There are lots of stocks out there that just smell. Anyone who has been investing for awhile may very well know what I mean. The storys just don't make sense. Once in awhile though you get one that just smells .... well good. GVSS seems like one of those to me and despite the fact its a bit pricier than I generally like I bought in today at between .73 and .75 a share.
GVSS is a semi-exclusive distributor of Samsung video surveillance products in North and South America. One area of focus for them has been security for educational institutions. You have to like that niche. It has quite a bit of sex appeal for many investors.
The basic story is that we have a new management team that has taken a company that was bleeding cash when they took over back in March 06 and has turned it around into an enterprise that is growing the bottom line consistently and looks poised for some big topline and even bigger bottom line increases going forward.
Management has a history of turning around companies and they have lived up to that history so far at GVSS. Here are their earnings from when they first took over in March 06 to the present quarter.
Jun 06 (3,746,000)
Sep 06 (3,570,000)
Dec 06 (6,500,000)
Mar 07 160,000
Jun 07 308,000
Sep 07 473,000
This is a pretty impressive turnaround on the bottom line IMO. Earnings improved by 4.2 million a quarter over a 15 month period.
There is a nice presentation from management on some of their history and strategy for the company here.
http://www.seekingalpha.com/article/36487-gvi-security-solutions-wall-street-analyst-forum-presentation-transcript
Their early strategy was to fix things, and they did. They cut expenses improved margins and ditched a nasty financing deal with Laurus and replaced it with a new cheaper loan package from Wells Fargo.
Now they are focused on growth.
They expect the next quarter to again show year over year improvements on the revenue side which means they should also grow earnings again on a sequential basis. In addition there are some tidbits that suggest they will see very substantial growth in 2008. First they mentioned on the last conference call that they added 30 sales reps in the current quarter.As of September they were sitting at 80 reps so a 30 rep increase is a huge increase in the sales force. Most of their sales reps in the US are independent reps so there should be no hit to SGA outside of the expected commission arrangements. In addition they announced today that Samsung will be funding a 1.5 million dollar marketing campaign in 2008 to help them expand sales. Their current sales and marketing expenses combined are roughly 1.4 million a quarter. You have to like it when another company pays for a 30% increase in your sales and marketing budget.
My only big reservation here it is not dirt cheap on a trailing earnings basis. Diluted EPS was a bit under .015 last quarter and those are untaxed earnings. They do have NOL's to offset taxes going forward however I expect them to pay at least partial taxes in 2008. By my calculations they will likely only be able to utilize about 300k in NOL's a quarter.
Still this is a company in a nice recession resistant niche with what appears to be great management and some serious wind at their back to help them ramp up sales in 2008. I believe I am going to bevery happy with this purchase 6 months from now.
Wednesday, November 28, 2007
Tuesday, November 27, 2007
DWCH should have had faith
I had very much wavered on this pick and as it turns out that was unjustified. The english accent must have thrown me off.
Company reported EPS of .14 today. I had guessed .10-.12 yesterday but I wasn't that confident. Revenues were up 29% year over year and better yet they managed to translate most of their sequential revenue increase into bottom line earnings.
Part of that was a result of some unusual expenses last quarter but still you have to give the company credit for managing to turn those incremental sales into earnings. The stock is up over 6 in the pre-market. Its probably too late to jump in here with any more shares so I will sit back and enjoy the gains and look for the next nice opportunity.
Company reported EPS of .14 today. I had guessed .10-.12 yesterday but I wasn't that confident. Revenues were up 29% year over year and better yet they managed to translate most of their sequential revenue increase into bottom line earnings.
Part of that was a result of some unusual expenses last quarter but still you have to give the company credit for managing to turn those incremental sales into earnings. The stock is up over 6 in the pre-market. Its probably too late to jump in here with any more shares so I will sit back and enjoy the gains and look for the next nice opportunity.
Monday, November 26, 2007
Still here treading water
I really don't have any new purchases to report. I did manage to get a couple of small fills on AWI.V and bought some more shares of ISF.V at .205 CDN. Both were steals trading at not too far above cash value.
