OK guys. First let me say I'm entirely biased. Take this all with a grain of salt. I apologize if this comes across as hype, but this is my analysis - and over time I've done OK investing in little companies like BIOI - members.aol.com - although I was early here.
I like this company. I've been buying into it big time the last few weeks - and I already had a good stake. The Motely Fool is shutting down the BIOI thread because it is a "penny stock." Too speculative. Yeah, right.
Let's look at the company. They have disappointed - and I think shocked analysts with the recent write off. And they may have another small one for the last quarter related to the acquisitions.
But - the company has little of no debt, will grow revenues this year 50% with the acquisitions, is selling below book value, has a pretty good amount of insider ownership, is in an expanding sector of the economy that should grow at double digits for at least the next decade, has a seasoned management team, is open to dialog with investors and the investment community, is a micro-cap, is buying back shares, and sells at a forward PE of 6..
Now purely from a statistical standpoint (this is the engineer in me coming out) studies have shown that stocks with low relative price/book, price/earnings ratios tend to outperform over time, as do companies whose revenues are growing, as do companies that are microcaps.
Look at the market cap here - $20 million. Microcaps tend to perform the strongest of any sectors over time - if the company stays in business. Will BIOI stay in business? Well, I'm betting on it - with little debt, profitable over the long term, with well connected management, in a growing segment of the economy.
Look at competitors also. Techne - labeled an "undiscovered gem" in the January 4 Business Week - selling at a price to book of 5.0 and a price to sales of 5.1. Comparable numbers for BIOI are a price to book of 0.9 and a price to sales of 0.9.
I did a search of the Lexis Nexis database for any articles that may explain the price weakness and found none. But note that last year was the year small biotech firms got killed. Just hammered - where larger firms did OK - just like the overall market.
There is no correlation - or very little - between the underlying value of a business and what the stock is selling for IMO in this micro cap world - at least for now. Ignore the article and look at the performance chart at the bottom of this link - sfgate.com
And last, here is the interview with the CEO and Chairman of BioSource - fair warning, I'm no Louis Rukeyser:
audioinvestor.com
Any comments, private or public, on my take on BIOI or on the new site are welcome.
Joe |
