Thresher Industries (THRR): Cream of the OTC crop.

Posted on April 30, 2010 by Edward Stevenson

Look no further than the Over-the-Counter (OTC) Market for comic relief. Proprietary technologies and metal matrix composite alloys provider Thresher Industries, Inc. (OTC: THRR), reported on March 10th 2010 “that the CEO – Tom Flessner has called for a special meeting with its board of directors to review an offer that has been received to buy the company.”

Six days or a cool 6.03 billion shares ‘traded’ later, Thresher Industries came out with another announcement stating the company’s board of directors approved the sale of the company, “for a price of $0.01 for all outstanding shares.” At least at that point, investors were reassured that the number of shares issued and outstanding did not exceed the authorized 10B.

Approaching the end of April, Olde Monmouth Stock Transfer Company, Inc., Thresher Industries’ designated Transfer Agent, informed inquisitive shareholders that the number of shares issued and outstanding is in the neighborhood or 11.65B, only a little over double the count recorded at the beginning of this year (5.32B). Chief Evading Officer, worthy of Chief Prevaricating Officer, Tom Flessner, informed investors on Thursday that the close to the ‘sale’ of the company would be postponed yet another two weeks due to an untimely illness the executive ‘caught’. Fortunately, shareholders were advised that should they gather the courage to contact the company regarding the brilliant buyout activity now spanning over 7 weeks, their call would not be received.

With $5,627 in cash on Thresher Industries’ balance sheet as of December 31st, 2009, Flessner has some creative work ahead of him. Although no formal statement has been issued as of yet, CEO Tom Flessner saved money by switching his insurance provider to Geico.

The brilliance of the Over-the-Counter stock market is that miracles do happen. Every so often comes along an anonymous bidder willing to offer to buyout a fantastic company for over $100M, overlooking a miniscule $11.3M in retained losses, and a compelling $2.93M in shareholder deficit. But we reserve judgment because ‘one man’s trash is another man’s treasure’.

POSC: Positron Corporation: Stock Chart Analysis 04.22.2010

Posted on April 22, 2010 by Edward Stevenson

Technical opinion regarding Positron’s market: Implementing two simple indicators, price and volume, we are able to derive an unbiased yet effective perspective while mapping out a potentially profitable ‘game plan’. Our analysis describes key technical principles based on Positron Corporation’s chart.

TimelessWealth.net sets guidance for Alpha Pro Tech Ltd. in anticipation of market correction.

Posted on April 21, 2010 by Edward Stevenson

Alpha Pro Tech Ltd., listed on the NYSE Amex under the ticker APT, continues to trade under Wall Street’s radar, despite reporting strong fourth quarter and year-ended 2009 financial results. Year-to-date the share price has dropped in half for reasons difficult to discern; little information can be found to justify the downwards spiral in price. This unique situation, ladies and gentlemen, is known as opportunity. For one it may present a suitable investment opportunity, for another – a timely swing trade opportunity. Regardless, even Alpha Pro Tech critics agree that the company is worth watching closely at the current prices. That is because short-term technical indicators suggest the share price may have found a bottom. What this means for most investors is an opportunity for quick gains on the upside. But there is more to this low-float stock and rapid-growth Company than meets the lazy eye. For starters, 21-years of operating history topped only by insiders who control nearly 21% of the company redefine the meaning of ‘long-term value and growth’.

On March 29th, 2010, Alpha Pro Tech announced a revision to their distribution of disposable protective apparel. The company reported that due to the launch of their own competitive brand, VWR International, LLC would no longer carry Alpha Pro Tech’s Critical Cover® proprietary shoe and boot apparel. Source

As in most cases, the market overreacted and the share price tumbled on ‘apparently’ bearish news. Three weeks afterwards, as chance would have it, we discovered this market, the ‘seemingly’ bearish news, the price reaction that accompanied, and decided to investigate for ourselves whether the market appropriately reacted. We contacted Alpha Pro Tech IR, Donna Millar, and inquired what the revision meant for the company and its outlook. Donna replied by stating that the revision in distribution of the company’s disposable protective apparel line would align Alpha Pro Tech to better meet long-term goals by allowing access to a broader group of distributors, and naturally, a broader market. She emphasized that while the distribution of two of the company’s products in the disposable protective apparel line was revised, their relationship with VWR remains strong and the distributor will continue to carry their other products.

