).

For the 18 stocks that we closed out in 2006, 2007 and 2008 the average gain was 23%.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Up $.76 to $9.03.
Finally a bit of “dead-cat” bounce. Management will not so a stock buy-back to support the price.
The company has $54.4 million in cash ($1.73 per share), and is trading at about 2 times 2008 revenues (net of cash).
No news.
Now down 4%. BUY.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $9.03 (was $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $3.65, up $.22. DWCH is now trading at 40% of our valuation.
No news.
Now up 16%. HOLD

Parlux Fragrances (PARL-Recommended 11/30/2006)
New Buy price $4.14 (was $4.78 before $10,000 adder, $6.12 before another $10,000 added, $6.65 before double up), Valuation $11.24 (Was $10.80 $9.20, $8.63, $13.77)
PARL closed at $3.07, down $.03.
Latest earnings were very good. Stock is down. The market in general is anticipating that the bottom will fall out of everything.
Now trading at 28% of our valuation.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 26%. BUY.

ILOG SA (ILOG-recommended 3/26/2007)
Buy price $12.08 (was $12.92 before another $10,000 added, $13.60 before double-up), Valuation $24.67 (was $20.51, $23.22, $20.99, $20.52)
Closed at $9.00 down $.48.
No news, just lack of interest as there were better places to put your money last week with the markets soaring.
For FY2008 (this year) they are STILL projecting another 20% increase in sales but revised their earnings projections down. They still have $3.39 a share in cash.
A buy-out is a decent possibility here.
Down 26%. HOLD

Celebrate Express (BDAY-recommended 4/17/2007)
NEW Buy Price $6.15 (was $8.38 before $10,000 adder and $8.82 before double-up), Valuation $15.51 (Was $17.85 $18.18)
Up $.68 to $5.28.
There will be no more birthdays or halloween. BDAY is not burning it up, but this is stupid.
Trading at 34% of our valuation.
The “turnaround” is not yet done.
Down 14%. BUY.

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.52, (was $6.67 ($10,000 added), $6.98 after double up) Valuation $10.28 (was $13.32, $12.89, $13.40)
Down $.28 at $5.44.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Most of this was purchased from Penninsula at $7.03 a share. Cannell is pushing MEDW management to sell the company. It seems the only was any stock can go up these days is on a buy-out. Hopefully they are working on this
Down 17%. HOLD

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $8.69 (was $11.51)
Down $.02 to $3.22
No news.
Down 56%. HOLD

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $2.38 (Was $2.62 before another $10,000 and was $3.00 before double up), Valuation $6.84 (was $7.58, $7.59)
Down $.03 to $1.67.
For 2008 they are projecting revenue of $145-$150 million and EBITDA breakeven. But it sounds like this will not happen until the second half of 2008. If they can turn this around-a double or triple from here is possible.
Our valuation dropped to $6.84. If they can do what they say in 2008, a valuation of close to $8 is possible.
Trading at 25% of our latest valuation
Down 30%. BUY

PDL Biopharma. (PDLI-Recommended 10/21/2007)
Buy Price $12.69 (was $14.15, before $10,000 adder, $16.53 before $10,000 adder, and $20.04 before double-up), Valuation $18.00 to $20.00
Up $.52 to $11.03.
Up 2 weeks in a row!
PDLI announced that they had closed all their asset sales ($240 million, $200 million and $85 million). Next should be a dividend of maybe $4 a share and then some deal involving their royalty income.
Down 12%. HOLD

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $10.66 (Was, $9.39)
Up $.13 to $3.85.
Earnings out Wednesday, April 16th, after the close.
Trading at only 35% of our valuation.
Down 10%. BUY

OB-abies (Bulletin Board Listed Stocks)

Interestingly, our OB-abies have held up better than the “higher-quality” stocks so far this year. They are down about 8% on average, compared to 23% for the stocks above. At least so far. As proven by OPTIO, patience is necessary with these stocks.

