It Doesn’t Get Much More Renewable than Algae

Zen Money News –  Issue 041

Today’s Hot Penny Stock – Cyanotech Corp. (CYAN)

Bob Harper, Managing Editor, The Zenect Wealth Report

On The Radar Report

Consumer goods market researchers have, for years, tracked and studied the rapid rise of the nutritional supplement market. According to market researcher Packaged Facts, the nutritional supplement market in the U.S. hit $11.5 billion in sales in 2012. They estimate the market to hit $15.5 billion by 2017. Packaged Facts suspects a desire for less-costly alternatives to traditional medicine to be the catalyst for this growth. Regardless of the motivation, the numbers don’t lie.

QUICK FACTS

Ticker                                     CYAN

Industry                                 Biopharmaceuticals

Recent Price                           $6.02

Market Cap                            $32.9 m

Shares Outstanding              5.5 m

Average Volume                    3,723

Dividend Yield                       N/A

Website                                  http://www.cyanotech.com/

COMPANY DESCRIPTION

Cyanotech Corp. (CYAN) is a Hawaii based company producing two classes of microalgae based organic nutritional supplements, Spirulina Pacifica® and BioAstin®. The former is rich in protein, beta-carotene, B vitamins, and a host of other phytonutrients. The latter is an antioxidant H-bomb with 550 times the concentration of vitamin E.

The benefits of deriving supplements from microalgae are multi-fold:

  1. Microalgae grows up to 100 times faster than land based plants
  2. Uniform cell structure – meaning no leaves, bark, or stems – greatly simplifies production
  3. This uniformed nature allows for a more practically controlled growing environment

FINANCIALS

CYAN’s annual numbers were released on June 24, 2013.

The company reported revenue of $6.9 million in the most recent quarter. Up from last year’s fourth fiscal quarter revenue of $6 million. This is an increase of 15.2%. Cyanotech Corp. also reported a net income of approximately $2.6 million… a year-over-year increase from a net income of $1.2 million.

As of March 31, 2013, the company reported $4.4 million in cash and $5.5 million in long-term debt.

KEY METRICS ANALYSIS

Trailing P/E  8.1 x

Price / Sales  1.2 x

Return on Assets  9.2 %

Insider ownership  36.2 %

Short Ratio  1.1 x

Current Ratio  4.2 x

Total Debt to Equity  27.6

 

RECENT EVENTS

 Cyanotech has been in the process of transitioning from a bulk ingredient supplier to a company that produces and markets its own consumer products. Over the past year their consumer products business, Nutrex Hawaii, has seen significant sales increases.

  • 54% sales increase in the 48 contiguous
  • 81% direct online sales increase
  • 105% international sales increase

The company is in the process of expanding production and building out additional infrastructure for its consumer facing offerings.

 

MANAGEMENT TEAM

Michael A. Davis – Independent Chairman of the Board

Walter B. Menzel  – President of the WM Group

Brent David Bailey – President, CEO, Director

Jole Deal – CFO, Vice President – Finance and Administration, Treasurer, Secretary

Gerald R. Cysewski Ph.D. – Chief Scientific Officer, Executive Vice President, Director

 

STOCK ANALYSIS

CYAN

 

 

 

 

 

 

 

 

Chart Courtesy of StockCharts.com

CYAN’s 52-week low was $4.21 and the 52-week high was $6.70. Right now the stock is trading at $6.02. The 50-day moving average is near $6.13 a share and the 200-day moving average is at $5.17. The company has a market cap of $32.9 million and 5.5 million shares outstanding.

*All ratios and figures updated on 8/09/13

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The Future of Medical Diagnostics is Already Here

Zen Money News Issue 041 – The Future of Medical Diagnostics is Already Here

 

Hot Penny Stocks – Fonar Corporation (FONR)

Bob Harper, Managing Editor, The Zenect Wealth Report

On The Radar Report

Nineteen-seventy was a monumental year for diagnostic science with the discovery of the technology that makes MRI machines possible. The inventors knew they had something big on their hands. And so did some medical entrepreneurs who jumped at the chance to design and manufacture these world changing devices. The first successful human image was performed in mid-1977, and today’s company, Fonar Corporation (FONR) was incorporated the very next year.

QUICK FACTS

Ticker: FONR

Industry: Medical Appliances & Equipment

Recent Price: $6.31

Market Cap: $38.5 m

Shares Outstanding: 6.1 m

Average Volume: 15,104

Dividend Yield: N/A

Website: http://www.fonar.com/

 

COMPANY DESCRIPTION

Fonar Corporation is the first and oldest MR manufacturer in the world. Throughout the subsequent decades they have developed a number of industry breakthroughs. Examples include the first multi-angle oblique scanners and first mobile MRIs.

In 1997, the company formed a subsidiary, Health Management Corporation of America (HMCA). This new segment operated 11 diagnostic imaging centers and 6 multi-specialty practices, primarily in New York and Florida.

FINANCIALS

FONR’s most recent quarterly numbers were released on May 15, 2013.

