Today's 'Right Stuff' Small Caps: ARNA, KNDI, RBCN

Lots of stocks are up today despite the bearish environment, but all of you know as well as I do.... not all of these bullish names will be up a month from now, or even a week from now. There do seem to be some real standouts from the universe of small cap stocks though - Kandi Technologies Corp. (NASDAQ: KNDI), Rubicon Technology, Inc. (NASDAQ: RBCN), and Arena Pharmaceuticals, Inc. (NASDAQ: ARNA). Here's a closer look at each, and why I think they may be trade-worthy today regardless of what the rest of the market is doing.

If you want proof that this game is just as much about timing as it is spotting value, look no further than Rubicon Technology, Inc. RBCN shares are currently priced at 9.0 times trailing earnings, and 7.5 times forward-looking earnings. And, given the history here, the outlook was more than plausible. The valuation for this semiconductor stock reached ridiculous levels in late May when the stock was around $22. The current $17-ish price is a screaming bargain.

Of course, just because a stock 'should' be worth more doesn't mean it always is straight-away. Fortunately for RBCN owners (current or prospective), the market's mistake is finally being corrected. Translation: It's much easier to buy Rubicon Technology now that's it's clearly on the way up again.

OK, it didn't "stick" yet, but it's worth watching for now. What's that? Arena Pharmaceuticals, Inc.  and its potential cross above the 200-day moving average line. While it can be a little misguided to apply conventional technical analysis to sub-$3.00 small cap stock, there's still the psychological milestone such a move would entail. And for ARNA, that may be the last straw needed.

If ARNA can just make a close above the $1.53 mark, life would get much easier for all interested parties. There's not doubt it's overdue for a little bullishness after a year-long hiatus.

Finally, I find it amazing (read 'annoying') that a company can put out a press release, and that the media outlets can repackage it - and even turn it into a news story - yet none of these groups puts the news into a meaningful context for investors. Case in point --> Kandi Technologies Corp. KNDI shares are up a massive 25% today on what is certain to be good news, but with no clear specifics, the 40% gain could have just as easily been 15% or 132%. What's this small cap worth now, with the new agreement with Hangzhou Electric Vehicle Service Co. in hand?

Well, you can thank me later - I did the research and some math. The twenty thousand electric vehicles slated to be sold by the end of 2012 as part of the co-venture carry a price tag of roughly $6000 each. Assuming a wholesale price of $4500 each (a mere educated guess), Kandi Technologies stands to generate $90 million in sales. Seems like a lot for a small cap stock [market cap of $62 million], which happened to do $43 million in revenues over the past twelve months, clearing a little more than $9 million in profits.

Frankly, the 27% gain may not be doing KNDI shares justice... if you can believe any of the numbers for this Chinese company.