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up), Valuation $5.61 (was $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.65, unchanged.
Earnings were great, stock goes down. ARI does little to get any investor attention. Wake up management–you have a great little company here worth 3X what it is selling for.
Now up 2%. BUY. Still a Huge valuation gap here.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, NEW Valuation $1.31 (Was $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price up $.02 at $.29. Closed at $.29.
Earnings out at the end of March. Not bad at all. Q4 revenues were $4.8 million, gross margin was 72%, and excluding a $200,000 impairment charge, CTI actually made about $77k of income. Net cash (net of debt) grew by $350,000.
Our valuation went up to $1.31 per share.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 22% of our latest valuation.
UP 7%. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up) Valuation $2.08
Closed at $.59, down $.11.
No apparent reason for the recent decline. More sellers than buyers.
LTUS announced a $5 million private placement of stock in late February. 5,547,000 shares and warrants to purchase another 2.9 million shares at $1.20. Also in the agreement, the current big holders have to put up a chunk of their personal stock in escrow, which will be released on hitting certain earnings target. The target for 2007 is $8.5 million. For the 9 months ended September 30, they made $6.1 million. So this should make $2.4 million Q4 earnings a slam dunk–$.05 per share. Target for 2008 is $13.8 million (about $.28 a share) and 2009–$17.5 million or about $.35 per share.
Earnings should be out in about 2 weeks.
This is still a BUY.
Down 30%.

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Cheap Stocks, 3/29/2008 Update

Markets gave some gains up last week, except for NASDAQ, which was up a tad. We managed to rebound with a 6.4% gain.

All of the major averages have lost all their 2007 gains and then some from 12/31/2006. And we have too.

We were up 6.4% last week. NASDAQ was up .1% last week, the DOW was down 1.2% and the S+P 500 was down 1.1%.

Last week we went 6 stocks up, 6 down and 2 even.

For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is +6.4%,-39.2 and -3.7% respectively. Since inception we are now 18 stocks up and 13 down and 1 even.

So far in 2008 the DOW is down 7.9%, NASDAQ is down 14.8% and the S+P 500 is down 10.4%. The NASDAQ is now down a whopping 20.9% since October 31, 2007.

The Russell 3000 and the Wilshire 5000 are both down just about 10.5% this year.

Since inception we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3% (Waited too long to sell)
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)

The model portfolio assumes $10,000 invested in each stock (unless we double-up–then it is $20,000), less $10 commission each way (TD Ameritrade rate).

For the 18 stocks that we closed out in 2006, 2007 and 2008 the average gain was 23%.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Up $.28 to $8.27.
SPNC continues to drift. Management will not so a stock buy-back to support the price.
The company has $54.4 million in cash ($1.73 per share), and is trading at about 2 times 2008 revenues (net of cash).
No news.
Now down 12%. BUY.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $9.03 (was $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $3.43, up $.25. DWCH is now trading at 38% of our valuation.
No news.
Now up 9%. BUY

Parlux Fragrances (PARL-Recommended 11/30/2006)
New Buy price $4.14 (was $4.78 before $10,000 adder, $6.12 before another $10,000 added, $6.65 before double up), Valuation $11.24 (Was $10.80 $9.20, $8.63, $13.77)
PARL closed at $3.10, up $.06.
Latest earnings were very good. Stock is down. The market in general is anticipating that the bottom will fall out of everything.
Now trading at 28% of our valuation.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 25%. BUY.

ILOG SA (ILOG-recommended 3/26/2007)
Buy price $12.08 (was $12.92 before another $10,000 added, $13.60 before double-up), Valuation $24.67 (was $20.51, $23.22, $20.99, $20.52)
Closed at $9.48 down $.06.
For FY2008 (this year) they are STILL projecting another 20% increase in sales but revised their earnings projections down. They still have $3.39 a share in cash.
A buy-out is a decent possibility here.
Down 22%. HOLD

Celebrate Express (BDAY-recommended 4/17/2007)
NEW Buy Price $6.15 (was $8.38 before $10,000 adder and $8.82 before double-up), Valuation $15.51 (Was $17.85 $18.18)
Dwon $.15 to $4.60.
There will be no more birthdays or halloween. BDAY is not burning it up, but this is stupid.
Trading at 30% of our valuation.
The “turnaround” is not yet done.
Down 25%. BUY.

