Market Monitor

In Monday’s Goldman Guide we referenced the 80’s commercial craze “Where’s The Beef”. Our younger readers may not get the reference, and to be honest, we are not sure if there is anything close to the cultural phenomenon the ads created. The closest thing we could think of was the musings of ‘The Most Interesting Man in the World”, who ran a marathon because it was on the way among other accomplishments. But we digress. The tagline was meant to point out the weakening EPS figures for the S&P. We also pointed out that it may be time to look for down in the dumps consumer discretionary or energy stocks.

One energy stock that caught our eye initially was SunPower Corporation (NASDAQ – SPWR - $10.63). We decided otherwise due to several downgrades. On a side note, the Company conducted its quarterly conference call the other day and it was less that cordial. Here is a very interesting read.

http://www.marketwatch.com/story/sunpowers-shock-profit-warning-makes-for-unusually-tense-earnings-call-2016-08-10

The three-year chart for Canadian Solar, Inc. (NASDAQ – CSIQ - $13.09) is illustrated below. This is one our older Market Monitor picks from way back in November of 2013, and has had many peaks and valleys over that time. The stock is down over 50% since then as well as year-to-date coincidentally.

CSIQ 3-Year Chart

(Source: www.otcmarkets.com)

Canadian Solar Inc., together with its subsidiaries, designs, develops, manufactures, and sells solar wafers, cells, and solar power products primarily under the Canadian Solar brand name. The Company operates through Module, Energy Development, and Electricity Generation segments. Its products include various solar modules that are used in residential, commercial, and industrial solar power generation systems. The Company also provides specialty solar products consisting of Andes Solar Home System, an off-grid solar system, designed to provide an economical source of electricity to homes and communities without access to grid; and Maple Solar System, a clean energy solution for families, as well as solar system kits, which are a ready-to-install packages, such as inverters, racking system, and other accessories.

There are two major reasons we like CSIQ. First, EPS reporting which ties into the Company’s operating margin. An operating margin consistently above 7% has been a major contributor for the Company to hit or exceed EPS estimates four consecutive quarters. This is crucial for momentum pops. Secondly, there may be some M&A activity with larger firms looking to add technology and efficiencies by buying small cap firms like Canadian Solar. The all-important metric here is Enterprise Value to EBITDA value, which is a low 8.2

We believe CSIQ will begin an accumulation phase. Look for the stock to climb back to $17 by the end of the year.

Have a great day!

Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.

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

In Monday’s Goldman Guide we pointed out that we expect this August to be the normal bear that it historically has been. Yesterday, we got a bit of relief with a slight uptick in US markets. It may be time to look for an investment ‘buy and hold’ theme.

The Zika virus is front page material and has made its way into the United States. Several of our athletes, particularly in outdoor sports like golf, have declined to go to Rio over the growing Zika epidemic there.

The Female Health Corporation (NASDAQ – FHCO - $1.35) is a relatively cheap stock with that is currently trading above its 25-day EMA as illustrated in the chart below.

FHCO 6-Month Chart, 25 Day EMA

(Source: www.otcmarkets.com)

The Female Health Company develops, manufactures, and markets consumer health care products. It offers the FC2 female condom that provides women dual protection against unintended pregnancy and sexually transmitted infections, including HIV/AIDS. The Company sells its products to global agencies, non-government organizations, ministries of health, and other government agencies directly, as well as through distribution agreements and other arrangements with commercial partners. It operates in South Africa, Angola, Uganda, Nigeria, Zimbabwe, Tanzania, the United States, the United Kingdom, Brazil, Malaysia, the Democratic Republic of the Congo, and internationally.

Currently there are no drugs or vaccines available to treat Zika. Female condoms are considered a healthy choice to help limit the spread of the disease, since the virus can be transmitted through sexual contact. The U.S. Centers for Disease Control is recommending those who live in a state or area with the mosquito that spreads Zika virus to create a prevention kit. The suggested kit includes a bed net, standing water treatment tabs, insect repellent and the FC2 condoms. The threat of Zika in the US is boosting demand for the Female Health Company’s FC2 and additionally the Ministry of Health in Brazil is planning to dispense 100,000 FC2 female condoms to athletes participating in the 2016 Summer Olympics in Rio de Janeiro.

