I thought it would interest some folks to discuss 3 ideas for longs which will be followed later in the week by 3 shorts.
It has been about four months since my last installment of stocks to watch. I added Allied Defense Group in prices ranging from roughly $5.40 to $6.30 with the stock currently selling for $6.35. I remain very positive on the stock which is finishing up a major reorganization and has record backlog which is well over the market capitalization of the stock. As Allied Defense Group (ADG) starts to work off this backlog we are likely to see a significant increase in profitability and cash flows for the company. I also uncovered a couple of other stocks following my initial post which were added to the portfolio.
I thought it would interest some folks to discuss 3 ideas for longs which will be followed later in the week by 3 shorts. I would note that the long ideas are early in the process and I may or may not add these to the overall portfolio but they are initially screening well.
Long Ideas:
1) Mitcham Industries: (MIND, Financial) ($19.28)- The company leases and sells geophysical used primarily for seismic data on land, marsh and marine areas. 70% of the company's growth is coming from overseas as exploration in the energy area continues to rapidly grow with higher oil prices. The company has targeted ROIC in the 15% range. The overall mix of lease vs. sale has shifted so that sales are now actually slightly larger than lease but the company is growing in both areas. The company has a strong balance sheet and has also delivered strong cash flows.
2) Key Technology: (KTEC, Financial) ($31.52)- This is a 60 year old company based out of Walla Walla, Washington. The company designs and manufactures process automation systems focused primarily on the food industry. The technology (mostly optical sorters) are sold to a who's who of food processing companies such as Del Monte, Campbell Soup, Ocean Spray, Ore-Ida and many others. More than 40% of sales have typically occurred overseas. The company looks attractive fundamentally with a strong balance sheet with $5 in cash, no debt and a healthy ROE.
3) New Frontier Media: (NOOF, Financial) ($5.06)- This is an adult entertainment company focused on adult pay per view services. The company has a strong dividend and a good balance sheet. I will be looking at their next earnings report for signs of top and bottom line growth as they stated in their last conference call and I would like to see them expand their business lines to reflect improvements in technology.
I am also starting to see some opportunities appear in regional banks and select rent-to-own businesses.
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Source: See Dan Weiss's Profile
It has been about four months since my last installment of stocks to watch. I added Allied Defense Group in prices ranging from roughly $5.40 to $6.30 with the stock currently selling for $6.35. I remain very positive on the stock which is finishing up a major reorganization and has record backlog which is well over the market capitalization of the stock. As Allied Defense Group (ADG) starts to work off this backlog we are likely to see a significant increase in profitability and cash flows for the company. I also uncovered a couple of other stocks following my initial post which were added to the portfolio.
I thought it would interest some folks to discuss 3 ideas for longs which will be followed later in the week by 3 shorts. I would note that the long ideas are early in the process and I may or may not add these to the overall portfolio but they are initially screening well.
Long Ideas:
1) Mitcham Industries: (MIND, Financial) ($19.28)- The company leases and sells geophysical used primarily for seismic data on land, marsh and marine areas. 70% of the company's growth is coming from overseas as exploration in the energy area continues to rapidly grow with higher oil prices. The company has targeted ROIC in the 15% range. The overall mix of lease vs. sale has shifted so that sales are now actually slightly larger than lease but the company is growing in both areas. The company has a strong balance sheet and has also delivered strong cash flows.
2) Key Technology: (KTEC, Financial) ($31.52)- This is a 60 year old company based out of Walla Walla, Washington. The company designs and manufactures process automation systems focused primarily on the food industry. The technology (mostly optical sorters) are sold to a who's who of food processing companies such as Del Monte, Campbell Soup, Ocean Spray, Ore-Ida and many others. More than 40% of sales have typically occurred overseas. The company looks attractive fundamentally with a strong balance sheet with $5 in cash, no debt and a healthy ROE.
3) New Frontier Media: (NOOF, Financial) ($5.06)- This is an adult entertainment company focused on adult pay per view services. The company has a strong dividend and a good balance sheet. I will be looking at their next earnings report for signs of top and bottom line growth as they stated in their last conference call and I would like to see them expand their business lines to reflect improvements in technology.
I am also starting to see some opportunities appear in regional banks and select rent-to-own businesses.
________________
Source: See Dan Weiss's Profile