The company reported revenue of $11.6 million in the quarter. Up from last year’s third quarter revenue of $9.5 million. This is an increase of 22.3%. Fonar Corporation also reported a net income of approximately $1.6 million… a year-over-year increase from a net income of $1.55 million.

As of March 31, 2013, the company reported $9.2 million in cash and $15.9 million in long-term debt.

 

KEY METRICS ANALYSIS

Trailing P/E: 7.6 x

Price / Sales: 0.9 x

Return on Assets: 8.3 %

Insider ownership: 2.1 %

Short Ratio: 3.8 x

Current Ratio: 1.6 x

Total Debt to Equity: 45.5

 

RECENT EVENTS

On March 5 the company acquired a majority interest in Health Diagnostic Management (HDM). This dramatically expanded the footprint of their patient facing diagnostic services.

To put it into perspective, HMCA performed 45,000 scans in 2012. With the combination of HDM’s 2012 numbers, this jumps up to 113,000 scans. The acquisition resulted in 14 new centers and dramatically expanded this segment’s footprint.

In addition, the company is currently developing the OR-360º™. This room-size MRI will enable surgeons, assistants and equipment to utilize the unparalleled detail of MRI guidance without obstruction from the scanner’s magnet.

 

MANAGEMENT TEAM

Raymond V. Damadian M.D. – Chairman of the Board, President, Treasurer

Claudette J. V. Chan  – Secretary, Director

Charles N. O’Data – Lead Independent Director

Robert J. Janoff – Independent Director

Ronald G. Lehman – Independent Director

 

STOCK ANALYSIS

FONR

 

FONR’s 52-week low was $3.02 and the 52-week high was $7.94. Right now the stock is trading at $6.31. The 50-day moving average is near $6.37 a share and the 200-day moving average is at $6.22. The company has a market cap of $38.5 million and 6.1 million shares outstanding.

 

*All ratios and figures updated on7/15/13

 

 

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How Digital Marketing Became King Overnight

How Digital Marketing Became King Overnight

The Internet has undeniably and irreparably altered the face of advertising for the foreseeable future. It doesn’t take a media expert to recognize. It is, however, one of those industries that have been systemically altered to degrees not always appreciated or realized. Much as automation once eliminated vast swaths of jobs in manufacturing, the Internet has had a similar effect on publishers and traditional advertisers.

Circulation

Newspaper circulation figures provide easily quantifiable evidence of the evolution. From October 2012 to March 2013, The New York Times, the second largest U.S. Newspaper in terms of circulation, delivered an average of approximately 1.9 million newspapers every weekday. Nearly 1.1 million of those were digital editions.

Compare that to the paper’s peak daily circulation of 63.3 million in 1984.

That’s approximately a 97% drop.

What Does This Mean for Ad Dollars?

Digital Marketing

The following graph is a stark portrayal of the shift to digital.
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This graph shows print advertising revenue as compiled by the Newspaper Association of America. It is compared to Google’s advertising revenue during the same period.

During this period, Google’s (GOOG) advertising revenue comprised approximately 94% to 97% of the company’s revenue.

There are no indications that this trend is going to reverse anytime soon. That is not to say that traditional print outlets aren’t striving to remain relevant. They are all working towards turning digital assets into advertising revenue streams. Or in some cases fee based online subscriptions.

In Many Ways a Superior Marketing Platform

There have always been challenges with traditional forms of advertising, be they print, radio or television.

 

Effectively Tracking ROI

It hasn’t always been easy to track ROI with traditional marketing. Many ingenious solutions have arisen, but none without limitations.

The ability to track ROI on the digital landscaping is astonishing. Public outcry about online privacy is visible evidence of this enhanced functionality.

Businesses now have unparalleled knowledge about their customers. Their browsing habits. Their previous purchases. Their hobbies. The shows they watch. The books they read. All these things can be compiled to predict your shopping and searching habits.

Facebook (FB) is a perfect example. With so much information on every user’s interests, effectively advertising to their wants and needs is exceptionally easy.

Advanced Consumer Behavior Tracking

Business know more than just which ad hooked you and when. Advertising firms and business owners can now carefully document every aspect of the buying process.

They know the search terms put into the search engine. They know the specific ad copy that attracted the customer. Even the customer’s call can be tracked and monitored for sales performance analysis.

Business owners can tell exactly how much each click costs. After which they can track what that customer looked at and subsequently bought. Combined, these tools make calculating ROI more accurate than ever before.

These tools enable marketers to continually prune campaigns. They can see which ads are attracting the wrong customers. Which ads are attracting the right customers. Then use hard data to narrowly target only the worthwhile leads.

Where traditional advertising used to be throwing a wide net, digital advertising is like fishing with laser guided ICBMs.

