The Good, the Bad and the Active Stocks for Friday: PNS, FFHL, BRLI, AVT

On Friday, Pinnacle Data Systems (AMEX: PNS), Fuwei Films (NASDAQ: FFHL) and Bio-Reference Laboratories (NASDAQ: BRLI) presented investors and traders alike with opportunities for profits and losses – both at the end of last week and for heading into the new week. Specifically, Pinnacle Data Systems was acquired by Avnet (NYSE: AVT) while Fuwei Films sank after reporting earnings. Finally, Bio-Reference Laboratories announced a stock buyback program and saw unusually high trading volume as it sank 24.34% – which might be hard to understand unless you know the history of the company. Hence, should you be investing or trading Pinnacle Data Systems, Fuwei Films and Bio-Reference Laboratories? Here is a closer look at all three to help you decide:

The Good: Pinnacle Data Systems (AMEX: PNS)

Pinnacle Data Systems is a global provider of services and products for original equipment manufacturers (OEMs) of computer hardware products along with products that contain computer hardware. On Thursday, Avnet (NYSE: AVT), an industrial distributor of electronic components, announced that it would acquire Pinnacle Data Systems for $2.40 a share or $22 million in cash (the deal is expected to close in 60 to 90 days). Hence and on Friday, Pinnacle Data Systems rose 105.22% to $2.36 (PNS has a 52 week trading range of $1.08 to $3.45 a share) for a market cap of $18.6 million. Meanwhile, Avnet rose 4.12% to $30.84 - mid way between its 52 week trading range of $23.69 to $38.00. Avnet also announced last week that it would buy DE2 SAS, a France-based distributor of embedded systems, in order to build up its embedded business unit in the Europe, Middle East and Africa region. Hence, investors might want to take a closer look at Avnet.

The Bad: Fuwei Films (NASDAQ: FFHL)

Fuwei Films is a Chinese company that develops, manufactures and distributes plastic film. This plastic film is widely used to package food, medicine, cosmetics, tobacco and alcohol plus its used in the imaging, electronics and magnetic products industries. On Friday, Fuwei Films fell 23.17% to $1.99 (FFHL has a 52 week trading range of $1.66 to $6.55 a share) for a market cap of $26 million. On Thursday after the market closed, Fuwei Films announced that 3Q2011 revenues were RMB 117.0 million or US$18.3 million verses RMB 129.2 million for the same period last year while its net loss came in at RMB 4.9 million or US$0.8 million verses RMB 15.0 million for 3Q2010. While the smaller net loss may seem like an improvement, Fuwei Films’ Chairman and CEO noted that the sales price of their film products in the Chinese market continues to fall due to more supply than demand. In other words, Fuwei Films is facing ruthless Chinese competition that will probably see the stock sink further – especially if it ends up in the crosshairs of a short seller with a keyboard.

The Active: Bio-Reference Laboratories (NASDAQ: BRLI)

Bio-Reference Laboratories provides laboratory testing services to customers in the greater New York metropolitan area as well as to customers in other states. On Friday, Bio-Reference Laboratories sank 24.34% to $12.31 (BRLI has a 52 week trading range of $11.41 to $25.99 a share) on a very high trading volume of 8.5 million shares verses an average daily trading volume of 620,733 shares. Bio-Reference Laboratories sank despite the announcement of a stock repurchase program authorizing the repurchase of up to 1,000,000 shares in the over-the-counter (OTC) market at prevailing market prices through October 31, 2012. On the surface, this may seem odd – unless you know the history of Bio-Reference Laboratories – which a May article in Barron’s Magazine went into considerable detail about. Specifically, it was noted that Bio-Reference Laboratories has had a string of business relationships with a “remarkable succession of financial bogeymen” during its first 15 years or so years of operation. These bogeymen included Paul T. Russo, a Genovese crime family-associated broker; John T. Moran, a convicted stock swindler whose firm inspired the movie Boiler Room; and Steven Hoffenberg, who was responsible for one of the largest Ponzi schemes of the 1990s. With former friends like these, its remarkable that Bio-Reference Laboratories is still trading at the $12 level and makes you want to consider less riskier Chinese stocks!

The Bottom Line. Pinnacle Data Systems acquisition by Avnet should put the later on the radar of investors while Fuwei Films and Bio-Reference Laboratories probably belong on the radar of traders and short-sellers rather than investors.