Aug 27, 2010 10:04 AM PDT
News from the Labor Department that first-time claims for jobless benefits declined for the fifth straight week couldn't spark the broad markets today, but four SmallCap stocks soared above normal trading volumes and the high flyers pulled up their sectors.
A generally thinly-traded stock, Linktone Ltd., (LTON) http://www.linktone.com/ is one of those four volume gainers, quadrupling its 3-Month average daily volume. LTON is a wireless entertainment provider in China. In China, content is king. LTON application users get everything from event-driven news updates to; ringtones, screensavers, and advanced Java games. LTON picked up $0.38 of its current $2.37 (18+%) today on news it had reached a mobile video agreement with Major League Baseball (MLB) to make highlights of baseball games available through China National Radio Mobile Media.
Here's the LTON driver: Now with its foot in the door, all U.S. sports now become potential content targets. Beginning in April 2010, the baseball video highlights are expected to be expanded to include regular season games for all 30 MLB Clubs. Can football be far behind? Basketball? There's money to be made here on a $2.37 stock with $68 million in trailing twelve month revenues. The Q2 09 numbers from late August that LTON posted reported a $4 million increase in sequential quarters to $18.3 million and a one cent increase in diluted EPS. Each time LTON adds a sports contributor, the stock will gain value.
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LTON OPTT
Another of today's four high flyers seems to be continually posting 10% daily rallies. Ocean Power Technologies (OPTT) http://www.oceanpowertechnologies.com/ is now in the $7.38 range. I really like this company because of the business it is in and because its position (proven) and market share. It has virtually no revenues (yet) but has, and will, constantly produce news about agreements that will pay off 'big time' in the future. Before the top-line revenues begin; Get In.
OPTT said today it has a new agreement Lockheed Martin to provide Martin's expertise in systems integration, lean manufacturing, and test and optimization analysis to enhance OPTT's innovative PowerBuoy wave power generation technology to utility-scale.
This critical step will allow the two companies to pursue future utility-scale power generation projects in North America. The OPTT PowerBuoy technology uses "smart" buoys, based on integrated patented hydrodynamics, electronics, energy conversion and computer control systems, to capture and convert energy from the natural rising and falling of waves into low-cost, clean electricity.
The generated power is transferred ashore via an underwater power transmission cable. A future 10-Megawatt utility power station comprised of floating PowerBuoy systems would occupy approximately 30 acres (0.125 square kilometers) of ocean space. Such a plant would generate electricity for approximately 4,000 homes. What a great new source of energy.
And here's the 'leader' in the field validation: OPTT now has a range of power generation projects globally, including Oregon and Hawaii, in the U.S., Scotland and Southwest England; Spain; Australia; and OPTT has signed an exclusive agreement with a consortium of three leading Japanese companies to develop a demonstration wave power station near Tokyo, Japan. Get In.
Two Momentum Plays
Independent energy producer Crosstex Energy (XTEX) http://www.crosstexenergy.com/ just keeps gaining and gaining in value and I believe its caused by two factors: 1, a $6.43 stock with $3.81 billion, that's right; billion, in trailing twelve month revenues that produced $1.88 diluted EPS during the 'Great Recession' and reason number 2, XTEX keeps putting its house in order. On October 1, XTEX management said they had completed the sale of its gas treating business for nearly $266 million and will use the money to pay down debt.
Now I now this is a bottom-line approach, but when it begins to develop top-line revenues, the 'foundation' will be secure and won't 'dilute' new sales contracts. Perhaps a third factor is that Goldman, Sachs & Co. served as financial adviser to XTEX on the sale. I believe Goldman is deeply involved in bringing XTEX into top-contender status in the natural gas markets.
I also believe that's why an analyst upgraded the Company's stock to "Outperform" from "Market Perform" in late September and urged risk-tolerant, aggressive investors to buy up the cheaply-priced stock (then at $5 a share). I couldn't agree more even at $6.50.
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XTEX CAMP
CAMP Sets 52-Week High
Also moving on momentum is CalAmp Corp., (CAMP) http://www.calamp.com/ which picked up over 7% today in early trading. Now $3.30, CAMP has virtually no short-sellers (10% of 1%) and the buyers into this stock are either aggregators or new investors.
The last significant news out of CAMP was its Q2 2010 numbers released on October 8 that posted a 4% sequential gain over Q1 revenues and a diluted EPS loss of $0.9.
CAMP is in the wireless datacom and satellite business. In the Q2, management said their focus was increasing capital management that helped generate $2.9 million in cash flow from operations, and they had reduced total debt by $3.6 million to a balance of $14.4 million. I think the hint of Q3 guidance began this current upward momentum swing.
"We expect to see fiscal third quarter consolidated revenues increase significantly on a sequential quarter basis and be in the range of $29 to $32 million..." and "...with the increased demand and strong operating momentum we expect further growth in the fiscal 2010 fourth quarter with consolidated revenues in the $34 to $38 million range." Now if they could bring in some top-line sales, the momentum will continue. This is a "Watch Closely" stock.
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