The Napeague Letter identifies undervalued small-cap companies which are investment opportunities. The February 9th edition included the following updates on stocks that I am following:
ABATIX ENVIRONMENTAL - ABIX:
About a week ago I talked with Frank Cinatl, the CFO at Abatix. Of
course I asked whether there were any "events" which would cause
the recent decline in its price, and he confirmed that the Company
was generally on track, and that there were no internal forces
driving this price movement. He indicated that revenues for fiscal
1996 were in line with the Company's previous projections of an
approximately 20% increase for the year. The Company is aiming
toward releasing their 1996 financial results around March 4th. As
soon as I have this information I will e-mail it out to you, and I will update my Analysis of ABIX and publish it in The Napeague Letter.
Although the price of ABIX has gradually dropped to below $3.00,
it has done so on relatively low volume, which indicates to me that
this decline is driven by a lack of demand, and not by "impending
adverse news" For the last several days, momentum-based
indicators have been signaling potential upward price movement.
CANDELA CORPORATION - CLZR:
On January 27th, Candela announced a 60% increase in net income
on a 19% gain in revenue during the second quarter of fiscal 1997.
These results exceeded my quarterly projections, upon which I based
the fiscal year projection for 1997 which were published in The
Napeague Letter on January 5th ; Revenues were $9.4 million versus
my projection of $9.1 million; net income was $736,000 or $.13 per
share versus my estimate of $541,000 and $.10 per share.
I have not yet received a copy of the Company's 10-Q Report, but I
will update this Analysis after I read it and e-mail it to all Napeague
Letter subscribers.
On Friday, the Company issued a press release announcing the
opening of the worlds first combined spa, salon and cosmetic laser
center on February 11th in Scottsdale, AZ; plans for this center have
been announced previously.
Technically, momentum-based indicators are showing that the
upward price momentum for the stock has slowed, and that it may
currently be overbought. This may signal an upcoming short-term
price decline.
TRANSNET - TRNT:
In my TransNet Analysis published in The Napeague Letter on
January 10th, I projected that the second quarter results would show
revenues of $19.2 million and net income of $316,000, or $.06 per
share. On February 4th, the Company released its second quarter
results, which exceeded my projections. Revenues came in at $19.5
million and net income was $340,000 or $.07 per share
I have to admit that I am surprised at the subsequent performance of
the stock, which has declined consistently since the announcement,
although on relatively low volume. I especially found Friday's
trading to be quite interesting. Although the stock had been
reasonably strong earlier in the day, around 2:30 a single transaction
of about 10,000 shares momentarily pushed the price down below
$2.50. However, as soon as that transaction was cleaned up, the
price rebounded to $2.75. Unfortunately, I was not monitoring the
market at that point, so was unable to add to my position at those
prices. If this continues next week, I will be buying TRNT
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