In 2009, the company’s building supply segment accounted for 25.6% of sales revenue; infection control segment added $21.7M or 36% of total sales revenue. Growing 67% year-over-year in 2009, the company’s disposable protective apparel, coincidentally, showed the least amount of growth. Alpha Pro Tech explained:

“Disposable Protective Apparel segment sales during 2009, although a record annual high, were adversely affected by a supply chain issue in which goods from Asia were delayed due to the high demand for products relating to the global H1N1 Influenza A pandemic.”

Deducing the market had overreacted to the company’s news, the likelihood of investors having misinterpreted the news grows greater. As in most cases where the market overreacts to corporate news, an event, etc., a correction is needed to compensate for an unjustified reaction. A correction in Alpha Pro Tech’s market is long overdue having reached the point where shares are ‘oversold’. This means that investors may be looking at a significant upside and lower risk, or downside.

In October of 2009, Alpha Pro Tech was capitalized at $170M. Since, a 69% decline in share price has accounted for a $117M loss in ‘market value’ or capitalization. As we’ve illustrated vehemently, the decline in price per share is counterintuitive based on the company’s financial performance, moreover record sales growth in all business segments.
In 2009, the company earned $0.39/share amid a 478% jump in net income year-over-year. Source

According to Yahoo! Finance, Alpha Pro Tech’s competitors trade at an average price-to-earnings (ttm) ratio of 48. Shares of Alpha Pro Tech currently address an earnings multiple just above 6. Proposing a valuation based on a conservative 10-15 P/E ratio in the Medical Appliances & Equipment industry, Alpha Pro Tech should trade between $3.90 and $5.85/share. Assuming the share price is to adjust to our high end target, Alpha Pro Tech will recover but $78M of the $117M lost in market value since peaking at $7.60/share last October. That leaves room to accommodate any unforeseen growth.

About Alpha Pro Tech, Ltd.

Alpha Pro Tech, Ltd. is the parent company of Alpha Pro Tech, Inc. and Alpha ProTech Engineered Products, Inc. Alpha Pro Tech, Inc. develops, manufactures and markets innovative disposable and limited-use protective apparel products for the industrial, clean room, medical and dental markets. Alpha ProTech Engineered Products, Inc. manufactures and markets a line of construction weatherization products, including building wrap and roof underlayment. The Company has manufacturing facilities in Salt Lake City, Utah; Nogales, Arizona; Janesville, Wisconsin; Valdosta, Georgia; and a joint venture in India. For more information and copies of all news releases and financials, visit Alpha Pro Tech’s Website at www.alphaprotech.com.

Disclosure: Long APT

Pandemic Relief Play in Off-Season: Alpha Pro Tech (NYSE Amex:APT).

Posted on April 19, 2010 by Edward Stevenson

While some refer to it as a natural disaster or pandemic relief play, at TimelessWealth.net we are of the opinion that Alpha Pro Tech Ltd. (AMEX: APT) is a value play when trading at a 5.7X trailing earnings multiple and price to sales ratio of just 0.82. Add 67% sales growth year-over-year in 2009 and an impressive 1099% jump in earnings for the fourth quarter 2009 compared to the same period in 2008.

The company’s products are classified into three business segments. Source

Protective Apparel featuring a complete head to toe protective apparel line, consisting of shoe covers, coveralls, bouffant caps, gowns, frocks and lab coats;
Infection Control consisting of a full line of face masks, eye shields and medical bed pads as well as a line of pet beds, and
Building Products consisting of house wrap and synthetic roof underlayment.