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Bob Harper

Zenect Wealth

 

Sources

http://stateofthemedia.org/2012/newspapers-building-digital-revenues-proves-painfully-slow/newspapers-by-the-numbers/
http://www.huffingtonpost.com/2013/05/01/newspaper-circulation-top-10_n_3188612.html
http://www.nytimes.com/2006/10/31/business/media/31paper.html

Hot Penny Stocks – Air Transport Services Group Inc. (ATSG)

Reliable customers are an essential part of the air delivery and freight equation. A shaky partner who contributes to a significant portion of your revenue could potentially spell disaster. This was the situation today’s company was facing after one of their primary clients eliminated its U.S. air cargo network in 2011.

Instead of wallowing in self-pity they took proactive action, and over the next year dramatically cut costs. Despite the loss of a significant revenue contributor, Air Transport Services Group (ATSG) managed to increase net earnings by approximately 76% in 2012.

 

QUICK FACTS

Ticker                                    ATSG

Industry                                 Air Delivery & Freight Services

Recent Price                         $6.00

Market Cap                           $384.8 m

Shares Outstanding              64.1 m

Average Volume                   58,606

Dividend Yield                       N/A

Website                                 http://www.atsginc.com

 

COMPANY DESCRIPTION

Air Transport Server Groups Inc. is a domestic and international air cargo transportation company. They meet the needs of customers worldwide through a number of diversified subsidiaries specializing in freight transport, air craft maintenance, engineering, flight dispatching, aircraft leasing and other related air cargo support services.

This has given ATSG flexibility to provide comprehensive air cargo solutions scalable to the needs of a diverse portfolio of small, midsized and large clients.

 

FINANCIALS

ATSG released their annual numbers for 2012 on March 4, 2013.

The company reported revenue of $607.4 million for the year. Down from last year’s revenue of $730.1 million. This is a decrease of 16.8%. Air Transport Service Group also reported net earnings of approximately $40.8 million… a 75.9% year-over-year increase from net earnings of $23.2 million in 2011.

As of December 31, 2012, the company reported $15.4 million in cash and $343.2 million of long-term debt.

 

KEY METRICS ANALYSIS

Trailing P/E                                       9.4 x

Price / Sales                                     0.6 x

Return on Assets                              4.9 %

Insider ownership                              2 %

Short Ratio                                        7.7 x

Current Ratio                                    1 x

Total Debt to Equity                          122.9 x

 

RECENT EVENTS

On March 11, 2013, ATSG announced the merger of two airline subsidiaries, Air Transport International (ATI) and Capital Cargo International Airlines (CCIA). The two subsidiaries have been combined under ATI, with a fleet of 13 cargo aircraft. This is just another step in reducing expenses in an effort to make ATSG a more profitable company.

“This merger is the most significant of a number of steps we are taking throughout ATSG to better fit our airline overhead and operating cost structures to the airline operations we have today, and expect to add in the future,” said ATSG President and CEO Joseph Hete.

 

MANAGEMENT TEAM

Joseph C. Hete – President, CEO, Director, CEO of ABX Air, Inc.

Quint O. Turner – CFO of the Company and ABX Air, Inc.

Richard Francis Corrado – Chief Commercial Officer, President of Cargo Aircraft Management, Inc.

W. Joseph Payne – Senior Vice President, Corporate General Counsel, Secretary

James H. Carey – Independent Chairman of the Board

 

STOCK ANALYSIS

ATSG

 

 

 

 

 

 

Chart Courtesy of StockCharts.com

 

*ATSG’s 52-week low was $3.38 and the 52-week high was $6.09. Right now the stock is trading at $6.00. The 50-day moving average is near $5.07 a share and the 200-day moving average is at $4.33. The company has a market cap of $384.8 million and 64.1 million shares outstanding.

Stock prices as of 3/29/13
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hot Penny Stocks – Chembio Diagnostics, Inc. (CEMI)

There has never been a demand for slow point-of-care (POC) testing devices. Quite to the contrary, there is a constant demand for ever increasing speed in the POC market. Whether you’re a physician administering an HIV test or a supplier of employee drug screening services, haste is a desirable quality.

Today’s company has built a reputation for developing POC testing devices that are on the cutting edge of speed and accuracy.

 

QUICK FACTS

Ticker                                     CEMI

Industry                                  Diagnostic Substances

Recent Price                          $4.84

Market Cap                            $38.8 m

Shares Outstanding               8 m

Average Volume                    14,826

Dividend Yield                        N/A

Website                                  http://chembio.com/

 

COMPANY DESCRIPTION

Chembio Diagnostic Systems, Inc. (CEMI) develops point-of-care diagnostic tests (POCTs) utilizing their patented DPP® platform. Their revenue is primarily derived from HIV and syphilis testing devices, which are sold globally. Chembio is ranked second in the U.S. rapid HIV testing market, with 25% of market share.

CEMI currently has two new Syphilis POCTs in the pipeline, and estimate they could satisfy the needs of a potential $75 million market. In addition to their HIV and syphilis tests, the company is also developing a DPP® Hepatitis-C POCTs.

 

FINANCIALS

CEMI’s most recent quarterly numbers were released on November 13, 2012.

The company reported revenue of $5 million in the quarter. Down from last year’s third quarter revenue of $5.9 million. This is a decrease of 15%. Chembio Diagnostics also reported a net loss of approximately $485,113… a year-over-year decrease from a net income of $475,605.