One of the things I am doing at the moment besides looking outside the US is looking for companies with lots of assets on the books to go with earnings. I feel like there is a much better margin of safety for something with lots of cash per share like ISF.V or AWI.V are or for things trading at or below book value (also like ISF.V AWI.V). To that end there are a few on my radar screen with lots of assets. I still want earnings to go with those assets and ideally a PE under 10. There are still not many of those opportunities out there but the way the market is going I think there will be and I am very comfortable waiting for bargains to come to me.
This was my approach with AWI.V and I got my price. I also managed to pick up some shares of another stock I mentioned (KEQU) in between 12.60 and 13.25 shortly before their blockbuster earnings announcement. There was definitely some lucky timing there but the moral of the story is that right now is a good time to show patience.
In the meantime I have sold about a third of my TBTC. I had a substantial profit and alot of shares so given the thinly traded nature of the stock it seemed prudent to trim back some. Also sold about 10% of my ATRM primarily to build a bit more of a cash hoard.
There is another canadian equity I have my eye on. Its profitable with a modest PE and trading at about 20% over cash value. If it pans out I will mention it sometime in the next week or so.
In the meantime it pays to be cautious. A careful reading of some financials has saved me some utter disasters in recent weeks. I actually thought I might be buying AFT over a dollar before I took a good look at their SEC filings. Sloppiness would have cost me a 75% haircut if I didn't do proper DD. There was a time not too long ago where dart throwing worked and you could be sloppy. That time is over so my general advice is look before you leap then look again and only jump if you have a good quality parachute.
Looking for earnings on DWCH tomorrow. I don't have a ton of confidence but I am SWAGGING for .10-.12 a share. The next big report after that is AYSI in december and I am feeling pretty comfortable about a .03 EPS number. Mining in western australia continues to boom so I still see this as one of the best potential upsides of anything you will find for 2008.
One of the things I am doing at the moment besides looking outside the US is looking for companies with lots of assets on the books to go with earnings. I feel like there is a much better margin of safety for something with lots of cash per share like ISF.V or AWI.V are or for things trading at or below book value (also like ISF.V AWI.V). To that end there are a few on my radar screen with lots of assets. I still want earnings to go with those assets and ideally a PE under 10. There are still not many of those opportunities out there but the way the market is going I think there will be and I am very comfortable waiting for bargains to come to me.
This was my approach with AWI.V and I got my price. I also managed to pick up some shares of another stock I mentioned (KEQU) in between 12.60 and 13.25 shortly before their blockbuster earnings announcement. There was definitely some lucky timing there but the moral of the story is that right now is a good time to show patience.
In the meantime I have sold about a third of my TBTC. I had a substantial profit and alot of shares so given the thinly traded nature of the stock it seemed prudent to trim back some. Also sold about 10% of my ATRM primarily to build a bit more of a cash hoard.
There is another canadian equity I have my eye on. Its profitable with a modest PE and trading at about 20% over cash value. If it pans out I will mention it sometime in the next week or so.
In the meantime it pays to be cautious. A careful reading of some financials has saved me some utter disasters in recent weeks. I actually thought I might be buying AFT over a dollar before I took a good look at their SEC filings. Sloppiness would have cost me a 75% haircut if I didn't do proper DD. There was a time not too long ago where dart throwing worked and you could be sloppy. That time is over so my general advice is look before you leap then look again and only jump if you have a good quality parachute.
Looking for earnings on DWCH tomorrow. I don't have a ton of confidence but I am SWAGGING for .10-.12 a share. The next big report after that is AYSI in december and I am feeling pretty comfortable about a .03 EPS number. Mining in western australia continues to boom so I still see this as one of the best potential upsides of anything you will find for 2008.
Wednesday, November 14, 2007
Some results out today
Very good numbers relatively small reactions
CXPO reported earnings more or less in line with what I figured at .63/share in EPS. This one appears to still be insanely low in price at 11.00/share. They should have annualized free cash flow of close to 10 bucks a share going forward.
