• Micro Cap Investing: Timing

    Posted November 21, 2011 By in Blog With | 3 Comments

    Many elements go into a micro cap multi bagger.  When the right management + right product/service + right share structure work in harmony a stock price can do some incredible things. Maybe the hardest part is “timing”.  The risk for me has always been being “too early”.  I’ve found being too early is fine as long as you are just early and not just plain wrong ;) I remember ZAGG in Sept 2008 at $0.65 PPS trading 5k shares day.  No one cared.  In the summer of 2008 they announced a deal to distribute the invisible shield in Best Buy (BBY) and no one still cared.  They announced Q3 2008 results of 5c EPS (up from 1c the quarter before) and investors started to care.  The point is investors had time to buy ZAGG if they were paying attention and you had to be willing to buy it early.  Here at MicroCapClub we try to find and discuss the best micro cap stocks while remaining cognizant of timing.

    The MicroCapClub (mc2) is an exclusive micro cap forum focused on micro cap companies (sub $500m market cap). The MicroCapClub was created and founded by Ian Cassel as a way to share ideas and to learn from other seasoned like-minded micro cap investors. Our goal at MicroCapClub.com is quality membership and quality stock ideas.  If you are an experienced micro cap investor, feel free to Apply today.

  • Micro Cap Medical Technology Companies

    Posted November 17, 2011 By in Blog With | No Comments

    As a full time investor in micro cap companies, I’ve been drawn in recent years to companies focusing on medical technology.  Medical Technology broadly includes medical devices, information technology, biotech, and healthcare services.  The PowerShares S&P SmallCap Health Care Fund (PSCH) is up 18% the last 12 months, while the S&P is up 5%.  Micro-Small Cap medical technology companies seem to do fairly well in good and bad macro environments.  As many large cap players have flat lining growth curves, they will likely look toward acquiring growth through M&A.  Here is a list of med-tech micro cap companies that we are currently discussing at MicroCapClub.

     Bacterin International Holdings, Inc (BONE), PPS $2.95, $117m market cap:  Bacterin has grown revenues 100% per year for the last three years (based on FY 2011 Guidance), and is expected to grow 70% in 2012.  The company operates two divisions:  The Biologics division develops, manufactures and markets biologics products to domestic and international markets. Bacterin’s proprietary methods optimize the growth factors in human allografts to create the ideal stem cell scaffold to promote bone, subchondral repair and dermal growth.  The Medical Device Division develops, employs, and licenses bioactive coatings for various medical device applications.  Two analysts follow BONE with an average price target of $5.25.

    Medgenics (MDGN), PPS $2.90, $27m market cap:  Medgenics is developing and commercializing Biopump, a proprietary tissue-based platform technology for the sustained production and delivery of therapeutic proteins using the patient’s own skin biopsy for the treatment of a range of chronic diseases including anemia, hepatitis C and hemophilia. Medgenics believes this approach has multiple benefits compared with current treatments, which include regular and costly injections of therapeutic proteins. The company has three long-acting protein therapy products in different stages of clinical development.  Medgenics plans to develop and/or out-license a pipeline of future Biopump products targeting the large and rapidly growing global protein therapy market, which is forecast to reach $132 billion in 2013.  One analyst follows MDGN with a price target of $8.00.

    Patient Safety Technologies (PSTX), PPS $1.25, $42m market cap: Patient Safety provides the Safety-Sponge® System, a solution proven to improve patient safety and reduce healthcare costs by preventing one of the most common errors in surgery, retained foreign objects.  Since the company received FDA clearance in March 2006, over 60 million of the company’s Safety-Sponges have been successfully used in more than 3 million surgical procedures.  The Safety-Sponge System is currently being used in 78 institutions-hospitals (including six of the 2011-2012 US News and World Report Best Hospitals Honor Roll) and planned to grow to 100 by year-end 2011, with an additional 130 in the backlog.  No analysts cover the company.

    Response Genetics (RGDX), PPS $1.70, $33m market cap:  Response Genetics is focused on the development and sale of molecular diagnostic tests for cancer. RGI’s technologies enable extraction and analysis of genetic information from genes derived from tumor samples stored as formalin-fixed and paraffin-embedded specimens. In addition to diagnostic testing services, the Company generates revenue from the sales of its proprietary analytical pharmacogenomic testing services of clinical trial specimens to the pharmaceutical industry.  The company expanded its sales force by adding seven sales people during the third quarter to meet expected demand.  One analyst follows RGDX with a $3.50 price target.

    Verisante Technology (VRSEF), PPS $0.79, $45m market cap:  Verisante is a medical device company committed to commercializing innovative systems for the early detection of cancer.  The Verisante Aura for skin cancer detection received CE Mark approval in Europe in November, after receiving approval in Canada in October.  The Verisante Aura™, a non-invasive optical system, is indicated for use for the evaluation of skin lesions that may be clinically suspicious for melanoma, squamous cell carcinoma and/or basal cell carcinoma when a medical professional chooses to obtain additional information to rule out one of the above conditions before making a final decision to biopsy.  One analyst covers Verisante with a $2.60 price target.