As of September 30, 2012, the company reported $3.3 million in cash and $95,000 of long-term debt.

 

 KEY METRICS ANALYSIS

Trailing P/E                                 6.8 x

Price / Sales                               1.6 x

Return on Assets                        6.2 %

Insider ownership                       25.1 %

Short Ratio                                  0 x

Current Ratio                              3.5 x

Total Debt To Equity                   1.1 x

 

RECENT EVENTS

On December 21, 2012, Chembio announced it received approval for the Dual Path Platform® (DPP®) HIV 1/2. The device detects antibodies to HIV-1 and HIV-2 with an oral and blood test, with visual results within 15 minutes. The device is simple, requires a small sample size and doesn’t need to be refrigerated.

In addition to the flexibility and ease of use, the DPP® HIV 1/2 is the only rapid testing device to earn approval for testing of patients younger than 13. 

 

MANAGEMENT TEAM

Lawrence A. Siebert – Chairman, President and CEO

Richard J. Larkin – CFO

Javan Esfandiari – Executive Vice President – Research and Development

Richard Bruce – Vice President – Operations

Michael Steele – Vice President – Sales, Marketing and Business Development

 

STOCK ANALYSIS

CEMI

 

 

 

 

 

 

 

Chart Courtesy of StockCharts.com

CEMI’s 52-week low was $3.36 and the 52-week high was $5.80. Right now the stock is trading at $4.84. The 50-day moving average is near $4.58 a share and the 200-day moving average is at $4.50. The company has a market cap of $38.8 million and 8 million shares outstanding.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Where to put your money now that Obama has won?

Zen Money News Issue 036 110812
Hot Penny Stocks – DURECT Corporation (DRRX)

Bob Harper, Managing Editor, The Zenect Wealth Report

On The Radar Report

Between 2001 and 2003 roughly 772,000 individuals were diagnosed with opioid painkiller abuse – from 2007 to 2009 that number increased to 4.4 million.

The US healthcare industry, pharmaceutical producers and the FDA are combating prescription drug abuse by developing delivery systems that incorporate abuse deterrent properties.

Today’s company is on the forefront of this effort, already having developed a number of proprietary delivery methods designed to curtail the abuse potential of modern day painkillers.

QUICK FACTS
Ticker DRRX
Industry Drug Manufacturer
Recent Price $1.00
Market Cap $87.6 m
Shares Outstanding 87.7 m
Average Volume 99,863
Dividend Yield N/A
Website http://www.durect.com/

COMPANY DESCRIPTION

DURECT Corporation is a pharmaceutical company dedicated to developing proprietary drug delivery technologies ranging from oral gel caps to biodegradable implants. Some of their established platforms include SABER, ORADUR, TRANSDUR, DURIN, and MICRODUR. Most of these drug delivery systems utilize extended release or prolonged release technologies.

These lower dose and sustained release delivery methods have increased in popularity. Thanks in part to wider public awareness of opioid abuse relating to prescription medication.

DURECT’s long term strategy is to build upon their portfolio of proprietary drug delivery platforms. They will continue partnering with other pharmaceutical producers, such as Pfizer (PFE), in order to develop delivery platforms for their products.
.
FINANCIALS

DRRX’s most recent quarterly numbers were released on November 5, 2012.

The company reported revenue of $3.8 million in the quarter. Down from last year’s second quarter revenue of $8.1 million. This is a decrease of 52.8%. DURECT Corporation also reported a net loss of approximately $4.8 million… a year-over-year increase from a net loss of $5 million.

As of September 30, 2012, the company reported $6.3 million in cash and no long-term.

KEY METRICS ANALYSIS

Trailing P/E 4.6 x
Price / Sales 1.4 x
Return on Assets 25.9 %
Insider ownership 22.9 %
Short Ratio 0.8 x
Current Ratio 5.1 x
Total Debt To Equity N/A

RECENT EVENTS

On August 6 2012 DURECT announced the completion of pre-NDA (new drug application) communications with the United States FDA regarding a new delivery platform, POSIDUR. The company plans to submit their NDA filing in late 2012 or early 2013.

POSIDUR is an investigative post-operative pain relief delivery method. Utilizing DURECT’s patented SABER technology it provides up to three days of pain relief post-surgery.

Pfizer (PFE) Remoxy Announcements

Pfizer and Pain Therapeutics (PTIE) are developing a new painkiller known as Remoxy, which was formulated with DURECT’s ORADUR technology. During Pfizer’s Q3 earnings call on November 1, 2012 they announced additional testing of Remoxy, delaying its approval and release.

MANAGEMENT TEAM

James E. Brown – CEO, President and Director
Felix Theeuwes – Chief Scientific Officer and Chairman of the Board
Matthew J. Hogan – CFO
Su Il Yum Ph.D. – Executive Vice President – Pharmaceutical Systems Research and Development
David R. Hoffmann – Lead Independent Director

STOCK ANALYSIS

 

 

 

 

 

 

Chart Courtesy of StockCharts.com

DRRX’s 52-week low was $0.61 and the 52-week high was $1.71. Right now the stock is trading at $1.00. The 50-day moving average is near $1.38 a share and the 200-day moving average is at $1.04. The company has a market cap of $87.6 million and 87.7 million shares outstanding.

