Little-known stocks click on Internet connection
By Emily Kaiser
CHICAGO (Reuters) - Little-known technology companies clicked Tuesday amid hopes that their links to Internet retailing would drive future profits, analysts said.''
''There is so much momentum behind Internet stocks,'' Gene Ramirez, technology analyst with Dallas-based Southwest Securities Inc., said. ''I don't think it will stop here.''
On Tuesday, the stock price of 7th Level Inc. surged $6.69, or nearly 370 percent, to $8.50 on Nasdaq after it teamed up with WavePhore Inc. to expand its Internet animation technology.
Financial data provider Market Guide Inc. was up almost 230 percent at $26, also on Nasdaq, after it signed a deal to provide financial research tools to America Online Inc.'s personal finance section.
K-tel International Inc. traded as high as $49.50 this week -- up from just $6.94 last Monday -- after the music retailer said it will offer more than 250,000 of its music titles for sale over the Internet.
Atlanta-based HomeCom Communications Inc. jumped more than $6 a share to $12.94. HomeCom specializes in Internet applications for the financial services market.
HomeCom President Harvey Sax said in an interview he knew no reason for Tuesday's stock move, but said it was possible that activity in other Internet-related stocks had attracted interest in his company.
Those four companies were among the 10 most actively traded Nasdaq stocks Tuesday.
But some industry sources cautioned that the run-ups may be too steep given the fact that even Internet retailing powerhouses like Amazon.com have yet to post profits.
''The biggest challenge is that Internet means revenues, now we have to show that Internet means profitability,'' said Lauren Freedman, president of the e-tailing group, a Chicago-based consulting firm specializing in Internet commerce.
''The issue is, how long will the market continue to fund companies that are grossing high revenues, but not showing a profit?'' Freedman said.
Michael Murphy, editor of the Overpriced Stock Service, said K-tel in particular appeared to have climbed too far, too quickly. He said the music retailer's shares were undervalued at $6 a share, but overvalued at $46.
''The pendulum has swung too far for sure,'' Murphy said, referring to K-tel. ''This is a stock that is probably worth somewhere in the 20s.''
Southwest Securities' Ramirez said he maintained his buy rating on 7th Level. He said the stock could trade at $6 to $8 a share in the next 12 months, a strong move for a company that was trading at just above $1 a share last month, but only a modest projection after Tuesday's jump.
^REUTERS@
15:34 04-21-98
ANYBODY KNOW OF AN INTERNET RELATED COMPANY WITH A PROFIT???
GO DGIV!!!!!
Enjoy the ride. |
