3 Potential SmallCap Turnaround Plays
Posted by Timothy Sykes on Wed 17th of Oct, 2007 11:05:17 PM
Tags:
I know–trust me, I know–this isn’t my style, but no matter; these three plays showed up on one of the many nightly screens I do so let’s see how they play out.
Neurochem (Nasdaq: NRMX), a $197 million biotechnology company, rose 33% to $4.40 on heavy volume of nearly 5 million shares after announcing cash reserves of $80 million which will allow them to remain in
business another 15 to 18 months. Their stock has gotten annihilated over the past year, dropping from the mid $20s down to $2 as a result of their failed phase 3 study of their Alzheimer’s disease treatment Alzhemed and a lack of other drugs in the pipeline. I don’t play biotechs—they’re too unpredictable for me—but with over 4 million shares short, a solid bottom in place and cash to last for the foreseeable future, all hope is not lost here (as previously thought) and we could see further strength. I’m a cynical short seller so I doubt it, but those who are interested, remember the Elan! (Hint: Look at a 3-year chart of ELN)
China TechFaith Wireless Communication Technology Limited (Nasdaq: CNTF), a $342 million developer of mobile phones and related software, rose 25% to $7.90 after winning a government contract to develop a pocket PC phone for the police forces in two provinces in China. Now this is some interesting news because despite a recent runup from $4 to $10 and a retracement to $6, CNTF is waaaaay off its 2-year high of $18 and could start to make a comeback, especially if they can get some further contract wins. Even though CNTF has missed analyst expectations over the past few quarters, revenues are still expected to grow 77% this year to $143 million and 55% next year to $221 million and they will be slightly profitable. 13 million shares traded on this news (the entire float is only 17 million) so people are definitely watching this…as am I now.
Another beaten down company, LeCroy Corp. (Nasdaq: LCRY), a $117 million supplier of scientific testing instruments, rose 18.55% to $9.46 on some pretty decent first quarter earnings numbers. This is certainly not a growth company as revenues only rose 4%, but management cut costs, made the business more efficient and reaffirmed 2008 estimates. This is a big change for a company whose stock is down from $25 a few years ago and is now trading only 0.65x sales. book value is $9 so this is a true value play—bleh I just threw up a little in my mouth, I can’t believe this is showing up on my website, but so be it—there’s potential for a nice turnaround here.
Disclosure: Timothy Sykes has no positions in these stocks although positions may change at any time.
Please note that due to factors including low market capitalization and/or insufficient public float, we consider these stocks to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.
TIMstore Monthly DVD Specials:
See all TIM DVD specials HERE
Related Reading
- None Found
TIM Trades
View All| Date | Stock | Buy | Sell | Net |
|---|---|---|---|---|
| Nov 19 | AENY | $2.80 | $3.02 | $1148 |
| Nov 18 | NLST | $4.16 | $4.40 | $947 |
| Nov 18 | IMGG | $1.42 | $1.64 | $2094 |
| Nov 17 | NLST | $5.04 | $5.59 | $2195 |
| Nov 13 | VRMLQ | $21.50 | $22.97 | $2901 |
| Nov 11 | EONC | $2.61 | $2.80 | $687 |
| Nov 10 | EONC | $2.74 | $3.36 | $9784 |
| Nov 6 | QXM | $4.31 | $4.80 | $1936 |
| Nov 4 | COT | $8.66 | $8.88 | $642 |
| Nov 4 | QXM | $4.61 | $4.89 | $822 |
| Oct 30 | DDRX | $25.70 | $26.53 | $812 |
| Oct 29 | CTDC | $4.00 | $4.42 | $781 |
| Oct 26 | AWSL | $3.24 | $4.10 | $2516 |
| Oct 23 | RODM | $5.27 | $5.23 | $301 |
| Oct 22 | AMLM | $2.69 | $2.97 | $820 |
| Oct 22 | USEG | $6.12 | $6.09 | $85 |
| Oct 20 | CBOU | $8.93 | $9.06 | $243 |
| Oct 16 | VRMLQ | $16.79 | $18.65 | $2773 |
| Oct 13 | YONG | $11.05 | $11.66 | $1202 |
| Oct 13 | NPHC | $0.59 | $0.71 | $583 |
| Oct 12 | IMGG | $0.60 | $0.70 | $682 |
| Oct 9 | ZAGG | $5.50 | $6.10 | $2380 |
| Oct 7 | GVBP | $0.03 | $0.27 | $702 |
| Oct 1 | NPHC | $0.70 | $0.85 | $1482 |
Total: $98,094 (681%)
