Market Monitor

Tonight’s Game 7 of the NBA finals promises to be an exciting end to a great series, especially if Game 6 is any indication.  Game 7’s are one of the best parts of American sports.  So who is going to win?  I am pulling for San Antonio, but this is just a sentimental pick.  If I were betting on the winner, or money line, I would take Miami all week and twice on Sunday.  In the seventeen times the NBA finals have gone to a Game 7, the home team has won 14.  The home team has also won 5 straight dating back to 1978.  I would guess that the same phenomenon exists in the NHL and MLB.

In Monday’s Goldman Guide we discussed trading volume combined with advance/decline days as a lagging indicator for stock sentiment.  So what does this have to do with the NBA Finals and game 7 tonight?  When picking stocks or betting the winner of a final Game 7, stick with what has been proven to work or in sports gambling terms, the team with the ‘odds’ in their favor. 

In Monday’s Goldman Guide we referenced volume as a great lagging indicator for the market.  More importantly the inconsistency of volume on high buying or high selling days or a general increase or decrease in volume should provide an indication of how investors/traders feel about a certain stock.  Coincidentally, there are 10 stocks in our Market Monitor highlights that have averaged over 1 million shares traded per day over the last three months.  Here is a quick review on each of them with a percentage gain or loss listed at the far right from the date initiated.  As expected the majority of them are in bio-tech or technology.

In Monday’s Goldman Guide we reiterated our strong buy stance on the automotive and semiconductor sectors.  Back in early May we highlighted Stoneridge, Inc., (NYSE – SRI - $11.95) a high tech automotive supplier that designs and manufactures engineered electrical and electronic components, modules, and systems for cars and trucks, farm machines, motorcycles and off-highway vehicles.  The company is an international player with customers in North America, South America, and Europe.  SRI is up over 56% since then.  We think this is still one to keep.

So all week we have somewhat been hammering the millennial generation.  There has been no harm intended and truth be told, probably more than anything, it is wishing we were 25 years old again.  As stated in Monday’s Goldman Guide, the current generation in their 20’s and early 30’s are delaying adulthood to a certain extent, and are huge consumers.  The major industry that targets these spenders is technology both with gadgets and applications.  Another niche industry that is ‘catering’ more and more to this market segment are coffee producers, particularly chain coffee shops.  Finally, these people spend a lot on clothes and fashion, but in a more relaxed and sporty way than prior generations when it comes to going out of the house.

Today, we thought we would shift gears and look at some large or mega cap stocks in a fun ‘competitive’ format with this millennial generation in mind.  We will analyze two stocks in each industry, technology, coffee, and sports apparel with a longer term focus in mind as performance for these stocks depends heavily on how and where this particular segment spends its money over the next five to ten years. 

In keeping with the youth and technology theme in Monday’s Goldman Guide we looked for an inexpensive technology stock pick for today’s Market Monitor to possible add to the satellite part of your portfolio.

Dot Hill Systems Corporation (NASDAQ – HILL - $2.07) is in the software and hardware storage system business for small and mid-range storage markets with customers around the world.  While this component of the technology industry does not have the some of the sex appeal of electronic gadgets or social media, it is a necessary and growing market.  The company’s storage solutions consist of integrated hardware, firmware, and software products employing a modular system that allows end-users to add various protocol, performance, capacity, or data protection schemes.

Recently, Dot Hill was named to the UBM Tech Channel’s CRN 2013 Virtualization 50 for the third year in a row.  The annual listing showcases the companies with the most innovative virtualization solutions on the market today.  Dot Hill’s marquee product is the AssuredSAN, a high level SAN (Storage Area Network), which is a networked storage and data management solution that provides high performance and large disk array capacities for various environments, including fiber channel, Internet small computer systems interface, and serial attached SCSI storage markets.  Additionally, the company offers RAID (Redundant Array of Independent Disks) adapters and stacks for Windows and Linux based servers.

There are mixed signals for HILL in the short term technical analysis, but a definite shift to a bullish indicator in the intermediate and long term.  On the earnings side the firm is expected to turn to profitability from an EPS perspective in 3Q13 or 4Q13 to finish the year in the black with $0.14 EPS expected in 2014.  Revenue growth is expected to be 15% over the next two years as well.