An impressive metric on the technical side is the short float of only 1.2% for FHCO. Additionally, the Company has $3.2 million on cash with zero debt as of the end of 2Q 2016. Finally, the margins are extremely impressive with 10.9% profit margin and 15.9% operating margin.

With the inevitable increased demand for The Female Health Company’s FC2 condom to fight Zika and the impressive metrics we pointed out, the time is right to buy into FHCO. Look for the stock to climb back to $2.00 by the middle of Q4.

Have a great day!

Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.

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

In Monday’s Goldman Guide we pointed out a couple of factors we are looking at right now. First, a high RSI, which is typically and overbought signal here, but we are using as a momentum indicator. Secondly, it is not too early to think about back to school as far as the market goes.

Lincoln Educational Services Corporation (NASDAQ – LINC - $1.69) is a relatively cheap stock with a current RSI over 60, an overbought signal. Also, as illustrated below, the LINC is now trading over the 25-day EMA.

LINC 6-Month Chart, 25 Day EMA

(Source: www.otcmarkets.com)

Lincoln Educational Services Corporation, together with its subsidiaries, provides various career-oriented post-secondary education services in the United States. It offers bachelor's degree, associate's degree, and diploma and certificate programs in automotive technology, skilled trades, healthcare services, hospitality services, and business and information technology areas to recent high school graduates and working adults. The Company operates 31 schools in 15 states under the Lincoln Technical Institute, Lincoln College of Technology, Lincoln College of New England, Lincoln Culinary Institute, and Euphoria Institute of Beauty Arts and Sciences brand names.

The first metric that jumps out is the technical indicator, short float. Lincoln is under 1%. Additionally, the forward P/E is 8.5 on consensus analysts’ revenue growth estimates of 29% in 2016 and 300% in 2017! Finally, positive EPS surprises can be critical to ‘pops’ especially in the small cap world. The Company has averaged plus 171% in that regard over the last three quarters.

We like the technical analysis for LINC combined with the back to school theme. Wall Street analysts appear to love the stock as well given the revenue estimates over the next two years. For these reasons we think the stock climbs to $3 by the end of the year.

Have a great day!

Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.

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

In Monday’s Goldman Guide we discussed the disheartening chaos and violence all over the globe. Unfortunately, this amps of the finger pointing and blame game at both political conventions over the next two weeks which could lead to more anger and violence. We will step back. Healthcare is going nowhere, especially with the aging population here and globally in the industrialized world. We will look to this old guard today.

Harvard Biosciences, Inc. (NASDAQ – HBIO - $3.10) has been around for over 100 years and is a steady player in the small cap healthcare space. Below is the six month HBIO chart which highlights two important technical indicators. First, the stock has moved ahead of the 25-day EMA. Secondly, the stock has entered a rise from a trough in a head and shoulders patter over the last two months.

HBIO 6-Month Chart, 25 Day EMA

(Source: www.otcmarkets.com)

Harvard Bioscience, Inc. develops, manufactures, and markets scientific instruments, systems, and lab consumables used in life science research. The Company offers cell and animal physiology products, such as syringe pump and peristaltic pump products, as well as a range of instruments and accessories, including surgical products, infusion systems, microdialysis instruments, behavior research systems, isolated organ and tissue bath systems, and in vivo and in vitro electrophysiology recording, stimulation and analysis systems for tissue, organ, and animal based lab research under the Harvard Apparatus, CMA Microdialysis, Panlab, Coulbourn, Hugo-Sachs, InBreath Bioreactor, MCS, TBSI, and HEKA brands. It also provides products for molecular biology labs comprising pipettes and pipette tips, gloves, gel electrophoresis equipment and reagents, autoradiography films, thermal cycler accessories and reagents, sample preparation columns, tissue culture products, and general lab equipment and consumables under the Denville Scientific, AHN, and other brands. In addition, the Company offers spectrophotometers under the Libra, WPA, and BioDrop brands; microplate readers; amino acid analyzers; gel electrophoresis equipment under the Hoefer and Scie-Plas brands; and electroporation and electrofusion products, including systems and generators, electrodes, and accessories for research applications, such as in vivo, and in vitro gene delivery, cell fusion, and nuclear transfer cloning under the Harvard Apparatus BTX brand.

