The Last Day to Sell in May

Written by GSCR Staff   
Friday, 31 May 2013 07:50

We have been very successful this year in our daily Market Monitor where we have highlighted over 60 small cap stocks.  Some of our huge winners include LCI +115%, TEAR + 73%, MNKD + 98%.   There are also 7 stocks over 40%.  This is not a self pat on the back session so let’s also discuss some of our misses. As of the market close yesterday only 19 picks were in the red with only 5 of those over a 20% loss, excluding the 3 we have already advised to sell.  In the spirit of the last day of Sell in May, we decided to look at these 5 stocks.

USA Technologies, Inc. (NASDAQ – USAT - $1.84): Down 23%

The charts are absolutely horrible on this USAT with very bearish signals on the technical side.  We liked the stock because the company was profitable in 4Q12 and looked to be turning the corner.  This was not the case as USAT lost money in 1Q13.  There appears to be no new deals to bring in revenue and the company is seeking more capital from the Street.  Probably time to cut your losses here. 

DURECT Corporation (NASDAQ – DRRX - $0.83): Down 29%

We highlighted this one at $1.36, and went out of our $5 bottom limit here to start with the notion that it was just pain cheap.  The company received tough news this week that Pfizer (NYSE – PFE) will not pursue the company’s Remoxy pain killing drug.  There is no good outlook on the technical side here either.  Again probably time to sell, with caveat mentioned above related to price.

Aviat Networks, Inc. (NASDAQ – AVNW - $2.71): Down 26%

There are mixed signals on the technical side from the short term perspective related to AVNW, while intermediate and long term looks generally bearish.  In the short term, MACD and EMA are bullish, but most of the other indicators are very bearish.  The company has not landed any major deals since the $10 million deal with a major U.S. city back in February, which we wrote about then.  Probably time to get out.

NetSol Technologies, Inc. (NASDAQ – NTWK - $10.10): Down 25%

Even though the bears dominate the chart here the company received great news yesterday with a $5 million dollar deal with major Australian bank and the stock popped $0.60.  NetSol had record revenue of nearly $13 million and increased the annual guidance to the $48 million range.  The EPS forecast is $0.91 in 2013 and $1.16 in 2014 and the trailing 12-month P/E of 11.5 compared to the industry 25.  You may want to hold here if you can stomach it.

Swisher Hygiene, Inc. (NASDAQ – SWSH - $1.06): Down 20%

The company whiffed on financials earlier this week.  The charts do not look good at all, and the only month with any active option trading is October 2013, with a bullish put/call ratio.  We still like the business model here but think this has turned more into a long term hold stock, rather than a pop trade.

As mentioned above, we think we have done pretty well this year, but no one can get it right all the time.  Our motto is to learn and move on.

Have a great weekend.

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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