investor-list - analystgroup.com
*******Undervalued Dog************* Vol. 4, No. 111, July 4, 1999
analystgroup.com
A Leading Provider of Micro-Cap Stock Advisory Newsletters
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Notice: We will not publish the Daily Update tomorrow, as the market will
be closed.
Happy 4th of July!
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Weekly Market Review
Investors celebrated better-than-expected inflation news this week as the
Fed raised the federal funds rate by a quarter point on Wednesday but left
the discount rate unchanged. As a result, stocks surged to record highs
last week as the Federal Reserve raised the federal funds rate by
one-quarter of a percentage point and shifted to a neutral bias on the
need for future rate increases.
The Dow soared 586.68 points (5.56%) last week to close at a new record
high of 11,139.24. The S&P 500 jumped 75.91 (5.77%) to end at a new high
of 1391.22. And the NASDAQ Composite surged an impressive 188.37 points
(7.38%) last week to close at a record high 2741.02.
Smaller stocks also did well as the Russell 2000 Index of small-cap stocks
gained 3.02% while The MicroCap 1000 Index closed the week at a new high,
up 5.2% to 1139.24.
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Quarterly Stock Review
It's time to review all stock that we initiated to cover in the first six
months of 1999 and determine what we should do with these investments.
Please remember the past performance is not of indicative of future
performance!
GROUP V CP (OTC BB: GRPV or TXCI): The ask price was $0.125 when we
recommended it as the pick of March, and its high was $1.01 thereafter, up
708%. Currently, the stock price is $0.49, up 292%. Now the company has
94.2 million outstanding shares with 85.7 million shares in the float,
giving the company a market cap over $46 million. So far the company has
not achieved significant revenues and has negative cash flow over $2
million. We believe the company needs to generate $10 million annual
revenues to justify its stock price. Hence, we want to see its last
quarter (ended on June 30) earning report before we give an evaluation of
its financial status. The stock is rated neutral.
KANAKARIS COMM (OTC BB: KANA): The as price was $0.25 when we recommended
it as the pick of January, and its high was $4.00 thereafter, up 1,500%.
Currently, the stock price is $1.0625, up 325%. We also played the stock
several times for gains raging from 50% to 100%. We still believe the
company has huge potential in its Internet businesses and may become one
of future leaders in the emerging-growth Internet industry involved in
downloadable books, movies and music. However, the company has not
released its financials. It's impossible to evaluate the stock valuation
without its financials. Technically, the stock does not look good now, as
the stock has broke its technical support at $1.25. If the stock
continues to break its $1.00 secondary support, the stock can go much
lower unless the company releases its financials. It appears that news
events no longer help the stock price. The stock is rated neutral.
ELCOM INTL (NASDAQ: ELCO): The ask price was $2.00 when we recommended it
as the pick of week, and its high was $8.9375 thereafter, up 346%.
Currently, the stock price is $3, up 136%. We also played the stock
several times for gains raging from 50% to 100%. The stock is still dirty
cheap compared to its current revenues of over $747 million and huge
potential of its Internet businesses. The company continues to
restructure its business to more of an Internet-based model and invests in
the ramp up of elcom.com, Inc., its Internet-based sales and technology
licensing subsidiary and the marketing and continued development of PECOS
Procurement Manager, its automated procurement system for businesses. If
the company executes its plan to have IPO for its elcom.com, Inc., the
stock will get its recognition. With the valuation of major Internet
companies in the market, ELCO should be traded over $100. It's no
question that Wall Street still has some doubts on the ability of the
current management team. This is the reason, we believe, that the stock
has not performed well. If the company can have some damn good earnings,
the street will wake up and the stock will soar. The stock is rated
accumulation under $4.50 if you don't the shares or want to add more and
hold if you do have the shares.
7TH LEVEL INC (NASDAQ: SEVL): The ask price was $2.75 when we recommended
it as the pick of week , and its high was $10 thereafter, a gain of 264%.