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.52, (was $6.67 ($10,000 added), $6.98 after double up) Valuation $10.28 (was $13.32, $12.89, $13.40)
Down $.11 at $5.72.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Most of this was purchased from Penninsula at $7.03 a share. Cannell is pushing MEDW management to sell the company. It seems the only was any stock can go up these days is on a buy-out.
Down 12%. HOLD

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $8.69 (was $11.51)
Up $.22 to $3.24
No news.
Down 55%. HOLD

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $2.38 (Was $2.62 before another $10,000 and was $3.00 before double up), Valuation $6.84 (was $7.58, $7.59)
Down $.05 to $1.70.
For 2008 they are projecting revenue of $145-$150 million and EBITDA breakeven. But it sounds like this will not happen until the second half of 2008. If they can turn this around-a double or triple from here is possible.
Our valuation dropped to $6.84. If they can do what they say in 2008, a valuation of close to $8 is possible.
Trading at 25% of our latest valuation
Down 25%. BUY

PDL Biopharma. (PDLI-Recommended 10/21/2007)
Buy Price $12.69 (was $14.15, before $10,000 adder, $16.53 before $10,000 adder, and $20.04 before double-up), Valuation $18.00 to $20.00
Up $.98 to $10.61.
Finally an UP week.
PDLI announced that they had closed all their asset sales ($240 million, $200 million and $85 million). Next should be a dividend of maybe $4 a share and then some deal involving their royalty income.
Down 16%. HOLD

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $10.66 (Was, $9.39)
Down $.05 to $3.72.
No news.
Trading at only 35% of our valuation.
Down 13%. BUY

OB-abies (Bulletin Board Listed Stocks)

Interestingly, our OB-abies have held up better than the “higher-quality” stocks so far this year. They are down about 10% on average, compared to almost 25% for the stocks above. At least so far. As proven by OPTIO, patience is necessary with these stocks.

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up), Valuation $5.61 (was $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.65, down $.15
Earnings were great, stock goes down. ARI does little to get any investor attention. Wake up management–you have a great little company here worth 3X what it is selling for.
Now up 2%. BUY. Still a Huge valuation gap here.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, NEW Valuation $1.31 (Was $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price unchanged at $.27. Closed at $.27.
Earnings out late Friday. Not bad at all. Q4 revenues were $4.8 million, gross margin was 72%, and excluding a $200,000 impairment charge, CTI actually made about $77k of income. Net cash (net of debt) grew by $350,000.
Our valuation went up to $1.31 per share.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 21% of our latest valuation.
EVEN. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up) Valuation $2.08
Closed at $.70, up $.11.
No apparent reason for the recent decline. More sellers than buyers.
LTUS announced a $5 million private placement of stock in late February. 5,547,000 shares and warrants to purchase another 2.9 million shares at $1.20. Also in the agreement, the current big holders have to put up a chunk of their personal stock in escrow, which will be released on hitting certain earnings target. The target for 2007 is $8.5 million. For the 9 months ended September 30, they made $6.1 million. So this should make $2.4 million Q4 earnings a slam dunk–$.05 per share. Target for 2008 is $13.8 million (about $.28 a share) and 2009–$17.5 million or about $.35 per share.
Earnings should be out in about 2 weeks.
This is still a BUY.
Down 16%.

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3/21/2008 Update-off this week

Taking the holiday off.

Market still stinks for small caps. Be back next week.

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ARI Networks

ARIS.ob, announced Q2 earnings this morning (1/31/2008).

Sales up 17%, earnings up 35%. Made $.05 per share (not-taxed, but I doubt ARI will pay any taxes (in the next 5 years anyway) with their net-operating loss carryforwards). Cash earnings were $.09 this quarter.

Our valuation actually fell a bit from $5.71 to $5.61 (on more shares ourstanding), but this is turning into an earnings play it seems.

