Despite the fact that the market's pullback today is likely to bleed into next week (and perhaps longer, give the size of the recent runup), a handful of small caps - largely unknown to investors - are actually looking quite attractive. Maybe this dip will be a great buying opportunity. We'll take a look at these five ideas below.
First, however, let's recap some of the community highlights from this week. We saw commentaries on Sunesis Pharmaceuticals (SNSS), THQ (THQI), Resources Connection (RECN), China Architectural Engineering (CAEI), and Hemispherx BioPharma (HEB). Links to those write-ups are below; the 'Five Great Stocks Under $5' picks follow. .
Stocks In Focus
It's Little Things That End Up Being Big - WAMUQ, HEB, DCSO
While the market was distracted by other things over the last two months, Hemispherx BioPharma, Inc. (AMEX:HEB) has quietly put itself into a position to make a legitimate breakout effort. Though in the red today, and pressing into a new support level, Hemispherx BioPharma is still a great small cap stock to watch - we should see a big move (either way) very soon.
Three Stocks to Buy on the Dips: CYTX, SUNH, RECN
Why does Dennis Askew think Resources Connection, Inc. (NASDAQ:RECN) is something you'd want to scoop up after temporary pullbacks. Part of it has to do with a pattern the chart has been making for months. To see that rather compelling chart for Resources Connection, just click on the link.
Reality Checks for FBC, ARIA, and SNSS
Although up slightly today, Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS) has already taken on too much water.... so to speak. Yesterday's big pullback tugged SNSS shares under an important floor, and today's low volume buying effort isn't likely to undo that damage quickly enough.
Is Misery Ending for COOL, NLST, and CAEI, or Not?
While it's in the red today along with most other stocks, the bulls may have gotten a strong enough grip on China Architectural Engineering, Inc. (NASDAQ:CAEI) this week to keep the bigger uptrend alive. China Architectural Engineering recently pushed above some long-standing and major resistance level, on strong volume. This may be just a glimpse of what's to come.
Why These Tech Plays are Leading the Way: THQI, RTEC, IKAN
Why is THQ Inc. (NASDAQ:THQI) considered to be a 'buy'? It's got a lot to do with the advent of cloud computing, and how online gaming can tap into that advanced technology. It doesn't hurt that THQ Inc. just launched an expansion pack to one of the globe's best selling game titles. Dennis Askew has the scoop.
Five Great Stocks Under $5
Looking for a cheap way to recharge your portfolio? (Aren't we all?) Although the stocks below aren't necessarily immune to what's likely to be a marketwide pullback in the near future, we do think (1) they'll hold up better during the dip, and (2) they'll recover more quickly than other names once the rebound begins.
No fanfare - let's just dig in.
Broadpoint Securities, Inc. (NASDAQ:BPSG)
Broadpoint Securities certainly isn't a household name like E-Trade or Merrill Lynch, but that's because the company isn't interested in retail brokerage clients. Broadpoint is an institutional broker, with a huge focus on investment banking and fund-raising... an arena that's getting traction again.
There's not much of a following for, nor much news from, Broadpoint Securities, Inc. The numbers speak loudly though. One number speaks very loudly, in fact.... $54.9 million, which is the amount of profit the company generated in 2009. It's an important number, since it's in complete contrast to the $17.3 million loss the company took the year before. Yes, business is better.
If the analysts are right, Broadpoint Securities will earn $0.40 per share this year. The analysts have been well short on their guesses in three of the last four quarters though, so perhaps BPSG is poised to surprise.
Smith & Wesson Holding Corporation (NASDAQ:SWHC)
Let's see.... the last time I mentioned Smith & Wesson in a bullish light, the stock plunged - a lot - within a few days. Dare I risk mentioning them again?
Yes, I do, because the sharp selloff was a gross over-reaction to a very modest adjustment in the company's anticipated Q4 revenue. Rather than the $103 million analysts expected, the company's thinking more along the lines of $97 to $101 million. Falling short by 4% on the revenue front apparently means your stock is worth 18% less, since SWHC moved from $4.73 then to $3.87 now.
Regardless of the lowered guidance, Smith & Wesson Holding Corporation is on pace to earn $0.37 per share in fiscal 2010. That's a P/E of 10.5, and considering the company has topped estimates in each of its last four quarters, it may underestimate the company's actual value.
Art Technology Group, Inc. (NASDAQ:ARTG)
Despite the name, Art Technology Group has little to do with art, and a lot to do with technology. The company offers e-commerce solutions to businesses that want to do business online, but don't have the know-how to do so. Its customers include Best Buy and AT&T.
And, business seems to be better as the economy continues to heal. Revenue was higher last quarter than in the same quarter a year earlier, and net income was much better for the same comparable periods (by 50%).
The most impressive and compelling aspect of the Art Technology Group, Inc., however, is the recurring revenue nature of business model. The company's good for a reliable $40 to $50 million in sales, quarter in, and quarter out. Without cash flow and earnings worries, the company can focus entirely on garnering new business.
Advanced Semiconductor Engineering (NYSE:ASX)
Be careful when you're making sales and profit comparisons to last year's numbers - Advanced Semiconductor Engineering made an acquisition of USI in that timeframe that may be displaying irrelevant results (depending on the information source).
Either way, the expected profit $0.33 per share this year is probably a very fair guess; analysts have been within a penny of making the right EPS guess for the last three quarters. That would be much better than 2009's earnings per share of $0.19.
Advanced Semiconductor Engineering doesn't exactly have the greatest degree of admiration from the analyst community. In fact, the scale is tipped slightly in favor of an aggregate 'sell' opinion. That, however, is the opportunity. Citigroup upgraded ASX to a 'hold' last month, and given the recent and expected and likely results, more upgrades could follow.
Cincinnati Bell Inc. (NYSE:CBB)
At first glance, the fact that Cincinnati Bell's revenue was down in Q4 of 2009 in comparison to Q4 of 2008 is more than a little alarming. After all, the economy's in recovery mode... right? A closer look at the numbers and news eases most of the concern.
Stunningly, landline revenue was up for the quarter. It was wireless and technology solutions revenue that was lower, by 3% and 4% respectively. Thought it's not clear what the company has in mind - if anything - to stave off further declines in the cellular business, a specific plan is in place (and already underway) to revitalize the data center operations.
Cincinnati Bell is a value play - not a growth play. It's kind of funny, however, how sometimes the value plays actually serve up more growth than actual growth stocks do. The expected EPS of $0.43 for 2010 translates into a P/E of 7.6... and earnings have been very reliable.
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