A few of my favorite small caps:
I recently went long on TS Telecom (TOM) also.
At the beginning of this year I bought two no-brainer undervalued gems: DFX(tse) (previously mentioned here) and SWE(vse). While they're no longer undervalued, I feel that both stocks could double within your 2 year period.
Silent Witness (SWE) will move from the vse to the tse tomorrow. They make specialty security cameras for niche markets such as penitentiaries, school buses, bullet proof cameras, etc. And have steady sales and earning growth. Note that their 4th quarter (July 31) is traditionally their best. School buses are available for retrofits in the summer. I expect a better than average jump this summer due to increased demand for cameras for school security. This may already be factored in the stock price. Security is a growth industry, if SWE maintains market share they will grow sales.
I first bought this stock in May 1996 @ $1.30 (consolidated), it's now at $6.00 at a 22 trailing P/E. It tends to plateau in a very narrow price range for months at a time and then suddenly break out. This behaviour may have changed however since it's been 'discovered'.
Sales & Profit Summary: silent-witness.com then click on Quarterly Revenue.
Stock price chart: chart.canada-stockwatch.com
Direct Focus (DFX) formerly BFX is tse listed but is a US company. They make and sell home weightlifting fitness equipment that uses flexible bows in place of weights. I believe this equipment to be superior to the market share leading equipment from Soloflex and NordicTrack. They have been in business for many years but discovered the advantages of direct marketing (infomercials) last year and the results have been spectacular. The gross margin on the product is around 70%. The stock has increased from $1.05 a little over a year ago to $15.00 today. Spring and summer are traditionally the slow seasons for home fitness equipment so its not impossible that this stock will be flat for a couple of quarters and then go up again in the 4th quarter.
Two pending news items may cause some movement: Monday's Q2 earnings announcement (I'm guessing 0.30) may be less if they've been spending a lot on their new product ramp up could move up or down. The eventual announcement of their new (much awaited) product, whatever it is, should move the stock up.
Note that DFX considers themselves to be a marketing company, not a fitness equipment company. Check bowflex.com for product information. Stock chart: chart.canada-stockwatch.com
Both Silent Witness and Direct Focus have threads on SI.
Now two speculative stocks:
World Heart Corporation WHRTF (nasdaq) is an Ottawa based medical research firm. A spin-off from the Ottawa Heart Institute (attached to the Civic Hospital) and the University of Ottawa. They are developing a Ventricular Assist Device called the Heartsaver VAD. Its a pump designed to be implanted in the chest and assists a weak or damaged heart. The company has enough cash for all remaining research, clinical trials, and manufacturing ramp-up. There should (hopefully) be no more dilution. Clinical trials will occur next year and revenue could begin in 2000. The word is getting around about this and the stock has almost doubled since May and is now at $7.75 US. There are other companies doing similar research, but their technology is either inferior or they are developing for a different niche market (like heart replacement). The CEO is Rod Bryden one of the founders of SHL Systemhouse and principal owner of the Ottawa Senators. The key is the clinical trial, if it succeeds, World Heart will sell as many VADs at $50K US each as they can train physicians to implant.
This posting summarizes the annual meeting: Message 4656782
Home Page: ottawalifesciences.com
Last, and most speculative, is a stock that I've lost a fair amount of money on. Of course, you don't lose money unless you sell. I think this stock has found its bottom, so I keep buying more. It's Tenke Mining(TNK), controlled by Adolf Lundins. They have a concession to exploit a copper and cobalt mine in Congo. This mine will be one if the lowest(if not the lowest) cost copper producer in the world. They've done the drilling, the assays, the feasibility study, the data room, and selected subcontracting engineers. Two things remain: the JV partner(s) (Anglo American is rumored) and the bank financing. An announcement is expected in August. The right announcement will cause this stock to multiply. There is a thread on SI. I'm tired of typing.
- Gofer |