    Zynex (ZYXI), PPS $0.75, $23m market cap:  Zynex is a fast growing, profitable, medical device company focusing on developing medical devices ignored by larger medical companies. The company has grown revenues from $2.6 million in 2006 to $33-34 million in 2011 (guidance). Zynex is involved in the design and sale of FDA-approved non-invasive electrotherapy devices for the treatment of pain management and the rehabilitation of stroke and spinal cord injury patients. The company has three divisions: Zynex Medical (all of the revenue to date), Zynex NeuroDiagnostics (created 2010), and Zynex Monitoring Solutions (created 2010).  There is some litigation pending on the company that has been waning on the stock price, so be sure to do your DD into the company.  Zynex expects to grow revenues by 40% in 2011 to $33-34m and earn $0.08-0.09.  One analyst follows Zynex with a $1.40 price target.

    The MicroCapClub (mc2) is an exclusive micro cap forum focused on micro cap companies (sub $500m market cap). The MicroCapClub was created and founded by Ian Cassel as a way to share ideas and to learn from other seasoned like-minded micro cap investors. Our goal at MicroCapClub.com is quality membership and quality stock ideas.  If you are an experienced micro cap investor, feel free to Apply today.

  • Small Cap Solar Stocks

    Posted October 27, 2011 By in Blog With | No Comments

    Alternative energy industries often fall prey to 1-2 year boom and bust cycles that make the underlying stocks feel like quite a roller coaster.  For the last several months we’ve been in the “bust” cycle for anything Solar. Most Solar stocks (International and US Domestic) are down 60% on average just in the last 3 months while US based Solyndra, Evergreen Solar, and SpectraWatt have all declared bankruptcy.  These three bankruptcies represent one-fifth of solar panel manufacturing capacity in the US.  Needless to say if you have owned a Solar related stock the last couple months, everyday that goes by feels like another anvil is being dropped on your foot.  I think the financial publications have enjoyed blasting Solar stocks as much as Chinese RTO’s.

    CommodityHQ wrote a great piece called, “The Ultimate Guide to Solar Power Investing”, so instead of regurgitating what that article states, I’ll point you to it as a good overview of the industry.  In a nutshell, China has invested billions into its Solar industry transforming it from a small player to the main producer of solar panels.  China now accounts for three-fifths of the world’s solar panel production capacity.  The increase in capacity in China has substantially driven down costs thus making it albeit impossible for a US or European manufacturer to compete.  Solar companies that haven’t been quick to move production to China are literally being driven out of business.

    Even with all the negativity surrounding Solar, job growth in the industry remains very strong.  US Solar related jobs are expected to grow 24% in 2012 mostly in installations.  A good friend of mine owns a local HVAC and fleet fueling company that recently expanded into solar installations, and I know many other business owners who are doing the same thing.  Solar prices are coming down drastically which is a good thing for consumers, and it is also making solar “a little” less dependent on subsidies for it to be economic.

    As an investor in micro-small cap companies, I’m drawn to these industries that have gotten killed.  Here are a few micro-small cap companies attached to Solar that could make big returns over the next few years:

    GT Advanced Technologies (GTAT), PPS $7.75, Market Cap $975m, Cash Position $473m or $3.60 per share:  GT Advanced Technologies Inc. is a global provider of polysilicon production technology and sapphire and silicon crystalline growth systems and materials for the solar, LED and other specialty markets. The company’s products and services allow its customers to optimize their manufacturing environments and lower their cost of ownership.  GTAT has grown revenues from $60m in 2007 to $899m in 2011. The company gave guidance for $1.0 – 1.1 billion in revenues and EPS of $1.55 – 1.85 for FY2012.  GTAT has $2.3 billion in backlog ($952m – Sapphire, $1.35b – Solar).  14 analysts cover GTAT with an average price target of $14.60.

    TechPrecision Corp (TPCS), PPS $1.10, Market Cap $20m, Cash Position $7.5m: TechPrecision Corporation is a global manufacturer of precision, large-scale fabricated and machined metal components and systems. These products are used in a variety of markets including: renewable energy (solar and wind), medical, nuclear, defense, industrial, and aerospace.  TPCS has a diversified customer base with about 50% of revenues coming from alternative energy.  TechPrecision’s largest customer is GT Advanced (GTAT), and when GTAT moved manufacturing of solar/sapphire to China, TPCS was quick to open its Wuxi Critical Mechanical Components subsidiary in China (started producing Q3 2011).  Management has stated that the move to China will increase gross margins for the company.  TechPrecision produces high temperature vacuum chambers for the solar and sapphire markets.  Since announcing the Wuxi Chinese Subsidiary, TechPrecision has signed up four more tier 1 solar and sapphire customers, which is expected to contribute to revenues/income starting in calendar Q4 2011.  2 analysts cover TPCS with an average price target of $4.25.  Analysts expect FY 2011 revenues of $43 million and EPS of $0.16, and FY 2012 revenues of $57 million and EPS of $0.27.

