Market Monitor

Good Morning.  Today’s featured stock is Vical, Inc. (NASDAQ – VICL - $3.93).   The Company is a biopharmaceutical firm that develops products based on its DNA delivery technologies for the prevention and treatment of serious or life-threatening diseases.

Vical has a strong pipeline headlined by its Melanoma candidate, Allovectin.  Allovectin is a DNA based immunotherapy designed to stimulate immunization in tumors.  Phase 3 trial results are expected sometime late 2Q13 or early 3Q13.  The growth potential in the melanoma market in the U.S. and EU is huge, potentially increasing to $2.5 billion in the next 10 years, which would be 100% from current levels.  The Allovectin product alone could provide $500 million in sales for Vical.

Instead of calling this a down day in the market, we will focus on a communications stock. Today’s featured stock is Vonage Holdings Corporation (NASDAQ – VG - $3.00).  I am sure everyone has seen the somewhat obnoxious commercials, which is no doubt an advertising strategy to ensure that consumers remember Vonage.  Nevertheless, the company is a world leader in providing communications through cloud connected devices with nearly 2.5 million subscribers. 

You would think after all of this time I would learn to never say "never." Still, like many, I "never" seem to learn from my mistakes. For example, I thought I would never have a favorable attitude about Rite Aid Corp. (NYSE – RAD - $2.12.) Until now.

Back in the early part of the 1990’s Rite Aid was a darling on Wall Street, with its CEO admired and respected by analysts and institutional investors alike. Martin Grass, the CEO and son of the Company’s founder lived not far from me in Baltimore and sat on a number of panels together in the area regarding investing and philanthropy.

Although I never kissed the ring I always was cordial toward Mr. Grass even though there was something cocky about him and some of the other leadership that I could not put my finger on. As a result, I never bought the stock, nor recommended it. About 2 years after he incurred the wrath of his neighbors with his twice a day commute to the Company’s headquarters via helicopter, he incurred the wrath of the U.S. Attorney’s office, the SEC, and other regulators.

A major accounting scandal forced bankruptcy which was just the beginning of its troubles. Later, Rite Aid agreed to pay $7 million to settle allegations that the company had submitted false prescription claims to United States government health insurance programs. There were other claims and charges, fits and starts, acquisitions of other chains, and no annual profitability for many years with the exception of 2007.

Now you see why I felt this was just one stock to avoid for all time.  After following its moves over the past few quarters and seeing the financials release and huge volume yesterday, my sentiment has changed dramatically. In our view, all of the bad news and history is reflected in the stock and it appears as if management has enabled it to turn the corner.  Moreover, the future appears bright.

Rite Aid, the nation’s third-largest drugstore chain recorded its first annual profit since 2007, and reported its second straight quarter of profitability, which leads us to believe that this is not a one-time event. For 4Q13, revenue was $6.45 billion with EPS of $0.13, versus the $6.44B and break-even results expected by the Street. As a result, the stock jumped 20% on five times the average daily volume and achieved a new 52-week high.

For the full fiscal year, the Company earned $107.5 million, or earnings per share of $0.12 cents, on $25.39 billion in revenue. For fiscal 2014, management now forecasts net income to range between $0.04 cents and $0.20 cents per share, on $24.9 billion to $25.3 billion in revenue.  The Street’s consensus is $0.03.

The EPS forecast range is wide given that a good deal of the income generation is based upon profits from the sale of generic drugs which, while they carry lower price tags than branded drugs, enable higher profitability. At current levels, the stock trades at roughly 11x the high end of the EPS guidance for next year and under the $2 billion market level.

Now that the Company has proven it has turned the corner in consecutive quarters and just blew away the Q4 EPS estimates, we believe that the stock will continue to be in play. If the trends continue, we would not be surprised to see this RAD stock reach the $3.00 level.

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

Today’s featured stock is NetSol Technologies, Inc. (NASDAQ – NTWK - $13.53).  While NTWK is up an astounding 120% since early January, there is room for the stock to move higher as the short term analysis shows there is still room for another pop.  The EMA and Fibonacci analyses also both indicate very bullish signals in the short term.

NetSol Technologies is a unique global IT firm that provide solutions that include credit and finance portfolio management systems, SAP consulting and services, custom development, systems integration, and technical services for the global Financial, Leasing, Insurance, Energy, and Technology markets.  The company’s flagship product, NetSol Financial Suite (NFS) is a comprehensive finance and leasing tool used by automobile sales network.  NetSol has several other offerings that support leasing, credit checking, underwriting, and funding.  NetSol's product and services offerings have achieved ISO 9001, ISO 20000, ISO 27001, and SEI (Software Engineering Institute) CMMI (Capability Maturity Model) Maturity Level 5 assessments, a distinction shared by only 178 companies worldwide.