Stock has not traded. Terrific results on a crappy day in the market (few days haven’t been crappy this year).

This should be trading at $4 a share at least–even in this market.

BUY.

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Cheap Stocks, 3/15/2008 Update

Well we got a big head fake last week as the markets soared on Tuesday, then gave it all back by the end of the week. NASDAQ is back to where it was in December 2005! Last week LTUS.ob dropped 19% for no apparent reason leaving us down 2.5% for the week.

We are adding another $10,000 to both PDLI and LTUS.ob this week.

All of the major averages have lost all their 2007 gains and then some from 12/31/2006. And we have too.

We were down 2.5% last week, bringing our YTD 2008 loss to 35.8%. NASDAQ was even last week, the DOW was up .5% and the S+P 500 was down .4%. There are lots of cheap stocks around now, but we keep coming back to the ones we already own as being the best values.

Last week we went 5 stocks up, 6 down and 3 even.

For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is -2.5%,-35.8 and -2.8% respectively. Since inception we are now 19 stocks up and 13 down.

So far in 2008 the DOW is down 9.9%, NASDAQ is down 16.6% and the S+P 500 is down 12.2%. The NASDAQ is now down a whopping 22.6% since October 31, 2007.

The Russell 3000 and the Wilshire 5000 are both down just about 12.3% this year.

Since inception we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3% (Waited too long to sell)
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)

The model portfolio assumes $10,000 invested in each stock (unless we double-up–then it is $20,000), less $10 commission each way (TD Ameritrade rate).

For the 18 stocks that we closed out in 2006, 2007 and 2008 the average gain was 23%.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Down $.46 to $7.95.
SPNC continues to flounder. Insider buying perked it up a bit for a while.
Zack’s put out a tepid report last week with a price target of $9.50–because SPNC missed their estimate by $.01. Lets see that’s $300,000 miss. It is just too easy in this market to say things are bad. Zacks can’t even get their numbers right. They ignore the $55 million in cash (22% of the market cap) that SPNC has and says that at 3.1 times 2008 sales it should trade at $9.50. They are idiots.
The company has $54.4 million in cash ($1.73 per share), and is trading at about 2 times 2008 revenues (net of cash). Stupid.
Now down 16%. BUY.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $9.03 (was $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $3.57, up $.17. Zeff Capital Partners filed a 13G last week disclosing a 303,100 (5.1%) ownership position.
DWCH is now trading at 40% of our valuation.
No news.
Now up 13%. BUY

Parlux Fragrances (PARL-Recommended 11/30/2006)
New Buy price $4.14 (was $4.78 before $10,000 adder, $6.12 before another $10,000 added, $6.65 before double up), Valuation $11.24 (Was $10.80 $9.20, $8.63, $13.77)
PARL closed at $2.99, up $.12.
Latest earnings were very good. Stock is down. The market in general is anticipating that the bottom will fall out of everything.
Now trading at 27% of our valuation.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 28%. BUY.

ILOG SA (ILOG-recommended 3/26/2007)
Buy price $12.08 (was $12.92 before another $10,000 added, $13.60 before double-up), Valuation $24.67 (was $20.51, $23.22, $20.99, $20.52)
Closed at $10.38 down $.22.
Our valuation moved back up to over $24 per share.
For FY2008 (this year) they are STILL projecting another 20% increase in sales but revised their earnings projections down. They still have $3.39 a share in cash.
A buy-out is a decent possibility here.
Down 14%. HOLD

Celebrate Express (BDAY-recommended 4/17/2007)
NEW Buy Price $6.15 (was $8.38 before $10,000 adder and $8.82 before double-up), Valuation $15.51 (Was $17.85 $18.18)
Up $.31 to $4.70.
There will be no more birthdays or halloween. BDAY is not burning it up, but this is stupid.
Trading at 30% of our valuation.
The “turnaround” is not yet done.
Down 24%. BUY.