*All ratios and figures updated on 11/05/12

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Hot Penny Stocks

Zen Money News Issue 035 101812
Hot Penny Stocks – Pendrell Corporation (PCO)

Bob Harper, Managing Editor, The Zenect Wealth Report

On The Radar Report

Few people foresaw the massive transformation media distribution would experience over the past decade. Digital distribution methods combine convenience for the user with a relatively low cost distribution method for the provider.

The dawn of mobile computing has served as an unparalleled catalyst for the rapid growth of demand for digital media. One of the challenges of this distribution method is ensuring intellectual property rights holders receive proper compensation

Today’s company is positioning itself to become a leader in digital rights management. Its holdings already include hundreds of industry patents and licensing agreements with many leading content distributors.

QUICK FACTS
Ticker PCO
Industry Wireless Communications
Recent Price $1.16
Market Cap $296.6 m
Shares Outstanding 255.7 m
Average Volume 640,350
Dividend Yield N/A
Website http://www.pendrell.com

COMPANY DESCRIPTION

Pendrell Corporation (PCO) has spent the past two years transforming from a next-generation mobile satellite service (MSS) provider into an investment firm focusing on intellectual property (IP) technology.

Notable Sales and Acquisitions

 March 2011 – The company sold an MSS related holding, DBSD North America, Inc., to DISH Networks (DISH) for $325 million.
 June 2011 – PCO purchased Ovidian Group, LLC, an IP advisory firm, for $6 million and 3 million shares of common stock to the former owners.
 October 2011 – Pendrell purchased 90% of the outstanding capital stock of ContentGuard Holdings, a leading Digital Rights Management (DRM) technologies developer.

This type of intellectual property protection is an integral part of digital content distribution models.

Companies including LG Electronics, Microsoft, Panasonic, Sharp, Sony, and Fujitsu currently have licensing agreements with ContentGuard.
.
FINANCIALS

PCO’s most recent quarterly numbers were released on August 3, 2012.

The company reported revenue of $20.8 million in the quarter. Up from last year’s second quarter revenue of $195,000. This is an increase of 10,563%. Pendrell Corporation also reported net income of approximately $62.2 million… a year-over-year increase from a net loss of $2.2 million.

Net income was three times higher than revenue because of a $48.7 million gain on deconsolidation of subsidiaries, as well as a $10 million settlement from litigation with Boeing.

As of June 30, 2012, the company reported $211.9 million in cash and no long-term.

KEY METRICS ANALYSIS

Trailing P/E 3.8 x
Price / Sales 10.9 x
Return on Assets -3.5 %
Insider ownership 28.8 %
Short Ratio 8.7 x
Current Ratio 30.7 x
Total Debt to Equity N/A

RECENT EVENTS

During the first quarter of 2012, PCO sold their Brazil property and other satellite related assets for $5.6 million. The continuing divestiture of satellite assets in the first half of 2012 eliminated approximately $61.9 million in related liabilities.

Boeing Pays PCO $10 Million

In May 2004 litigation began over a dispute with Boeing Satellite Services. The dispute pertained to the manufacturing and management of the company’s medium earth orbit satellite. In February 2009 the trial court ruled in favor of Pendrell for approximately $603.2 million.

On April 13, 2012 a California Appellate Court overturned the ruling. In a June 2012 settlement, Boeing agreed to pay PCO $10 million and waive appellate costs. This was in exchange for PCO dropping their petition for review to the California Supreme Court.

MANAGEMENT TEAM

Benjamin G. Wolff – CEO and President
R. Gerard Salemme – CSO and Executive Vice President
Robert Jaffe – Vice President, General Counsel and Corporate Secretary
Mario Obeidat – Vice President, Licensing
Tom Neary – Vice President and Chief Financial Officer

STOCK ANALYSIS

PCO’s 52-week low was $0.96 and the 52-week high was $2.94. Right now the stock is trading at $1.16. The 50-day moving average is near $1.15 a share and the 200-day moving average is at $1.30. The company has a market cap of $296.6 million and 255.7 million shares outstanding.

 

 

 

 

 

 

 

Chart Courtesy of StockCharts.com

*All ratios and figures updated on 10/14/12

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One Company Cornering A $2.3 Billion Market!

Right now, it’s easier to land a man on the moon than to cure cancer.

In many respects getting to the moon was easy.  There are lots of things leading medical experts still don’t understand about the human body.  It’s one reason the medical research industry is such a robust market.

The other reason… the numbers.

According to the American Cancer Association, 569,490 people in the United States died because of Cancer in 2010.

They estimate there are around 1.53 million new cases of cancer every year.

Cancer has touched everyone’s life in one way or another.  Maybe you’ve had a close family member die of cancer… or a friend diagnosed with the horrible disease.

