Are They Too Good to be True: INFN, SBIB, BLDR

Trends, Observations, and Exclusive Opinion

Three SmallCaps Report Q2 Earnings

INFN: Q2 Net Loss Due to Stock Option Compensation

SBIB: Co Returns a Plus Net Income in Q2 of a Penny

BLDR: Positive Co Q2 Positions Construction Material Supplier

First up this morning we have Infinera Corporation (INFN) http://www.infinera.com/ currently trading in the $7 range on a 3-Month average daily trading volume of 929,644 shares. INFN has a 52-week high of $10.10 with current trailing twelve month revenues of $338+ million. INFN is a networking equipment manufacturer and the Co recently posted a smaller net loss for its Q2 compared to last years’ Q2. Stock compensation pretty much knocked the Co into negative territory. Excluding stock compensation expenses, INFN earned 3 cents per share in the latest quarter. However, doling out the shares took its toll with INFN posting a net loss of $9.6 million, or 10 cents per share, compared with a loss of $27.1 million, or 28 cents per share, in the same period a year earlier. That’s a nice turnaround. For the three months ended June 26, the company Revenue rose 62% to $111.4 million from $68.9 million. “The second quarter represents the company's fifth consecutive quarter of improving revenue, our third straight quarter of increasing bookings and our fourth quarter of sequentially improving gross margins," CEO Tom Fallon said. If the stock compensation options are done for a while, INFN would be a short-term (6 Mo) ‘Buy’ consideration for me.   

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Next up this morning we have S&P SmallCap 600 company Sterling Bancshares Inc., (SBIB) http://www.banksterling.com/ currently trading in the $4.89 range. SBIB has a 52-week high of $8.69 set on 08-04-09 with current trailing twelve month revenues of $117+ million. SBIB posted its Q2 earnings this week and surprised a lot of people. It was a net income plus for SBIB of a penny a share while everyone was looking for a nickel loss. The 1 cent gain was a great encouragement to investors compared with a loss of 6 cents a share, a year earlier. "We continue to see incremental improvement in key economic indicators that lead us to believe the worst of the recession is behind us," Chief Executive J. Downey Bridgwater said in a statement. As of December 31, 2009, it served through 58 banking centers in the greater metropolitan areas of Houston, San Antonio, Dallas, and Fort Worth. At nearly $4 off its high SBIB is a ‘Buy on the Dips’ consideration for me.

Finally this morning we have Builders FirstSource Inc., (BLDR) http://www.bldr.com/ currently trading in the $2.47 range on a 3-Month average daily trading volume of 229,506 shares. BLDR has a 52-week high of $8.60 set on 08-27-09 with current trailing twelve month revenues of $679+ million. BLDR is a supplier and manufacturer of structural and related building products for residential new construction in the U.S. BLDR reported its Q2 results yesterday. "Our sales for the second quarter of 2010 were $211.5 million, up 20.5 percent over sales of $175.5 million one year ago," said Floyd Sherman, BLDR CEO. Chad Crow, BLDR Sr. VP and CFO said, "We ended the quarter with approximately $125 million in cash and over $141 million of available liquidity, as we had $16.6 million of net borrowing availability under our revolver.” BLDR had a 12 cent net loss for the quarter, but that was 2 cents below analyst expectations and that brought in new buyers this morning. The BLDR press release is a good read on housing starts across the U.S. As construction returns, slowly but surely, BLDR prefabricated components, including floor trusses, roof trusses, wall panels, stairs, and engineered wood; aluminum and vinyl windows; and pre-hung interior and exterior doors, as well as assembles and distributes interior and exterior door units will be in demand. $6 off its high, BLDR is a long-term (1 Yr) ‘Buy’ consideration for me.  

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