I think at the very least it deserves to have a share price in the $15-$18 range. It will likely get there but it may need a bit of time. I was disappointed in the action. I was looking for a quick 50% or more gain from my buy ins at a bit over 9.
In this tough market environment I will apparently need to be patient to get that.
AGX showed continued strength today on the back of its 190 million dollar contract hitting a new 52 week high and spiking over 12.
HLXH had another good quarter at about .003/share. Backlog was up again. The numbers would have been better except for an unusually high tax rate. I haven't looked at the quarterly closely yet but I was satisfied with the numbers.
All in all I can't complain too much. I am treading water and even making a bit of money here and there in a bad market.
CXPO reported earnings more or less in line with what I figured at .63/share in EPS. This one appears to still be insanely low in price at 11.00/share. They should have annualized free cash flow of close to 10 bucks a share going forward.
I think at the very least it deserves to have a share price in the $15-$18 range. It will likely get there but it may need a bit of time. I was disappointed in the action. I was looking for a quick 50% or more gain from my buy ins at a bit over 9.
In this tough market environment I will apparently need to be patient to get that.
AGX showed continued strength today on the back of its 190 million dollar contract hitting a new 52 week high and spiking over 12.
HLXH had another good quarter at about .003/share. Backlog was up again. The numbers would have been better except for an unusually high tax rate. I haven't looked at the quarterly closely yet but I was satisfied with the numbers.
All in all I can't complain too much. I am treading water and even making a bit of money here and there in a bad market.
Monday, November 12, 2007
ISF.V / ISFIF new holding
Purchased some ISF.V (pink sheet ISFIF today)
This is a canadian IT company that just earned .03 this quarter following up on a .03 quarter last quarter and .02 before that.
The stock trades at around .30/share making it quite cheap on an earnings basis with a forward PE of about 2.5
The company also has an excellent balance sheet with about .15 in cash and trading below book value.
Revenues have been weakening so they have accomplished their numbers greatly through cost cutting but the stock is so cheap it was hard not to buy some.
This is a canadian IT company that just earned .03 this quarter following up on a .03 quarter last quarter and .02 before that.
The stock trades at around .30/share making it quite cheap on an earnings basis with a forward PE of about 2.5
The company also has an excellent balance sheet with about .15 in cash and trading below book value.
Revenues have been weakening so they have accomplished their numbers greatly through cost cutting but the stock is so cheap it was hard not to buy some.
News on some holdings today
AM.TO /AMZKF earned .07 for the quarter. Year over year revenues were up more than 100%. This was down from last quarters .11 but the September quarter is historically a considerably weaker quarter than the June quarter.
This still looks very good to me in the 2.20 range. Despite the troubles in the auto industry they still have plans to more than double their canadian workforce to accomodate new contracts.
AGX announced a 190 million contract to build a new power plant. The contract will run over 2 years. My previous entry mentioned the conclusion of a money losing contract for AGX that should greatly boost earnings this quarter. This new contract doubles their backlog on in the energy business. That certainly suggests that they may end up being a long term growth play rather than a short terms earnings play. All of the previous caveats and risks still apply of course.
Right now they are trading at about 25% of their current order backlog.
Too bad it was such a bad market day. I thought both of these events deserved some love from the market as a whole. AGX got a slight bump up. AM.TO went nowhere.
This still looks very good to me in the 2.20 range. Despite the troubles in the auto industry they still have plans to more than double their canadian workforce to accomodate new contracts.
AGX announced a 190 million contract to build a new power plant. The contract will run over 2 years. My previous entry mentioned the conclusion of a money losing contract for AGX that should greatly boost earnings this quarter. This new contract doubles their backlog on in the energy business. That certainly suggests that they may end up being a long term growth play rather than a short terms earnings play. All of the previous caveats and risks still apply of course.
Right now they are trading at about 25% of their current order backlog.
Too bad it was such a bad market day. I thought both of these events deserved some love from the market as a whole. AGX got a slight bump up. AM.TO went nowhere.