Currently, the stock is $$.469, up 62.5%. The stock was a pure hype
Internet play as we have said along the way. We also shorted the stock
two times for gains raging from 50% to 100%. The company has a loss of
over $22 million on sales of $1.86 million. If you compare SEVL valuation
with ELCO's, you would learn how Wall Street has been so carried away by
the Internet hype! The stock is rated sell.
HEARTSOFT INC (OTC BB: HTSF): The ask price was $0.80 when we recommended
it as the pick of week, and its high was $5.97 thereafter, a gain of 642%.
Currently, it is $1.4375, up 80%. The stock continues be traded on the
sidelines. Although we still believe the company's businesses have some
potential, the company has not released its financials that has been
promised by the company for so long. The stock is rated neutral.
ALPHANET SOL (NASDAQ: ALPH): The ask price was $4.43 when we recommended
it as the pick of week, and its high was $6.75 thereafter, up 52%.
Currently, the stock price is $4, down 10%. The company is still in the
transition of its core business from product sales to Information
Technology (IT) services including a broad range of systems integration
and other IT services, including network consulting, workstation support,
education, communications installation, IT staffing and applications. The
company's fundamentals are strong. But they need to turn its businesses
profitable. We anticipate the company revenues will continue to be down,
but we hope they can make money from its IT business that has much higher
profit margins. We are looking forward to its next earning report that is
due in the middle of August. The stock is rated neutral.
ION NETWORKS (NASDAQ: IONN): Previously it was Microframe Inc. (NASDAQ:
MCFR). The ask price was $2.00 when we recommended it as the pick of week,
and its high was $5.062 thereafter, up 153.1%. Currently, the stock price
is $4, up 100%. The company is profitable and nicely run. The stock won't
advance if the company can't grow in its revenues and earnings. The
stock is rated neutral.
CENTURA SOFTW (NASDAQ: CNTR): The ask price was $1.00 when we recommended
it as the pick of week, and its high was $1.3125 thereafter, up 31%.
Currently, the stock price is $1, up 0%. The company has had some good
news recently. However, the stock has not been responded well. The key,
we believe, is that the company need to grow its revenues and earnings in
a big way. Thus, they may be able to catch some attention in the
investment community. The stock is rated neutral.
DATELINE.NET (OTC BB: NETD): The ask price was $1.625 when we recommended
it as the pick of week, and its high was $6.125 thereafter, a gain of
277%. Currently, the stock price is $4.50, up 177%. We also played the
stock several times for gains raging from 50% to 100%. Since June 10,
phone.com (NASDAQ: PHCM), a provider of Internet-access software for
wireless devices, went IPO, the stock has been as high as $69 per share.
We believe NETD will be eventually recognized by the investment community
for superiority of its patented technologies in the Internet-wireless
real-time content delivery industry, as NETD will move to NASDAQ or AMEX
by the end of this year. Our short-term target price is $12 to $15. As
the stock has been over our entry point under $4.50, the stock is rated
hold.
WIRELESS ONE (OTC BB: WIRL): The ask price was $0.20 when we recommended
it as a rumor play, and its high was $4.125 thereafter, up 1,962%.
Currently, the stock price is $2.656, up 1,228%. The company's financials
are shaky, but the stock still popped up to over $4. wifeless and
Internet is so hot on Wall Street. NETD just provides this kind of play
as we reviewed as indicated above. The stock is rated neutral.
LA GROUP INC (OTC BB: ONTV): The ask price was $0.03 when we recommended
it as the pick of February, and its high was $2.1875 thereafter, up
7,192%. Currently, the stock price is $0.4062, up 1,254%. Since the
running up last time, we don't see the stock has any legs to advance. The
company has not reported its financial yet. The stock is rated neutral.
SETO HOLDINGS (OTC BB: SETO): The recommend price was $0.30 when we
recommended it as the pick of week, and its high was $1.625 thereafter, up
442%. Currently, the stock price is $0.39, up 30%. As we don't see the
company's businesses will have huge potential in the near future, the
stock is rated neutral.
