The Last Day to Sell in May

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.

Disclaimer:

This Market Monitor blog was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research, which typically highlights small cap companies, and Goldman Opportunity Research, which features micro cap companies in a sponsored research format. Thus, the Select product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports. 

It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations. 

The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.

This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.

ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS   INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.

For more information, visit our Disclaimer: www.goldmanresearch.com