Oberweis' Small Cap Triple Play

06/06/2003 12:00 am EST


James Oberweis

President, Oberweis Asset Management, Inc.

"Small-cap growth funds have experienced one of the sharpest increases in investor purchases in quite some time," says Jim Oberweis, co-editor of The Oberweis Report . "We expect that small-growth fund managers will continue to support prices of small growth equities through new purchases. We don’t believe we can successfully or consistently time the short-term market. As a result, we find the best solution is to remain fully invested at all times in a portfolio of high-growth, small-cap stocks trading at low valuations in relation to their growth rates." Here are Jim’s latest favorite small caps.

"Magma Design Automation (LAVA NASDAQ) provides software that enables chip designers to reduce the time needed to design and produce complex integrated circuits. Its products utilize a new methodology for deep submicron chip design that combines traditionally separate logic design and physical design processes into an integrated design flow and allows for the detection and correction of noise and electrical errors on the chip. Revenue for the most recently reported quarter rose 27% to $20.5 million from $16 million a year ago. Earnings rose to $0.13 vs. a gain of $0.02 in the fourth quarter of 2001.

"Medifast Inc. (MED ASE) sells consumable health and diet products. The company’s products include weight management, meal replacement, and sports nutritional products. Medifast offers programs through which customers can purchase products through its teleweb operation, while receiving medical supervision via its Lifestyles network of qualified medical practitioners. Products include shakes, supplemental bars, soups, hot cocoa, tea, oatmeal, and crackers. Revenues for the first quarter ended March 31, 2003, rose 258% to $6.3. The company grew fully diluted earnings per share from $0.03 in 2002 to $0.08 in 2003. These shares may be appropriate for risk-oriented investors.

"Although the US telecom business has contracted in recent years, Russian telecom companies like Golden Telecom (GLDN NASDAQ) are experiencing rapid growth. Golden Telecom provides its services to businesses and other high-usage customers and telecomm operators. The company’s competitive local exchange carrier services provide local exchange and access services, international and domestic long distance services, data communications, Internet access, and the design of corporate networks. The company also has mobile services, which provide mobile access to its customers. Golden Telecom’s data and Internet services include business-to-business services, which include web design, web hosting, co-location and data warehousing. Total revenues for the most recent quarter March 31, 2003, rose 115% to $78.4 million. Earnings rose to $0.47 vs. $0.23 in the first quarter of 2002. These shares may be appropriate for risk-oriented investors."

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