We think the stock can move to the $3 range later in the year, especially if earnings reports show the expected EPS turn around.

Have a great day.

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

In keeping with Monday’s Goldman Guide focusing on the millennial generation we thought it would be appropriate to discuss a high profile stock with these consumers in mind.  Deep down I do not think kids and young adults are any different today than any other generation, but on the surface these 20 and early 30 something’s seem to be the most ‘look at me’ people ever.  Like him or not, Mark Zuckerberg’s invention is one of the most innovative in history.

In Monday’s Goldman Guide we discussed the consumer oriented gadget and technology focused millennial generation and investing ideas related to the tastes of this group.  One sector that is at the core of technology is the semiconductor industry, where there are a large number of players in the small cap universe.

Back in early April we highlighted RF Micro Devices (NASDAQ – RFMD - $5.28) at a price of $5.19 and a $7.00 target for sometime by the end of 2Q13.  The stock has not been able to break through the $6.00 level but we still like the story.

As a refresher, the company designs, develops, manufactures, and markets radio frequency (RF) components and compound semiconductor technologies primarily in the United States and Asia.  Its products are targeted at the 4G LTE mobile smartphones, wireless infrastructure, wireless local area networks, cable television /broadband, Smart Energy/advanced metering infrastructure and aerospace and defense markets.

RF continues to innovate in all product areas.  Recently, the company introduced the RFHA1027, a gallium nitride (GaN) matched power transistor (MPT) that will deliver industry-leading pulse power performance of 500W in a compact flanged package, very useful in applications like tablets and smartphones.  The firm was spending over 20% of total sales in research and development for several consecutive quarters finally tapering off in 2013, but still aggressively spending over 15% of sales on new products and programs related to R&D.

RFMD has a forward 12-month P/E under 10, and indication of a great value at the current price levels and forecasts.  The charts remain somewhat bearish side, but we think the fundamentals outweigh this indication.  The stock may not reach the $7.00 mark by the end of 2Q13, which is in 20 days, but we still like that target for year-end 2013.

Have a great day.

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

Monday in the Goldman Guide we discussed our success with Travel Centers of America (NYSE – TA - $10.81).  I happened to be doing some flipping on the idiot box Monday night, and AMC appropriately started ‘Vacation’ week with the original 1983 ‘Vacation’, where Clark W. Griswold (Chevy Chase) drives his wife and two kids from Chicago to LA on a mission to get to Wally World.  Now, even though I have seen this movie countless times, I found myself enjoying bits and pieces of it again, and still laughing.  I think the movie, even though somewhat dated, endures the test of time because it strikes a nostalgic chord in a self deprecating way with so many of us.

So where are we going with this one?  Back in January we highlighted Denny’s (NASDAQ – DENN - $6.01) as a great buy with nice valuation, strong technical analysis, and expanding product lines and chains.  We hit a ‘grand slam’ with this one, as it is up almost 20% since, a nice steady climb. 

Denny’s is the classic breakfast stop for vacationers.  With the advent of the summer travels season this is one to keep on the BUY list.  Again, the technical analysis remains very bullish in the short-term, a positive sign that the momentum should continue.  Revenue and EPS growth remain solid as DENN beat on both for 1Q13, with estimates for $0.34 EPS for 2013 and $0.38 EPS for 2014.

Let’s face it, there will be many ‘Clark W Griswold and family’ trips to Denny’s over the next three months. While most experts agree travel will be up from last year, by no means are we in a travel boom and families will be looking for moderate ways to feed the family.  The seasonal revenue should aid the stock in 3Q13 earnings, which The Street will love.

We think the stock can climb to the $7 range by the end of the summer and $8 by the end of the year.

Have a great day.

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

Yesterday in the Goldman Guide, we emphasized that the biotech industry and the current ASCO meeting resulted in the repeated endorsement of small and micro-cap stocks in this space.  Right on cue, Clovis Oncology, Inc. (NASDAQ – CLVS - $74.59) went up from $56.01 at the open of market to $74.59 at the market close.  This is priced out of our range so where do we go?

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.