Penny Stock Alert 04.19.2010

When H1N1 (Swine Flu) fears arose, Alpha Pro Tech experienced an increasing demand for their line of face masks and other infection control products. While global fears of this recent pandemic have fallen, history shows that another, more sophisticated pandemic will inevitably follow. While at times we would like to ignore these cruel thoughts, the reality of the situation is that Alpha Pro Tech will again report a spike in demand for their line of infection control products.

Considering the company’s Protective Apparel line, Alpha Pro Tech distributes a necessity to the biotechnology and pharmaceutical industries. Whether investors realize it or not, a great deal of research and development takes place prior to a novel drug or product being submitted to the Federal Drug Administration (FDA) for ‘approval’. Collectively, long years of trials comprise a great expenditure in protective apparel such as shoe covers, coveralls, bouffant caps, gowns, frocks and lab coats. In other words, the multi-billion dollar biotech and pharmaceutical industries rely upon manufacturers of protective apparel products, presently, Alpha Pro Tech Limited.

But what rationale can offer an explanation as to why the stock price is trading at 70% discount to its 52-week high ($7.60)?

On March 29th, 2010, Alpha Pro Tech reported:

"VWR International, LLC ("VWR") has historically been the Company’s largest distributor of disposable protective apparel. [...] On or about March 18, 2010, the Company received confirmation that VWR had decided to launch its own, potentially competing, private label line of disposable protective apparel and to transition away from selling the Company’s products. As a result of this decision, effective March 26, 2010, the Company is no longer supplying VWR with Critical Cover proprietary shoe and boot apparel. The Company is now making its Critical Cover proprietary shoe and boot apparel available through a broader distribution network. The Company anticipates that the balance of its Critical Cover product line will be available through both this broader distribution network and VWR. It is unclear what effect the Company’s changed relationship with VWR will have on the Company’s ability to sell its Critical Cover product line, including its Critical Cover disposable protective apparel."

Three weeks since these news were released, the price has retraced to an April 2009 supporting level (ref. weekly chart below).

Amex Penny Stock Pick

A long position in this equity can be justified by the continued demand for their line of medical products, encouraging growth in working capital ($29M) in 2009, no outstanding debt and an unused $3.5 million credit facility. Source

It may be redundant to speculate whether or not Alpha Pro Tech will find another distributor to take VWR’s place. Perhaps it is a matter of when one or more distributors will ‘fill’ VWR’s previous role. Some investors may speculate that the market will react favorably and adjust to a higher price per share as we await further news from the company. Meanwhile, Alpha Pro Tech’s Board of Directors "authorized an additional $2.0 million of stock repurchases under [their] stock repurchase program." So while investors may be hesitant to retire a few shares of Alpha Pro Tech Limited, the Company is actively buying up their own common shares at a considerable discount.

Remember to cut yourself a piece of the Greece Bailout.

Posted on April 11, 2010 by Edward Stevenson

Similar to Obama’s bailout of the United States in 2009, $30B euro in loans offered to Greece on Sunday may send a struggling and beaten down Baltic Dry Index ($BDI) higher next week. While Wall Street will speculate with large and distinguished shipping companies, we’ve selected 3 Small Cap contenders that may not receive as much recognition but have potential to win over the hearts of Main Street investors with large leaps in stock price.

Shares of OceanFreight Inc. (Nasdaq: OCNF) currently trade at over a 50% discount to book value on the balance sheet, while the company recently completed a public stock offering which resulted in gross proceeds of $99.7M. The price has found support just above $0.75/share and appears positioned for a break to the upside following sideways trading.

The worst may be behind dry bulk cargo transporter Seanergy Maritime Holdings Corp. (Nasdaq: SHIP), as the share price tumbled from over $4/share in late 2009 to a 52-week low of $1.04 in February of 2010, amid a common stock offering announced in late January. According to yahoo! Finance, insiders control just under 65% of the outstanding shares with 21.4M, resulting in a low-float, low P/E (trailing P/E 1.28) shipping gem.