Revenue for the June fiscal 2013 is expected to be somewhere in the $46 to $49 million range with EPS around $0.96, up from $0.39 last year. Revenue and EPS are expected to climb to $57M and $1.15, respectively for FY14.

With great financials, a reasonable valuation, and a slew of new orders of late, we think a price target of $16.00 in this quarter is achievable as the Company continues to expand its customer base and improve efficiency.

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

Good Morning.  No matter what your opinion on global warming and whether or not there is a man-made global crisis, there is money to be made in the renewable energy sector.

Today’s featured stock is Renewable Energy Group (NASDAQ – REGI - $9.27).  The stock is up over 40% on an average of 300,000 shares traded per day over the last three months.  The chart analysis, particularly EMA, remains very bullish in the short term.

Renewable Energy is a biodiesel producer.  The Company acquires feedstock and produces fuel.  The various feed stocks include inedible corn oil, used cooking oil, and inedible animal fat; and from virgin vegetable oils, such as soybean oil or canola oil.  It is also involved in the purchase and resale of biodiesel and raw material feed stocks acquired from third parties; and sale of glycerin, free fatty acids, and other co-products of the biodiesel production process.  Finally, the company offers various operational services to biodiesel production facilities and other clean-tech firms, and construction and general contractor services for biodiesel production plants.

REGI reported a profitable 4Q12 due to several growth initiatives and improving margins.  Additionally, the retroactive reinstatement of Blenders Tax Credit by the US government resulted in a net benefit of $58 million to REGI.  The Blenders Tax Credit, officially known as the Volumetric Ethanol Excise Tax Credit is a credit of $0.45 for every gallon of pure ethanol blended into gasoline.

We think these factors point to price target $12.00 by July 1.

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

Good Morning.  Congratulations to the NCAA champion Louisville Cardinals.  It was a great tournament.  It’s a great time to be a U of L fan, with a Sugar Bowl victory over Florida in early January, and an NCAA Men’s basketball championship.  The women’s basketball team plays for the NCAA championship tonight.

Today’s featured stock is Omega Protein Corporation (NYSE – OME - $10.67).  While over $10, it has a market cap of only $212 million, well within the micro-cap space.  Omega is a nutritional ingredient company that produces Omega-3 fish oil and fish meal products.  The Animal Nutrition segment produces animal nutrition products for animal feed, refined fish oil products, dietary supplements, and fish solubles for livestock feed manufacturers and aquaculture feed manufacturers, as well as for use as an organic fertilizer.  The Human Nutrition segment provides compound products, including Omega-3 fish oils; and operates as an ingredient.

OME is up nearly $4 to current levels since the start of the year.  The charts are awesome for the continuation of this great ride, and very bullish in short term analysis.  The Human Nutrition segment business, the fastest growing segment of the company, increased revenues by 44% in 2012 to $23 million.  Company management believes the high growth rate in this segment will continue in 2013.  Additionally, Omega continues to grow organically and through acquisition.   In late February the company bought Wisconsin Specialty Protein, a company that produces a variety of value-added protein ingredients for the food and nutritional supplement industries, including organic and other specialty protein products.

Omega has accounted for a $7.7 million payoff over previous quarters in a settlement with the U.S. government.  This should clear the way to EPS profitability and a short term target of $13.

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

Good Morning.  Hope everyone enjoyed the awesome weather we had in the East over the weekend, finally!  The big national title game tonight features Michigan vs. Louisville, and promises to be a good one.  As an Ohio State alum, I am glad to see the Wolverines made a good showing for the Big Ten by making it to the final, but it ends there.  Go Cardinals!

Earnings season for 1Q13 is upon us.  The fed continues to pump cheap money.  These two factors suit our goal here in the daily Market Monitor as we should see some nice pops in some of our previous and upcoming picks.

Today we will revisit one of our picks from 1Q13.  Back on February 26^th we looked at Astex Pharmaceuticals (NASDAQ – ASTX - $5.39) at a price of $3.01.  The stock is up nearly 80% since then and even went from $5.12 to $5.50 in after-hours trading on Friday, even during a massive sell-off day with disappointing job numbers yet again.  There seems to be no end in sight to the run as the short-term analysis remains very favorable and very bullish.

Astex is slightly different from most of the bio-tech companies in the small cap space in that they are profitable, primarily from their drug that targets treatment of myelodysplastic syndrome and acute myeloid leukemia, Dacogen.  The company is continuing its new Dacogen ‘upgrade’, SG-110, to be used in treatment for myelodysplastic syndromes, acute myeloid leukemia, advanced hepatocellular carcinoma, and platinum-resistant ovarian cancer.  Early results are positive for SG-110.  Additionally Astex is developing an HSP90 inhibitor, AT13387 to be used in treatment for refractory gastrointestinal stromal tumors, castration resistant prostate cancer, and ALK+ lung cancer.  AT13387 is currently in Phase II.