You may have sidestepped the big “C” however you probably know someone doing battle right now.

Remember, the 1.53 million unlucky souls diagnosed last year are people.  They need our love and support.  And most importantly, they need treatment.  Bottom line, cancer is put into remission by pricey hardware, expensive surgical treatments, and powerful drugs.

Companies bringing powerful treatment to the frontlines of this disease are poised to reap not only huge financial rewards, but emotional rewards too!

Just take a look at BSD Medical (BSDM).

BSD MEDICAL’S BUSINESS

BSD Medical makes its money off some pretty advanced cancer fighting medical equipment.

They specialize in Hyperthermia therapy devices.  Hyperthermia therapy entails superheating cancer cells with radiofrequency and microwave energy to damage or destroy them.  Weakened tumor cells might suffer apoptosis, which is a certain type of cell death.  If the cancer cells don’t die they at least become more susceptible to traditional treatments.

Right now BSDM produces superficial, deep, and internal hyperthermia therapy devices.

The various devices all target cancer cells in different ways.  For example, superficial hyperthermia is noninvasive and used for tumors within centimeters of the skin’s surface.  This is effective for treating cancers like melanoma and breast cancer.

Other products like the internal/intestinal device are used inside the body.  An antenna is threaded into various parts of the body to deliver hyperthermic microwave energy.  This technology can be used on prostate cancer, breast cancer, and head and neck cancer.

The company is working on even more powerful versions of these devices.

WHY BSDM? WHY NOW?

BSDM received FDA clearance to market the MicroThermX in August 2010.  They also received clearance from EU regulators to market the new product line in Europe.  This is a huge milestone as management estimates the potential world market for ablation devices to be around $2.3 billion.

With FDA clearance comes an ability to sell their equipment.

In early May 2011 the company announced a distribution agreement with CoMedical who specializes in selling noninvasive or minimally invasive medical equipment. BSDM’s hyperthermia ablation device is right up their alley.

The latest news indicates the company has since signed up two additional distributors.  The company is continuing to work on additional distribution networks for the US, Europe, and other international markets.

BSD MEDICAL’S FINANCIALS

Just a few weeks back the company announced second quarter results.  Now, keep in mind for whatever reason the company doesn’t use a traditional year-end… their second quarter ended in February 28, 2011.

And their third quarter numbers should be released in a few weeks.

The key to understanding their financials is that the business is still in development.  Remember the ink is still drying on the new distribution deals.  BSDM won’t magically see a huge influx of revenue overnight.

Keep an eye on their revenue over the next couple of quarters.

The key at this point is the balance sheet…the sales revenue will come in time.  For now, we want to focus on cash and debt levels.  And I like what I see.

The company reported just under $20 million in cash and no debt.

The company lost just over $1.5 million last quarter and at that rate, they’ll be in business for over 3 years before running out of money.  But I don’t think that will be a problem.  Once the company starts seeing sales from their distribution network, the losses should dwindle.

BSDM VALUATION

Right now you can’t really slap traditional valuation measurements on the company.  Without significant revenue or earnings, the normal valuation ratios don’t apply.

In this case we have to look at the value of the company and the value of the market they are approaching.  Remember, the company is selling a newly FDA approved device into a $2.3 billion market.

In the next few years you could estimate the company grabs a small slice of this industry… maybe 5%…

Five percent of a $2.3 billion market would generate over $115 million in annual sales.  Not bad…

Now consider this…

When looking at the entire medical device industry, the average Price to Sales ratio (or P/S) is just over 4.7x… and the Median is just over 2.0x.  A little back of the envelope math gives us a valuation range of $540 million to $230 million.

Granted right now these are just estimates… but at a $540 million valuation BSDM’s stock would be trading for around $18.51 a share!  At the lower $230 million value the stock would only be trading around $7.87.

Look the stock’s trading for less than $3.00 right now… $2.85 actually.

Even if I’m off by a few million, the stock still has lots of room to move higher.  I could see it easily doubling form here if management is able to get sales rolling.

ANALYSIS OF BSDM’S STOCK

BSDM is trading at a deep discount right now.  The company’s value has been heading lower along with the general downtrend in the market.  I think the selloff is overdone.

Remember, as the sales start to roll in, we’ll see big improvements in the financials… and the stock is sure to jump on the news.

 

 

 

 

 

 

Chart courtesy of StockCharts.com

 

ACTION TO TAKE

If you like what you’ve read, do your own research… then Buy BSDM up to $3.00 a share.

 

 

 

 

Prices as of June 13, 2011
The “Recommended Price” is as of the date and time of the recommendation (adjusted for splits and dividends), you may pay more or less. “Buy-up-to” means don’t pay more than this price for the stock. If you can get it cheaper, then great! “Hold” means hold if you own it, but don’t buy it if you don’t. “Sell” means sell. Remember to consult your investing professional before making any trade or investment. And remember all investments have some risk.

Buy China Stocks Now

What Are You Doing With Chinese Stocks Now?