Collectively, insiders and institutions hold 47.9% of the total issued and outstanding shares in Excel Maritime Carriers, Ltd. (NYSE: EXM), which realizes a float of just 49M shares, but perhaps even less when institutional ownership is factored in. Shares of Excel Maritime Carriers trade at a third of book value ($18.56), and are attractive at their current price based on traditional valuation measures. Excel Maritime Carriers saw encouraging price action of Friday’s trading session, perhaps a signal of a strong week of trading lying ahead.

Earnings Season – Cramer’s wrong, you can make money!

Posted on April 11, 2010 by Edward Stevenson

On the brink of an earnings season, a period where most quarterly corporate earnings are released to the public, investors are often hesitant to risk capital for potential potent growth. On CNBC’s ‘Mad Money’ Jim Cramer stated that “it’s impossible to make money during earnings season[…]”. If the market is driven by speculation, earnings season is a period of time where stocks are most volatile. Volatility implies uncertainly, and uncertainty implies risk. But there is a way to manage risk and protect your capital, while ensuring this time of year is one of your best ‘earnings seasons’ – TimelessWealth.net explains.

Large Corporations, Industry Leaders, or ‘Fortune 500’ Companies, are typically first to report their earnings (for the most recent quarter). Their financials often model how well or how poorly an industry has performed in micro and macroeconomic environments. Based on reported earnings from companies with a large market share in predefined industries or sectors, the market begins to draw conclusions in the form of patterns and trends. Industries expected to perform poorly are discounted and often ‘dumped’ with exaggerated ambition. Instead, traders and investors flock to an industry or sector expected to outperform analysts’ forecast. If you’ve positioned yourself alongside a company explicitly expected to ‘outperform’ forecasts early on, you have a chance at financial bliss. If not, you’ve already missed the ‘run-up party’. So when you find yourself at crossroads as to how to reap the rewards offered during earnings season, consider the following three-step design:

I. Research companies with solid fundamentals. Even if they miss projections, estimates, or forecasts, pick them up when the market does not want them. It may appear counterintuitive, but it fits along the lines of Buffett’s “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”. Earnings season and the accompanying reports describing a company’s performance in the latest quarter say little in regards to a company’s outlook. If you strongly believe in a company’s future growth, why not pick it up at a discount?

II. Follow stocks that regularly trade strong volume (the definition of “strong” is subjective to an individual). If the volume isn’t there, the market hasn’t any interest in the company. Stocks trading insignificant volume become a great hazard to investors during earnings seasons. While volatility may be present in this type of market, lack of volume or liquidity will keep traders away. Because Investors and traders are more likely to speculate in a liquid market, picking liquid stocks can significantly reduce capital risk and leverage upside potential.

III. Follow stocks that trade at a certain price or in a defined price range. The market encompasses such a massive line of companies that it is excruciatingly difficult to follow its entirety. Our personal preference is set in tracking companies trading under $5/share, often referred to as ‘penny stocks’. These cheaper priced stocks frequently have a volatile nature about them. This generally means we can procure greater gains in a shorter period of time than if we were to track large-cap stocks. Again, as with volume, price is a subjective limit. It is up to you to define that limit for yourself in order to focus on a particular part of the market during earnings season.

If you’ve ever wondered how investors produce a handful of prospective stocks having started with a list consisting of thousands, now you know. While some will argue that more effective systems than our proposed ‘three-step design’ exist to accomplish our goal, we’ve essentially taken an intimidating process (achieving financial success during earnings season) and broken it down into the simplest of elements. In all likelihood, our process is universal for all traders and investors alike. Sometimes the best of us, the most experienced investors, need to sidestep all the chaos that earnings season drags along with it, and revisit the basics. Remember that it is from the basics that we develop everything that is seemingly complicated. Take our system for a test drive this earnings season and you may find yourself better prepared to succeed than you thought possible!