RBC Capital was one of the Wall Street firms that initiated coverage of ASTX last week setting a long term price target of $9.00.  We think the $7.00 level is more in line with our goals of a short-term pop, and could occur in 2Q13.

Have a great day!

Aaron Schweitzer

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

Good Morning.  When most portfolio managers talk about being ‘defensive’ they are referring to buying gold or some other commodity to temper the affect inflation on your stock investments.  In our case today, we are talking about playing defense within the confines of small cap stocks that have exposure to the U.S. Defense Department.

Tensions are high and troops in Asia are on alert with yesterday’s news emanating from North Korea that its Army had received ‘authorization’ to attack the U.S..  Before you go into hysterics, realize that this dialogue has been fairly consistent from both Kim Jong-Il and his son Kim Jong-Un in between shooting 38 under par and hanging out with America’s favorite weirdo, Dennis Rodman, respectively.  Add in the constant idiocy from Iran’s Ahmadinejad, and one could make a serious case for arguing the validity and existence of Napoleonic Complex.  But I digress…

In response, the defense sector has rallied.  For example, Northrop Grumman (NYSE – NOC) is up 9% in the last month and General Dynamics (NYSE – GD) up almost 6% in the since early February.  These stocks are obviously out of our typical market cap range, but we have uncovered a nice play in our space.

Innovative Solutions and Support, Inc. (NASDAQ – ISSC - $5.44) is a stock that first off, jumps out at us from a technical perspective with very bullish indicators for the short term in almost every form of analysis, and secondly has had solid momentum since the start of 2013, up over 50%. 

Innovative Solutions has a customer base comprised of the primarily US Department of Defense and commercial contractors, aircraft operators, aircraft modification centers, foreign militaries, various original equipment manufacturers, government agencies, defense contractors, commercial air transport carriers, and corporate/general aviation markets.  The company manufactures and markets flat panel displays for aircraft use, air data systems, altitude alert systems, and engine and fuel cockpit displays.  The company just celebrated its 25^th anniversary and continues to innovate in its existing product line and expand its service offerings.

We think the momentum continues and the stock reaches $6.00 sometime this quarter.

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

Welcome to Biotech Wednesday.

Yesterday, Novavax, Inc. (NASDAQ – NVAX - $2.35) reported favorable Phase 2 trial results for its respiratory syncytial virus (RSV) vaccine candidate in women of childbearing age.  (http://finance.yahoo.com/news/novavax-reports-positive-top-line-200500539.html)

The trial accomplished the trial's protocol-specified objectives and supports progression to the next stage of advanced clinical testing.  The treatment will allow vaccinated women to naturally transfer immunization to their infants in utero, and will protect the infant during the extremely vulnerable time during exposure to severe respiratory disease due to RSV.

Novavax’s technology platform is based on proprietary recombinant vaccine technology that includes virus-like particles (VLPs) and recombinant protein micelle vaccines.  Its vaccine candidates target seasonal influenza, pandemic (H5N1) influenza, and respiratory syncytial virus (RSV). The company, through its joint venture, CPL Biologics Private Limited, engages in developing seasonal and pandemic influenza, and rabies vaccine candidates.  The company has a licensing agreement with LG Life Sciences, Ltd. to use the VLP technology to develop and sell the influenza vaccines in South Korea and other countries; and a clinical development agreement with PATH Vaccine Solutions to develop RSV vaccine candidate.

The company expects revenue growth to increase to 25% over the next two years.  Additionally, it has over $40 million in cash.  These two factors combined with the fact that developmentally, the wind is at its back, make NVAX an attractive buy in this space.

We like the $4.00 sometime this quarter.

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.

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There was some selling in the market yesterday as 2Q13 began, and buying has returned today.  Since this is a semi- upward day, we will take a look at a new stock in one of our favorite small cap sectors, semiconductors.

RF Micro Devices, Inc. (NASDAQ – RFMD - $5.19) is up 18% since the start of 2013 trading on heavy average daily volume of about 6 million shares per day.  The stock is undergoing some serious accumulation, and the chart analysis remains very bullish, particularly our favorites EMA and MACD.

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 Micro Devices recent ‘big deals’ include becoming a component supplier for the iPhone 5 and the Samsung Galaxy S4, which should aid in revenue growth this year.  More important, EPS for the March 2014 year is expected to double from FY13.

All these factors considered, we think the stock can reach $7.00 sometime this quarter.

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