Small cap stocks Pulse Network Inc (OTCBB: TPNI), Sterling Consolidated Corp (OTCBB: STCC) and diaDexus, Inc (OTCMKTS: DDXS) have or could start to sizzle for investors. However, I should also mention that two of these stocks have been the subject of paid promotions while a third apparently has not been, and could be the real deal. With that in mind, here is a closer look along with a quick reality check about all three small caps to help you decide whether they are hot or not:
Pulse Network Inc (OTCBB: TPNI) Likes to Mention SAP in Its Press Releases
Small cap Pulse Network provides a cloud-based platform focused on content marketing and event solutions which helps clients ranging from Fortune 500 companies to small and mid-size companies to boost awareness, drive lead generation and enhance client engagement through content marketing, campaign management and event registration with a social and digital backbone. On Friday, Pulse Network fell 2.04% to $0.480 for a market cap of $43.39 million plus TPNI is up 37.1% since last May according to Google Finance.
What’s the Catch With Pulse Network? According to various disclosures, transactions of $500, $1.5k, $2k, $3k, $7.5k, $8k and $15k have or will occur to mention Pulse Network in various investment newsletters. Last Tuesday, Pulse Network announced (in cooperation with enterprise application software giant SAP which the company likes to mention in its press releases), the Customer Edge outpost - a new multimedia resource for “all things related to delivering engaging and profitable customer relationships for marketers, sales professionals and service executives.” A quick look at the Pulse Network’s financials reveals revenues of $934k (most recent reported quarter), $3,757, zero and negative $1,046k for the past four quarters along with net losses of $133k (most recent reported quarter), $1,243k and $5k and net income of $198k. At the end of June, Pulse Network had $14k in cash to cover $2,260k in current liabilities and $3,352k in total liabilities. However, the Pulse Network was created through a reverse acquisitions back in March – meaning the financials don’t mean too much and investors might want to wait for some more to appear.
Sterling Consolidated Corp (OTCBB: STCC) Recently Made an Acquisition
Small cap Sterling Consolidated Corp, through its wholly-owned subsidiary, Sterling Seal and Supply, has been a leading supplier of hydraulic and pneumatic seals to the automotive and industrial marketplace for more than 40 years. On Friday, Sterling Consolidated Corp rose 7.5% to $0.215 for a market cap of $8 million plus STCC is down 14% since last May according to Google Finance.
What’s the Catch With Sterling Consolidated Corp? According to various disclosures, transactions of $250, $500, $2k, $5k, $7.5k and $15k have or will occur to mention Sterling Consolidated Corp in various investment newsletters. Just over a week ago, Sterling Consolidated Corp announced the acquisition of Superior Seals and Service in High Point, NC as the company’s first acquisition as part of its accretive roll-up strategy (there’s also a press release about the company’s acquisition criteria with the long-term goal to create a distribution network that allows Sterling to service the entire US market on a 1-day delivery basis). According to the press release, Sterling Consolidated Corp paid less than 3x EBITDA for the acquisition in a combined stock and cash transaction with the acquisition expected to add $0.4 million in annual sales and approximately $50,000 in EBITDA upon closing. A quick look at Sterling Consolidated Corp’s financials reveals revenues of $1,501k (most recent reported quarter), $1,663k, $1,217k and $5,328k for the past four quarters along with a net loss of $107k (most recent reported quarter), net income of $111k, a net loss of $72k and net income of $64k. At the end of June, Sterling Consolidated Corp had $108k in cash to cover $2,288k in current liabilities and $4,728k in total liabilities. So while the income statement looks pretty good for a small cap OTC stock, the balance sheet will be something investors need to watch as the company makes acquisitions.
diaDexus, Inc (OTCMKTS: DDXS) Awaits Positive Data
Small cap diaDexus, Inc is a medical diagnostics company focused on the development and commercialization of patent-protected in vitro diagnostic products addressing significant unmet needs in cardiovascular disease. On Friday, diaDexus, Inc fell 5.79% to $1.79 for a market cap of $97.03 million plus DDXS is up 426.5% over the past year and up 208.6% over the past five years according to Google Finance.
What’s the Catch With diaDexus, Inc? According to various disclosures, no transactions have occurred for one investment newsletter to mention diaDexus, Inc, but there have been a couple of articles on Seeking Alpha talking up the stock (see: Diadexus, Back To The Future, DiaDexus Awaiting GSK's Darapladib Pivotal Results and DiaDexus: A Hearty Choice). Apparently, diaDexus, Inc or rather some investors in it are awaiting positive data from GlaxoSmithKline's two pivotal trials of its darapladib cardiovascular drug which could provide a huge boost to the utilization of diaDexus, Inc’s PLAC test. That test is being used on patients in the studies to measure their levels of Lp-PLA2 - a biomarker that identifies risk of heart attack and stroke. With that in mind, it should be mentioned that diaDexus, Inc has reported revenues of $6,218k (most recent reported quarter), $5,554k, $5,419k and $5,298k for the past four quarters along with net losses of $446k (most recent reported quarter), $1,170k, $397k and $239k. At the end of June, diaDexus, Inc had $11,970k in cash to cover $4,108k in current liabilities and $11,063k in total liabilities. Those financials looks pretty good and comparable or potentially better than some small cap biotech stocks on major exchanges – meaning diaDexus, Inc is worth investigating further as well as worth watching.