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.52, (was $6.67 ($10,000 added), $6.98 after double up) Valuation $10.28 (was $13.32, $12.89, $13.40)
Unchanged at $6.00.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Most of this was purchased from Penninsula at $7.03 a share. Cannell is pushing MEDW management to sell the company. It seems the only was any stock can go up these days is on a buy-out.
Down 8%. HOLD

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $8.69 (was $11.51)
Down $.65 to $3.26
Funds selling (Third Point–who has been hammered lately–PDLI also)
No news.
Down 55%. HOLD

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $2.38 (Was $2.62 before another $10,000 and was $3.00 before double up), NEW Valuation $6.84 (was $7.58, $7.59)
Up $.01 to $1.81.
Earnings out last week. Not great–but there seems to be hope. Sales down %5 to $34.6 million, and they had an adjusted EBITDA loss of $2.9 million. For 2008 they are projecting revenue of $145-$150 million and EBITDA breakeven. But it sounds like this will not happen until the second half of 2008. If they can turn this around-a double or triple from here is possible.
Our valuation dropped to $6.84. If there can do what they say in 2008, a valuation of close to $8 is possible.
Trading at 26% of our new valuation
Down 25%. BUY

PDL Biopharma. (PDLI-Recommended 10/21/2007)
New Buy Price $14.15 (was $16.53 before $10,000 adder, and $20.04 before double-up), Valuation $18.00 to $20.00
Down $1.44 to $9.69.
PDLI announced that they had closed all their asset sales ($240 million, $200 million and $85 million) last week. Next should be a dividend of maybe $4 a share and then some deal involving their royalty income. As scary as this whole thing is–we still think that this current valuation is stupid. At $9.69, less a $4 dividend–this will be trading at around $5.69–or a $680 million market cap. Doing $150 million a year in royalties (and growing), a bunch of clinical developments, ongoing.
So we are adding ANOTHER $10,000 to this one. New avg. buy price will be-$12.69.
Down 32%. HOLD

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $10.66 (Was, $9.39)
Down $.02 to $4.02.
No news.
Trading at only 38% of our valuation.
Down 6%. BUY

OB-abies (Bulletin Board Listed Stocks)

Interestingly, our OB-abies have held up better than the “higher-quality” stocks so far this year. They are down about 5% on average, compared to almost 25% for the stocks above. At least so far.

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up), Valuation $5.71 (was $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.85, unchanged.
Earnings announced in January were great. Sales up 21% and they made money. This market just stinks for mini/micro caps, and ARI does little to get any investor attention. Wake up management–you have a great little company here worth 3X what it is selling for.
Earnings due out Monday, March 17th, before the open.
Now up 15%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.93 (Was $.99 and $1.19 before adding $10,000-twice), Valuation $3.41 (was $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.90, up $.05.
Earnings out in early February. Sales up only 4%, but earnings up 69%!. EPS was $.04 compared to $.02 last year. Pre-tax earnings were up over 100%. Our valuation rose to $3.41. Stock goes down. Who can figure.
Hired a PR firm last week. Maybe they are ready to go prime time with the Street. Hope somebody is left out there to listen.
Now down 3%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.17 (Was $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price unchanged at $.29. Closed at $.24.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 25% of our latest valuation.
Up 7% based on the ASK price. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.95 (Was $1.08 before double-up) Valuation $2.08
Closed at $.68, down $.16.
No apparent reason for the decline. More sellers than buyers.
LTUS announced a $5 million private placement of stock in late February. 5,547,000 shares and warrants to purchase another 2.9 million shares at $1.20. Also in the agreement, the current big holders have to put up a chunk of their personal stock in escrow, which will be released on hitting certain earnings target. The target for 2007 is $8.5 million. For the 9 months ended September 30, they made $6.1 million. So this should make $2.4 million Q4 earnings a slam dunk–$.05 per share. Target for 2008 is $13.8 million (about $.28 a share) and 2009–$17.5 million or about $.35 per share.
We bought more last week at $.72. Add another $10,000 here too. New avg. buy price will be $.84.
This is still a BUY.
Down 28%.

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Author: Dave O

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3/21/2008 Update-off this week

ARI Networks

Cheap Stocks, 3/15/2008 Update