Cancer Drug Manufacturer Bound For Glory: Telik, Inc. (NASDAQ: TELK)

Posted on April 4, 2010 by Edward Stevenson

04.04.10 Cancer Drug Manufacturer Bound For Glory: Telik, Inc. (NASDAQ: TELK).

While Biotech Stocks have traditionally provided returns in leaps and bounds, Cancer Drug Manufacturers have recreated a ‘Cinderella’ story turning modest investments into retirement funds. Just three months ago, Somaxon Pharmaceuticals was trading for less than $1.00/share, capitalized under $30M. Since then it has boasted a 759% jump in price, leaving speculators hungry for other opportunities and another shot at financial bliss.

In fact, as we put together this report for our Newsletter Subscribers, it took our Staff less than 10 minutes to track down several Cancer Drug Manufacturers that have soared in the marketplace this year. We consolidated the results to illustrate our purpose:

Penny Stocks Alerts

Nevertheless, the question remains: How do we capitalize in the Market knowing what we know?

All seven stocks listed (above) were small, Cancer Drug Manufacturers trading under Wall Street and Main Street’s radar. That tells us the next Biotech Mover is a Micro Cap Company that trades relatively small or ‘quiet’ volume…at least at this point in time.

Enter Telik Inc. (NASDAQ: TELK), a clinical stage drug development company, focused on discovering and developing small molecule drugs to treat cancer. While analysts will bore investors with intricate detail, we will keep our report concise and give you three reasons why Telik, Inc. (NASDAQ: TELK) is an exciting Biotech Play:

(1) -TIMING- “The key is to find undervalued cancer drug makers that pose nominal downside risk but retain potential for serious growth”, writes SeekingAlpha columnist Justin M. Hall, in an article on the hot trend among ‘Cancer Drug Makers’. Telik, Inc. is trading at a 38% discount to its 52-week high ($1.40), a mark that could provide investors with a 61% return from the recent price per share ($0.87). Telik continues to be encouraged by long-term supporting levels just below as the price looks to break resistance for the fifth time in 10 months. Stocks are like clockwork, as many agree ‘timing is everything’

Free Penny Stocks Newsletter

(2) -RISK MANAGEMENT- One of the greater risks involving an investment in development-stage biotech companies is the necessity for Companies to raise capital to fund operations. That hurts the share price, and consequently, shareholders. Reiterating Telik’s 2010 Guidance, “The Company’s cash utilization for the full year 2010 is expected to be in the range of $18.0 million to $20.0 million”. With roughly $40M in cash, the company is well positioned to cover expenses without having to resort to stock offerings to raise capital. Investors have a high chance of evading this risk in Telik, Inc.

(3) -POSITIONING- There is something oddly convincing about a Company where 56% ownership belongs to Institutional Investors. When the likes of MORGAN STANLEY, EASTBOURNE CAPITAL MANAGEMENT LLC, and OPPENHEIMER FUNDS, INC. have a combined vested interest of $19M in Telik, Inc. that tells retail investors there is something going on ‘behind the scenes’. Whether that ‘something’ is a FDA approval of a Drug, a lucrative buy-out or ‘takeover’, only time will reveal. Meanwhile, ‘free trading’ shares less institutional holdings, results in a float under 23M shares. That attracts speculators.

Telik’s Drug Pipeline includes development candidate TELINTRA® (TLK199) which is currently in Phase 2 clinical development for myelodysplastic syndrome, and severe chronic idiopathic neutropenia. TELINTRA® is also being evaluated for the treatment of additional blood disorders. Another product candidate, TELCYTA® (TLK286), is a cancer cell-activated chemotherapeutic that has shown clinical activity in Phase 2 and Phase 3 clinical trials in advanced ovarian cancer, non-small cell lung cancer, colon cancer and breast cancer.

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Monthly Archives: April 2010