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Strategies & Market Trends : Stock Attack -- A Complete Analysis

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To: Chris who wrote (5293)	1/28/1998 1:28:00 PM
From: David Alan Cook	Read Replies (1) of 42787

Chris, I have done well investing in turnarounds. To me, these stocks are often neglected and mispriced according to their fundamental value. There is risk in investing in small cap turnarounds But one can attempt to quantify that risk be evaluating the balance sheet to determine if the company has the time to turn its operations around. In TSSW's case, this company has about $1.50 in cash . . no bank debt ( Debt to Equity = 0 and LTD to Equity = 0 ), a quick ratio of 2.99 which is much higher than the Industry avg ratio of 2.59 and much higher than last year's 2.55, a current ratio of 3.28 which is much higher than last year's 2.78 and better than the Industry avg ratio of 2.75. IMO the company has been neglected as a result of mgt's inability to turn the company into the black in the last 7 qtrs. They now have a new CEO . . a new marketing director and 3 new products. . costs are down. . just need to see some revenue growth in the next 2 qtrs and we will be back in the black. Given the P/E ratio of 45 and the fact that TSSW sales near 5 year historical low Price to Book and Price to Sales, I am willing to buy and hold this stock until the price reflects its fundamental value. I have held this stock for over a year. . .believe it was undervalued at $5 and believe it is much undervalued now. ** The biggest risk IMO in investing in small cap turnarounds with a strong balance sheet is that one often becomes impatient and turns trader very quickly. Some of my biggest winners were small cap turnarounds. . .CWEI .. GCO .. PACC . . MTEL . .HNV . . . Waiting and watching for the 4th qtr numbers to be released. DC HNV operations continue to improve. I am looking for them to report a profit in the 4th qtr. Lots of insider buying in HNV .. . see recent 13ds.

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