Wednesday, November 7, 2007
CXPO new purchase
I have been buying this oil and gas play for the past 2 days. I plan to do a writeup later but the short of it is they have significant reserves relative to the market cap are profitable and have increased production 40% sequentially over last quarter when they earned .45 a share.
Earnings should look substantially better this quarter and at just over $9 a share a better earnings quarter should translate into a much better share price especially with oil poised to hit the screaming headline level of $100 a barrel.
Earnings should look substantially better this quarter and at just over $9 a share a better earnings quarter should translate into a much better share price especially with oil poised to hit the screaming headline level of $100 a barrel.
Monday, November 5, 2007
ZYNX in with a great sales number
I believe I have mentioned ZYNX in a previous entry.
This company rents medical equipment primarily electrotherapy equipment for pain management but also a rather novel device called the neuromove which helps stroke victims recover movement lost as a result of the stroke.
ZYNX has been growing rapidly and announced their order numbers for October today.
And order is basically defined as a doctors prescription for a zynex product which then generates a recurring rental revenue stream for a bit under a year on average. They also get recurring revenue from selling supplies like electrodes.
Order numbers for ZYNX in October were just a blowout. They recorded 1452 orders in October.
Orders were up 39% over last month and 326% year over year. Those increases are getting hard to ignore. That is more than twice the 714 orders from this July.
They earned about .013 last quarter against a now 1.44 price but their revenues are very high margin and recurring in nature. I would suspect we should see EPS close to .03 for the September quarter with bigger numbers for the December Q.
.03 would put them at a forward PE of roughly 12 and with sequential earnings growth of 50% plus I think it could garner a significantly higher multiple especially in an industry category that is quite recession resistant.
This company rents medical equipment primarily electrotherapy equipment for pain management but also a rather novel device called the neuromove which helps stroke victims recover movement lost as a result of the stroke.
ZYNX has been growing rapidly and announced their order numbers for October today.
And order is basically defined as a doctors prescription for a zynex product which then generates a recurring rental revenue stream for a bit under a year on average. They also get recurring revenue from selling supplies like electrodes.
Order numbers for ZYNX in October were just a blowout. They recorded 1452 orders in October.
Orders were up 39% over last month and 326% year over year. Those increases are getting hard to ignore. That is more than twice the 714 orders from this July.
They earned about .013 last quarter against a now 1.44 price but their revenues are very high margin and recurring in nature. I would suspect we should see EPS close to .03 for the September quarter with bigger numbers for the December Q.
.03 would put them at a forward PE of roughly 12 and with sequential earnings growth of 50% plus I think it could garner a significantly higher multiple especially in an industry category that is quite recession resistant.
Saturday, November 3, 2007
AWI.V might as well mention it
This was my mystery canadian stock I have been trying to buy for 2 weeks. I managed to get 4000 shares in the .50 range.
At this point it does not look like I will get any more. The bid/ask is now .56/.70
So since I mentioned it previously I figured I owe readers a 10 second writeup.
These guys operate 18 cell phone stores in Canada. They earned .05 over the last 2 quarters but have their stronger quarters coming up.
They are trading near book value and have .30 in cash on the books.
They carry equipment for Rogers Wireless who just reported a strong quarter as well so in addition to being cheap there is reason to believe the current quarter should be quite good.
By any metric it was dirt cheap at .50/share. I was really hoping to get a good sized block. That doesn't seem likely to happen now.
Given that rogers showed 20% growth in wireless last quarter and the strong balance sheet and low projected PE I would still consider a buy at .60 if shares became available.
At this point it does not look like I will get any more. The bid/ask is now .56/.70
So since I mentioned it previously I figured I owe readers a 10 second writeup.
These guys operate 18 cell phone stores in Canada. They earned .05 over the last 2 quarters but have their stronger quarters coming up.
They are trading near book value and have .30 in cash on the books.
They carry equipment for Rogers Wireless who just reported a strong quarter as well so in addition to being cheap there is reason to believe the current quarter should be quite good.
By any metric it was dirt cheap at .50/share. I was really hoping to get a good sized block. That doesn't seem likely to happen now.
Given that rogers showed 20% growth in wireless last quarter and the strong balance sheet and low projected PE I would still consider a buy at .60 if shares became available.
