12/31/2012

Two Nano cap thoughts: 1) Selling at Net Cash 2) Deep Historical Discount/Oversold


Nano cap idea: SPRO (SmartPros Ltd) : They provide educational solutions for accounting/finance , legal, engineering, securities, insurance and information technology.

Why this idea is interesting?  SPRO at $1.25 per share appears oversold based on current valuation and price performance.

52 week return is -31%
Enterprise value is 197,000 or 197k. For the 197k we get 16.03M in TTM revenue, 9.94M in TTM gross profits, 1.728M in current AR.

Market Capitalization is 5.89 million or 1.25 per share. The 1.25 price gives you 1.23 per share in cash, 3.90% dividend yield, 2.31 book value and a 3.396 per share of revenue and 2.105 per share for gross profit. Positive 2012 insider buying, 11.600 shares were purchased in 2012 for an average price of 1.95 for a total of $22,640.
Those are some of the positive metrics but the company continues to be run with little regard for the public shareholders.Insiders own 24% but the SGA has been close to or greater than the gross profit. Q4 2011 was the last reported positive operating income. Gross margins have been declining since the end of 2007. Expenses have not been reduced enough to account for this shift as management waits for improved revenues and product mix to increase the GP for the business.

But having said that the stock price may present an opportunity as insiders own 24% and the exercise price of options are greater than the current market price. A stock price increase of .75 increases to the stock to $2 per share would represent a 60% return from the current price. But I do want to note that management is making most of their income from salaries not the price of the stock.

Capstone Therapeutics Corp. (CAPS) is a simple story. The stock is currently trading at net cash. Current price is .17 or a 7 million market capitalization. Capstone is a biotechnology company with 11,355 in cash or .16 per share and a book value per share of .30.

Nano Cap Idea: Capstone Therapeutics and LipimetiX, LLC, a privately-held biopharmaceutical company have entered into a joint venture to develop a class of drugs targeted for indications related to lowering blood cholesterol levels.
Value investor Lloyd Miller has been recently adding shares. BVF INC.owns 18% of the shares outstanding. 

3 comments:

Chad Henning said...

How's it going I like your blog. I've been doing a stock market blog for a while but I don't think anyone ever sees it lol. Anyways awesome information and thanks for sharing I'm gonna bookmark you

Fred said...

Happy newyear John.
Best wishes for 2013!

Fred

ShadowStock said...

Thanks for the good wishes, John