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A 52-Week High Services Launch, Better Loan Control at a Bank
and Shrinking Losses for a Semiconductor Company
The Conference Board's index of leading economic indicators rose 1% last month after a 0.4 percent gain in August. That is the sixth straight month and a signal the economy will keep growing next year. The economy has shrunk in the last four quarters and the third quarter of 2009 is expected to grow 3%. That didn't inspire the markets. There were mixed at the open, but there are three SmallCap stocks, TMRK, EWBC and MTSN that found support.
A 52-Week High
Gaining 7% this morning is Terremark Worldwide Inc., (TMRK) http://www.terremark.com/ now trading in the $6.98 range. TMRK double its 3-Month average trading balance early in today's session. On trailing twelve month revenues of $260 million, TMRK had a previous high of $6.71 set yesterday. The stock is now making daily gains. But there is still money to be made here.
TMRK jumped to new highs on news that its portfolio of virtualized services was launching a cloud-enabled disaster recovery service. Terremark's Virtualized Disaster Recovery solution provides customers with leading-edge, proven solutions that leverage the company's enterprise-class cloud computing platform to deliver fully secure, pre-provisioned computing and network capacity with advanced data replication and fully managed data center failover.
Here's where the stock has continued growth potential: TMRK's service provides full recovery capabilities in 15 minutes. A company's IT system goes down and in 15 minutes, it's available again. This is a 'BUY' stock to me. TMRK serves approximately 1,100 customers across various sectors, including enterprise, government agencies, systems integrators, network service providers, Internet content and portal companies, and Internet infrastructure companies.
On the heels of the launch, TMRK will hold its Q3 2010 conference call on Monday, November 9, 2009 after the market. The stock will jump again.
TMRK
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Gaining 7% this morning is S&P SmallCap 600 company East West Bancorp., (EWBC) http://www.eastwestbank.com/ now trading in the $8.96 range. EWBC is heavily traded; nearly 2 million shares a day. That's very impressive support for a SmallCap.
EWBC is less than half its 52-week high of $18.40 set on 11-04-08. The investing story here is one of loan management. EWBC had a terrible time during the 'Great Recession' with negative trailing twelve month revenues of -$47.98 million. EWBC is primarily a full service bank, but it has and is involved construction loans. So with yesterday's Q3 2009 news that its exposure was under very successful control by management, the stock jumped. Here are some numbers:
EWBC Q3 09 numbers posted a 25% reduction in land and construction loans with 30-89 loan delinquencies down to 1.01% of its total loans. The Q3 net loss was $68.5 million driven by a $159.2 million provision for loan losses and a $24.2 million impairment loss on investment securities. EWBC not only handed out fewer loans Q2-Q3, management sold $206 million of loans and real estate owned. Good move.
And in another good move, EWBC raised $80.3 million in July on an oversubscribed common stock offering. EWBC strengthened its tangible common equity by $249 million in Q3. EWBC also strengthened its capitalization: its Tier 1 risk-based capital ratio was 13.08%, significantly higher than the well capitalized requirement of 6.00%. With so many strong moves by management, I think this stock will bounce-back in the near-term from $9 to $11.
EWBC MTSN
A small, but significant gain of 3% was made today by Mattson Technology Inc., (MTSN) http://www.mattson.com/ currently trading in the $2.71 range. MTSN is a very heavily traded stock. It has a 52-week high of $4.46 set 10-22-08 and I believe it is positioning itself to surpass that and set a new floor at $5. Its losses are perpetually shrinking and top-line has broad-based potential of increasing its revenues (MTSN has trailing twelve month revenues of $56 million.
Yesterday, MTSN management said the company shrank its quarterly loss to $8.6 million, though sales plummeted from a year ago. The company said its loss of 17 cents per share during the quarter that ended Sept. 27 compared with a loss of $20.7 million, or 42 cents per share, during the same period last year. Revenue fell 62.8 percent to $11.2 million, from $30 million a year earlier. Not counting a tax benefit of 17 cents per share and a restructuring charge of 3 cents per share, the company would have lost 31 cents per share.
President and CEO David L. Dutton said business conditions are improving, and pointed out that revenue was up 38% from the second quarter of this year. "Mattson Technology has not only survived this extremely difficult environment; we have invested in new initiatives at the company that we expect will lead to a market opportunity nearly triple the size of what we had before," he said. Survival and Growing revenues are good signs MTSN is in recovery. This stock is on my 'Watch Closely' list.
If you'd like to know of any changes in our opinion of TMRK, EWBC or MTSN
(or if SCN officially recommends them as trades)