Thursday, November 1, 2007
AGX new trading position
Bought a small stake in AGX today
The basic idea here is this is a trade based on what I expect will be a suprisingly strong earnings report.
AGX has 3 divisions
The large one provides engineering and consulting services to the energy industry. They are progressively trying to move into alternative energy generation which might give this one some sex appeal to traders
The other two divisions are much smaller and provide infrastructure services to telcom companies and manufacture nutraceuticals.
I generally don't like these conglomerate structures with unrelated business entities but as I said this is more of a wham bam thank you maam than a long term relationship.
The basic thesis is this
The energy services division lost roughly 4 million in each of the last 2 quarters on a troubled project that is experiencing cost overruns. That project is now virtually finished
From the 10Q
" During the three months ended July 31, 2007, the Company experienced an unexpected increase in costs related to one of the GPS contracts. Unexpected costs include labor productivity being below expectations and previous experience, labor rate increases due to overtime requirements to meet the completion date, and engineering issues resulting in considerable rework and additional materials. The Company anticipates that upon completion of the contract which is 99% complete at July 31, 2007, it will incur an expected loss of approximately $8.2 million as of July 31, 2007 which has been recognized. The Company has recorded an estimated loss for this contract as of July 31, 2007 of $74,000 for additional costs to be incurred as the project is completed."
That means they should have a 4 million dollar pre-tax imrpovement off the top this quarter over last quarter.
Apply a 40% tax rate and assume nothing else changes and their earnings would increase from .12/share last quarter to .34/share this quarter.
Backlog on the energy side continues to increase as well so its possible even likely they could top last Q's revenue numbers as well and put out a really large earnings number.
The risks here as I see them is that this does not appear to be a strong management team and if there were cost overruns in one project there is no guarantee other projcets won't have the same problem. Still as I see it there is a good chance they show earnings that will look very good in a press release.
As a result I took that small position figuring its easy to see a 50% - 70% upside with a good report and I should be able to exit my position with a comparitively small loss if things don't develop as my scenario calls for.
The basic idea here is this is a trade based on what I expect will be a suprisingly strong earnings report.
AGX has 3 divisions
The large one provides engineering and consulting services to the energy industry. They are progressively trying to move into alternative energy generation which might give this one some sex appeal to traders
The other two divisions are much smaller and provide infrastructure services to telcom companies and manufacture nutraceuticals.
I generally don't like these conglomerate structures with unrelated business entities but as I said this is more of a wham bam thank you maam than a long term relationship.
The basic thesis is this
The energy services division lost roughly 4 million in each of the last 2 quarters on a troubled project that is experiencing cost overruns. That project is now virtually finished
From the 10Q
" During the three months ended July 31, 2007, the Company experienced an unexpected increase in costs related to one of the GPS contracts. Unexpected costs include labor productivity being below expectations and previous experience, labor rate increases due to overtime requirements to meet the completion date, and engineering issues resulting in considerable rework and additional materials. The Company anticipates that upon completion of the contract which is 99% complete at July 31, 2007, it will incur an expected loss of approximately $8.2 million as of July 31, 2007 which has been recognized. The Company has recorded an estimated loss for this contract as of July 31, 2007 of $74,000 for additional costs to be incurred as the project is completed."
That means they should have a 4 million dollar pre-tax imrpovement off the top this quarter over last quarter.
Apply a 40% tax rate and assume nothing else changes and their earnings would increase from .12/share last quarter to .34/share this quarter.
Backlog on the energy side continues to increase as well so its possible even likely they could top last Q's revenue numbers as well and put out a really large earnings number.
The risks here as I see them is that this does not appear to be a strong management team and if there were cost overruns in one project there is no guarantee other projcets won't have the same problem. Still as I see it there is a good chance they show earnings that will look very good in a press release.
As a result I took that small position figuring its easy to see a 50% - 70% upside with a good report and I should be able to exit my position with a comparitively small loss if things don't develop as my scenario calls for.
Subscribe to:
Posts (Atom)