DIGITAL ARMOR (OTC BB: DGTL): The ask price was $1.00 when we recommended
it as the pick of week, and its high was $1.25 thereafter, up 25%.
Currently, the stock price is $0.18, down 82%. We still feel the
company's products have huge potential in the market. We hope the company
can sign a distribution agreement with a major retail player in the
industry. The stock can explode with its tiny float if the company can
execute its business plan as we anticipate. The stock is rated neutral.
AMERICAN ECO (NASDAQ: ECGOF and ECGO now): The ask price was $2.31 when we
recommended it as the pick of week, and its high was $2.56 thereafter, up
10.8%. Currently, the stock price is $2.125, down 8%. We no longer cover
the stock, therefore we don't have any opinion on the stock.
MIM CORP (NASDAQ: MIMS): The ask price was $2.125 when we recommended it
as the pick of week, and its high was $3.125 thereafter, up 47%.
Currently, the stock price is $2.375, up 8%. We don't see any downside for
the stock here, but the company is doing a poor job in public
relationship. The company's fundamentals are strong, buy few investors
realize it. On May 25, Value America (NASDAQ: VUSA), the leading online
superstore and MIM Corporation (NASDAQ: MIMS), announced a new marketing
alliance. Under the terms of the agreement, MIM will exclusively provide
all prescription pharmaceuticals, diabetic supplies and certain home
medical products. The partnership will also include most over the counter
products, including vitamins and nutritional supplements and some health
and beauty aides. Under this relationship, MIM's 2.7 million customers
will be given special incentives to purchase Value America's broad array
of products and services. We believe the stock is still dirty cheap and
the company has huge potential in its new Internet venture. The stock is
rated accumulation under $2.25 or little higher.
SOFTECH (NASDAQ: SOFT): The ask price was $2.00 when we recommended it as
the pick of week, and its high was $2.875 thereafter, up 44%. Currently,
the stock price is $2.3125, up 15.6%. We feel the company's business is
in the right direction. SOFT has never owned its own technology before,
much less the development departments to crank it out. After a few years
of letting the other software company settle in, they have been able to
see what is working well and what hasn't. Now they are maximizing on the
winning combinations (professionals and software) and focusing in that
direction. The difference now will be the greater profits from increased
sales of what they own, as opposed to re-selling other companies' software
solutions. Last quarter, the revenues were up $8.9 million from $5.2
million and earnings were up $0.07 per share from a loss of $0.23 per
shares. We expect the company will have another good earning report due
in the middle of July. Then they may be able to catch up some attention
in the investment community. The stock is rated accumulation under $2.25
or little higher.
NETWORKS NORTH (NASDAQ: NETN): The ask price was $2.875 when we
recommended it as the pick of week, and its high was $3.4375 thereafter,
up 20%. Currently, the stock price is $2.475, down 14%. We anticipate
the company will have major news announcement regarding its merger and
on-line business contracts. The stock with a tiny float has been traded
on the sidelines and will explode up the news releases as we expect. The
stock is rated hold.
DIAMOND ENTMNT (OTC BB: DMEC): The ask price was $0.11 when we recommended
it as the pick of April, and its high was $0.23 thereafter, up 109%.
Currently, the stock price is $0.16, 45.4%. We also called buy up to
$0.22, as we wanted to break the resistance and anticipated some major
news releases will come out by the end of June. We still believe DMEC has
potential to advance to $1 to $2, though we are little disappointed the
delay of launch of its e-commerce site. The stock is rated hold.
OLYMPIC CASCADE (NASDAQ: NATS): The ask price was $2.78 when we
recommended it as the pick of week, and its high was $5.78 thereafter, up
108%. Currently, the stock price is $4, 44%. The company is planning to
offer online trading and investing services. This is a great news for the
stock price. However, the company is doing a poor job in public
relationship. The stock is rated neutral.
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