Coolcat's Small-Cap Six Pack
12/16/2005 12:00 am EST
"Are you looking for some sugar plums among your stock picks this holiday season?" asks Kevin Kennedy. "Instead of thinking ‘big’, when looking for stocks to take home for the holidays, it pays to think small." Here, he looks at some favorite micro- and small-caps.
"What are some potential gems in the current micro-cap crop?" asks Kennedy in an article on Marketwatch.com. He notes, "Micro-cap stocks are generally those companies with market caps below $500 million, have the ability to make a whopping impact on your portfolio. History shows micro-caps outperform other size classes over time. Here are three picks you might consider to stuff the stockings. What do these stocks have going for them?
"Our research shows the most important criteria in picking the small-cap and micro-cap stocks with the best potential to become outstanding winners is high relative strength combined with low stock price. Other important characteristics of top winning stocks include new 52-week price highs, low trading float and market capitalization, strong volume on up days, and improving fundamentals.
"AdStar (ADST NASDAQ) provides e-commerce transaction software and services for the advertising and publishing industries. AdStar's ad transaction infrastructure powers classified ad sales for more than 40 of the largest newspapers in the US. ADST is in the right place at the right time, helping newspapers battle the Internet and other increasingly splintered media which are invading their once-sacrosanct role as the main provider of daily news and information.
"The company has announced a lot of big wins this year, and revenues and earnings are rising rapidly. The stock broke out in mid-August on strong volume, corrected for about a week to shake out the ribbon clerks and has steadily climbed since then, hitting its peak of $3.39 Oct. 20. The company reported a third-quarter loss of two cents a share Nov. 15, down from a loss of four cents in an earlier quarter.
"DXP Enterprises (DXPE NASDAQ) sells, maintains, and repairs pumps, bearings, power transmissions, seals, hoses and safety, fluid power, electrical, and industrial supplies. DXPE surged in the aftermath of Hurricane Katrina amid big demand for its pumps. The stock jumped from under $7 in mid-July to $26.30 in 11 weeks before pulling back in lighter volume as low as $12.21 on Nov. 7. Its $168 million in annual sales is more than double its market cap of just under $75 million. The trading float of just three million shares is a big plus.
"ZEVEX International (ZVXI NASDAQ) is a diversified medical device company that makes products ranging from sensors and surgical tools to medical electronic systems. ZVXI has been the strongest of the three lately, making another new high Thursday. The stock jumped 91% Nov. 1 after the company reported third-quarter net income of 22 cents per share, compared with a net loss of 9 cents for the same period of 2004, on a 52% jump in revenues. The stock pulled back to $10.10, but has been strong since. ZVXI also sports a tiny three-million share float."
Meanwhile, in the latest issue of his Coolcat Report, Kennedy also added three new recommendations to his buy list:
"LMIA Aerospace (LMIA NASDAQ) is a supplier of quality components to the aerospace and technology industries. The company is benefiting from increased production rates of both commercial and corporate aircraft combined with new programs, such as the company's Sikorsky and Vought projects for the Blackhawk helicopter. The company's current backlog is at a record high of $112 million. LMIA expects full-year 2005 sales of approximately $100 million and has increased its forecast for 2006 sales to a range of $120-$135 million, based primarily on existing contracts, increased production rates, and newly-awarded business
"NeoMagic (NMGC NASDAQ) delivers mobile solutions that enable new and exciting features for multimedia-rich mobile phones and other wireless-handheld systems. The stock recently jumped 128% in one day after the company reported a blowout third quarter and numerous positive developments. NeoMagic reported revenue of $8.6 million up from $552,000 in the prior year. Net income was $0.11 per share, compared to a loss of $0.91 a share in the same quarter last year. In September, the company announced it had granted Sony worldwide, non-exclusive license to all of its patents.
"US Global Investors (GROW NASDAQ) is a registered investment advisory firm with a focus on profitable niche markets around the world. Headquartered in San Antonio, the company offers financial solutions and provides transfer agency and other services to US Global Investors Funds and US Global Accolade Funds. The groups consist of 13 no-load mutual funds that invest in a variety of investment options, from emerging markets to money markets.
"In November, the company announced first-quarter net income of $1.1 million, or $0.15 per share, compared to net income of $240,000, or $0.03 per share, for the comparable period last year. Revenues jumped 122% to $6.6 million. The company continues to see substantial growth in assets in the natural resource and foreign equity mutual funds the company manages. The results were aided by a 120% increase in investment advisory fees and a 54% rise in transfer agency fees. The increased investment advisory fees were a result of a 79% increase in the average assets under management to $2.41 billion from $1.35 billion a year earlier."