    Real Goods Solar Inc. (RSOL), PPS $1.75, Market Cap $30m, Cash Position $15m:  Real Goods Solar, Inc. is a leading residential and commercial solar energy integrator, having installed over 11,000 solar systems.  Real Goods Solar offers turnkey solar energy services and has 33 years of experience in solar energy, beginning with the sale in 1978 of the first solar photovoltaic, or PV, panels in the United States. On June 22nd, RSOL merged with Alteris Renewables to form the largest residential solar integrator-installer in the US (thought to have about 11% of the market).  4 analysts cover RSOL with an average price target of $4.38.  Analysts expect FY 2011 revenues of $123 million and EPS of $0.03, and FY 2012 revenues of $200 million and EPS of $0.20.

    The MicroCapClub (mc2) is an exclusive micro cap forum focused on micro cap companies (sub $500m market cap). The MicroCapClub was created and founded by Ian Cassel as a way to share ideas and to learn from other seasoned like-minded micro cap investors. Our goal at MicroCapClub.com is quality membership and quality stock ideas.  If you are an experienced micro cap investor, feel free to Apply today.

  • JG Boswell: The Most Interesting Small Cap You Never Heard Of

    Posted October 23, 2011 By in Blog With | 4 Comments JG Boswell: The Most Interesting Small Cap You Never Heard Of

    JG Boswell Company (BWEL.PK) is perhaps the most interesting micro cap company you never heard of.  This $700 per share, $650m market cap, non-reporting pink sheet company is the largest cotton farmer in America and known as the worlds largest privately owned farm.  The farming operation consists of ~150,000 acres (550km2) in Kings and Kern Counties just north of Los Angeles.  Most of this acreage rests on top of the dry Tulare Lake bed.  The company is known for its cotton production, but it is also the nations second largest processing tomato grower and packer.  The company is profitable and pays a dividend, not that you would know unless you know one of the less then 300 shareholders.

    The company’s past reads like a novel, literally.  A book entitled, The King of California: J.G. Boswell and the Making of a Secret American Empire, was written about its founder.  The company was started in 1921 by J.G. Boswell, and later run by J.G. Boswell II who is credited for the company’s growth from 1952-1984 (died 2009). The JG Boswell Company is a semi-private company that doesn’t post public financials.   Legally, the company doesn’t need to because it has less than 300 shareholders.  You will not find much public information on the company besides local articles or industry articles written about the founder.  No company website, no press releases, no public financials.  In spite of this or because of this lack of transparency, the company has a cult following of sorts.

    The only way you can even get a glimpse of what the company does financially is to become a shareholder, and I’ve heard that even the audited financials are not very detailed or descriptive.  The company earned roughly $31 per share last year, continues to pay a dividend (2% yield), so I can’t say the company is cheap per se.  This said I view BWEL as a land play/water rights play. Underneath the dry lake bed where BWEL grows its crops is an aquifer that could supply up to 3 million residents. The speculation around the company is that the water rights alone are worth several billion dollars on top of the land holdings and crop earnings.

    BWEL has less than 1 million shares outstanding, which make the stock very illiquid (Average Daily Volume: 200 shares per day).   Surprisingly, the stock does have some institutional ownership.  As a full time micro-small cap investor, BWEL doesn’t exactly fit the normal growth profile I look for, but it’s such an interesting company I’m almost forced to pay attention to it.  The only way to pay attention to it is to own it.

    The MicroCapClub (mc2) is an exclusive micro cap forum focused on micro cap companies (sub $500m market cap). The MicroCapClub was created and founded by Ian Cassel as a way to share ideas and to learn from other seasoned like-minded micro cap investors. Our goal at MicroCapClub.com is quality membership and quality stock ideas.  If you are an experienced micro cap investor, feel free to Apply today.

  • Keep Moving Forward

    Posted October 19, 2011 By in Blog With | No Comments

    When stocks drop, interest in talking about stocks drops.  Many of us, me included, are holding positions in companies that are down 10-20-even 50% over the course of a few months.  I find that getting too negative about the markets is just a waste of time and energy.  Taking a line from Rocky Balboa:

    “it ain’t about how hard you get hit. It’s about how hard you can get it and keep moving forward.”

    We’ve all taken our share of hits, and it might just get worse before it gets better.  But even in a bad tape there are still those micro caps that buck the trend.

    eGain (EGAN), up 180% in the last 6 months
    Mitek  (MITK), up 110% in the last 6 months
    TeamStaff (TSTF), up 260% in the last 6 months
    Vertex Energy (VTNR), up 195% in the last 6 months

    I find that the best stocks still do well in shitty markets.  The key is picking the right stocks at the right time.  Sometimes Picking them is easier then Timing them.

    My goal for MicroCapClub was to create a database of the best micro cap stocks and to have open discussion on them.  We currently have over 50 company profiles uploaded.

    The MicroCapClub (mc2) is an exclusive micro cap forum focused on micro cap companies (sub $500m market cap). The MicroCapClub was created and founded by Ian Cassel as a way to share ideas and to learn from other seasoned like-minded micro cap investors. Our goal at MicroCapClub.com is quality membership and quality stock ideas.  If you are an experienced micro cap investor, feel free to Apply today.

    We aren’t looking for a 10 page ANALyst report, just proof you have a micro cap brain in the form of a 1 page investment thesis on your favorite micro cap idea.

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