 

The last few months have been rough for China’s economy.  Businesses are struggling, and China stocks have been poor performers.  But that’s all about to change… I’ll tell you why in a moment.

 

If you hold Chinese stocks, the last few months have used up a lot of your willpower.

 

Stocks in China are taking it on the chin… all because of the economy.

 

Consider this…

 

China is expected to grow around 9% in 2011.  While that kind of growth is fantastic, it creates some problems.  The biggest is the inflation threat to economy.  See, growth is driven by demand… and the demand for commodities and other goods is jumping.

 

Millions of Chinese are reaching the middle class… and that means lots of new consumers with pockets full of money.

 

And these consumers want to buy!

 

As a result, Chinese government officials are having to battle back inflation.  A little growth is good… inflation (too much growth) is bad.  And the communist leaders know inflation causes people to do crazy things – like overthrow governments!

 

So they’re working hard to control inflation.

 

In March, China witnessed consumer prices skyrocket over 5%.  That’s a 5% jump in prices in one month’s time!  That rate is unsustainable.

 

So, in early April, the Chinese Central bank increased interest rates again.  All in an attempt to keep the “Inflation Tiger” caged.

 

The central bank is also using other unique techniques to cool off the economy.  They’ve been asking companies not to increase prices.  They’re forcing banks to pay higher interest rates (to take money out of circulation).  And they’re increasing reserve rates at banks to cool lending.

 

They’re even tightening down on lending standards for real estate.

 

They’re doing anything and everything in their power to keep growth low and slow.

 

As a result, the markets’ haven’t been kind to Chinese stocks.

 

In just the last two months we’ve watched as the Shanghai Composite plummeted by over 11.4%.

 

 

 

 

 

 

 

Chart courtesy of stockcharts.com

 

It’s ugly.

 

I don’t care who you are.  If you’re sitting on Chinese stocks right now, you’re second guessing your investment decision.  Getting hit with more than an 11% loss in just two months is never easy.

 

However, let me encourage you to hold tight to your Chinese stocks… And if you don’t own any right now, consider adding Chinese stocks to your portfolio right now.

 

Why?

 

Remember, the same threat to China’s economy is what’s going to drive stock prices higher.  The central bank may want to slow down growth in their country… but they’re still growing and growing rapidly.

 

It’s estimated around 600 million people in China will reach middle class status in the next decade.  If you think the buying frenzy is crazy now, just wait.

 

Companies who are aggressively expanding in China right now will reap the rewards in a few years.

 

Growth will not only drive prices higher, but sales volumes as well.  And with the recent down draft in the market, company valuations are at ridiculous levels.

 

Consider this…

 

Just today I used a powerful database to screen for Chinese stocks.  Out of the tens of thousands of companies traded in the US markets, the system identified 250 stocks as being based in China.

 

Then I screened the group based on valuation.

 

I started looking at Chinese companies trading at deep discounts to earnings.  My focus was on P/E ratios.  Now, before I go any further, let me remind you the P/E ratio compares the value of a company to their earnings.

 

Here in the United States, the S&P 500 has an average P/E ratio of around 15x.  That means you’ll pay 15 times earnings to buy the average American stock.

 

Of the 250 Chinese stocks in my database 78 are trading at ridiculously low P/E ratios.

 

What’s ridiculously low?

 

Try a P/E of under 5!

 

So more than 31% of all of these Chinese stocks are deeply discounted.  But what’s more amazing…

 

17 of the companies I screened for are trading at P/E ratios below 1.0x.  That’s right, a P/E of one!  In other words, you can buy these companies for about what they drop to the bottom line in earnings.

 

Talk about scooping up deep discount stocks at ridiculous valuations.

 

Now let me warn you, you have to do your diligence.  You can’t run out and buy everything you see.  Take some time, do a little research… and grab a few of your favorites.

 

You many never see Chinese stocks this undervalued again!

Another Opportunity To Make Big Money Following The Footsteps Of The Pros

Every year, millions wait anxiously for the annual report of Berkshire Hathaway.  Why such clamor for a notoriously boring document?  It’s the opportunity for everyday investors to see what famed investing genius Warren Buffett is investing in.

 

That simple document tells you every investment Buffet has made, and it allows thousands to follow in his footsteps.

 

Now, I’m not going to argue with the logic of following other successful investors… I’ve looked at my share of unknown stocks just because a big name investor has been buying it by the truck full.

 

However, allow me to make one simple observation… there’s a lot of successful investors out there.  Buffett isn’t the only one!

 

Take for example the investors Austin Marxe and David Greenhouse.

 

If you don’t eat and breathe investing like I do, you may have never heard of them.  However, these two run one of the most intriguing investment funds around – “Special Situations” is the name… and let me tell you, their success is legendary.

 

At last count they were managing almost $800 million in funds.

 

That’s why I sat up when I learned they owned a significant chunk of a very tiny company… Noble Roman’s Inc. (NROM.OB)

 

They own over 1 million shares, representing over 5% of the company. It’s worthwhile taking notice of the penny stocks major investors are holding onto.  After all, these guys didn’t earn their fortune without making wise investing decisions.