In keeping on the technical theme, HBIO currently has a short float of a super low 1.2%. On the fundamental side the 5-year PEG ratio is also a low 1.7. Additionally, Wall Street consensus has the revenue growing 38% over the next two years.

We believe HBIO is a solid short term play on a run to safety, i.e. the established. Look for a pop back to $4.00 over the next three months.

Have a great day!

Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.

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

In Monday’s Goldman Guide we had a lengthy discussion on the changing market dynamics prevalent today. With all the chaos and violence here in the U.S. and abroad we have strong convictions about defense stocks over the next year.

We are highlighting a new pick today in the small cap space, AeroVironment, Inc. (NASDAQ – AVAV - $27.60). Below is the one-year chart that illustrates the stock is coming off of a 52-week bottom in October and it may be time to buy again on a dip from a relative high of $32.44 a little over a month ago.

The Brexit panic of 2016 seems to have come and gone faster than you can say fish-n-chips, so now what? It may be time to look for some oversold downtrodden stocks for summer picks.

We have been following Del Taco Restaurants, Inc. (NASDAQ – TACO - $8.91) for quite a while looking for a buying opportunity. As of the start of trading last Wednesday the stock’s RSI was 38, a bullish signal. The stock popped 4% that same day. Below is the one-year chart that illustrates the stock is coming out of a 52-week bottom and it may be time to buy.

In Monday’s Goldman Guide we alluded to the Russell 2000 annual reconstitution occurring this month. The new stocks that make the list are great potential buys as the universe of mutual funds and ETF have to be updated to track the index. We will look again at our healthcare and biotech small cap sector.

For those of you living under a rock, or on a much needed early summer vacation, the ‘Brexit’ vote in the U.K. is next week. We think it is much ado about nothing, but it seems to be all you read about in financial market commentary. The larger issue going forward will be if other European countries follow. A German exit would essentially end the Euro currency in our opinion. We will stick to our value in our go to small cap space, healthcare.

Below is the one-year chart for Teladoc, Inc. (NYSE – TDOC - $13.36) along with the 100-day EMA metric in red, which illustrates the stock is now trading above the important technical metric.

The U. S. Open, the PGA tour’s second major of the season, begins next week at historic Oakmont Country Club near Pittsburgh. We thought we would begin the coverage early because pertinent news surrounding the sports apparel world ties into today’s stock pan.

For those of you who do not follow golf closely, the ‘big three’ reference is made to the new young stars of the game, Rory McIlroy, Jason Day, and Jordan Spieth. The original big three was Jack Nicklaus, Gary Player, and Arnold Palmer. But we digress. Apparel and gear sponsorship is big business sports and golf is no exception. The big boy on the block, Nike (NYSE – NKE), has tied their fortunes to Rory in an effort to try and fill the Tiger void for $200 million. Adidas AG (OTC: ADDY) announced it was selling its golf divisions that include the TaylorMade, Ashworth and Adams brands last month. How it affects the Jason Day sponsorship is yet to be seen. Adidas is still a huge presence in soccer. Finally, Under Armour, Inc. (NYSE – UA - $38.66) tagged their man Jordan last summer. Today we will look at UA going forward.

In Monday’s Goldman Guide we alluded to some potential headwinds for this month ahead of the normal summer slowdown.  Yesterday’s sell off seemed to confirm some of our fears with all major U.S. indices down relatively big including our bellwether the Russell 2000, which closed down 1.68%.  Having said that there are still trades to be made out there, and one sector seems to be holding its own in the small cap space, regional banks.