 

When I examined the company, I really liked what I found… there’s a lot more to the story than just a few big named investors!

 

NOBLE ROMAN’S BUSINESS

Noble Roman’s owns a variety of popular restaurant trade names, and sells and services franchises.  Their restaurants include Noble Roman’s Pizza and Noble Roman’s Take-N-Bake Pizza.

 

In addition to its pizza brands, the company also franchises its Grab-N-Go Subs, Tuscano’s Italian Style Subs, and the Noble Roman’s Bistro trade names.  Many of their franchises are located in very non-traditional venues like universities, convenience stores, and even hospitals.

 

Now, the franchises are all built around one overriding ideal… selling high quality food with fast service at affordable prices.  They focus on using fresh ingredients and providing a big menu full of choices.

 

When the business first started, they owned and operated all of their locations… but in the late 1990s, the company shifted focus.  Today, Noble Roman’s operates only two locations for demonstration purposes.  As a result, the bulk of revenue comes from franchising and licensing fees.

 

I’ll tell you more about their numbers in a moment…

 

The franchise business has been good to the company.  Noble Roman’s boasts locations in Italy and Canada in addition to its locations in 45 states and Washington D.C.

 

The company has over 1,112 locations, and 314 were added in 2010 alone!

 

Clearly the company has been growing in difficult economic times.  And their growth is poised to climb even higher as consumers spend more money eating out in 2011 and 2012.

 

Another appealing aspect of this company is its product diversification.  In addition to its traditional franchises, Noble Roman’s also offers licensing for the Take-N-Bake Pizza trade name.

 

The Take-N-Bake Pizza products serve as add-ons for existing convenience store franchises.  However, Noble Roman made it a stand-alone offering for grocery stores as well.  The company has already signed 635 grocery stores to participate in the program!

 

Now, let’s take a closer look at the business outlook.

 

As everyone knows, the restaurant industry suffered following the 2009 recession.  Since then, the outlook has brightened considerably.

 

According to experts, the entire restaurant industry is positioned to see substantial sales improvements in the next few years.  And we’re already seeing consumer discretionary spending rebound.

 

It all means higher sales for Noble Roman’s… and greater returns for investors.

 

Clearly Noble Roman’s industry and the company are poised to see substantial growth in the coming quarters.  Now’s the perfect time to step in and buy this company stock while it’s cheap!

 

Before we get ahead of ourselves, let’s take a closer look at the numbers.

 

NOBLE ROMAN’S FINANCIALS

The key to Noble Roman’s strong financial performance is due to the business model.  They generate most of their revenue from high margin franchising and licensing fees.

 

The company’s revenues remained strong in 2010, despite a drop in same store sales in the first part of the year. Total revenues were $7.3 million in 2010, which was down slightly from $7.5 million in 2009.

 

Remember, their business model means low overhead and operating expenses.

 

Just look at the company’s margins.  As of the most recent quarter, they’re showing operating margins of over 40.4%.  These margins are huge compared to the restaurant industry as a whole, which is lucky to see operating margins over 10%.

 

Now the company stock has suffered because of a fall off in net income.  The loss was due to an accounting charge on discontinued operations in 2010.  The future is looking bright however.

 

For the first quarter of 2011, the company announced revenue climbing, operating income moving higher and net income climbing as well.  As a matter of fact, the company is on track to generate close to $1.4 million in net income this year.

 

NROM VALUATION

At first glance, Noble Roman’s stock looks a bit overvalued.  They have a trailing P/E of 63x!  A ridiculous number for a restaurant.

 

But this high valuation is because of the accounting write-down.  If you look at their most recent quarter… and assume they do about the same for the following few quarters… NROM should generate close to $1.4 million in net income.

 

Based on that number, their P/E becomes a much more attractive 13x.  As a matter of fact, the company is trading at a valuation about 7% below the S&P 500.

 

But that’s not all.

 

With the rebound in consumer spending… the bright outlook for the restaurant industry… and the company’s huge leverage and stellar financial performance, I could see Noble Roman’s performing even better in future quarters.

 

And that tells me the company is very undervalued!

 

ANALYSIS OF NROM’S STOCK

NROM is trading at bargain basement prices right now.  The stock trades at $1.01 per share.  As you can see from the chart, this is a stock you should buy on the dips.

 

Remember, as the business improves, and the company continues to drive bigger profits, the stock is sure to skyrocket.

 

 

 

 

 

 

 

Chart courtesy of StockCharts.com

 

ACTION TO TAKE

If you like what you’ve read, do your own research… then Buy NROM.OB up to $1.20 a share.

 

 

_____________________

Prices as of May 27, 2011
The “Recommended Price” is as of the date and time of the recommendation (adjusted for splits and dividends), you may pay more or less. “Buy-up-to” means don’t pay more than this price for the stock. If you can get it cheaper, then great! “Hold” means hold if you own it, but don’t buy it if you don’t. “Sell” means sell. Remember to consult your investing professional before making any trade or investment. And remember all investments have some risk.