| | As the economic expansion continues, consumer spending has defied predictions of slowdown in the face of high energy prices and businesses, awash with cash, are beginning to step up capital spending, particularly in new technologies. Globalization, while oft described with dread, has opened up whole new areas of investment opportunity. In this environment one might think that companies with exciting prospects in health care, technology, financial services and energy and other natural resources would be magnets for analyst interest.
Perversely and unfortunately for investors, current Wall Street economics continue to narrow the universe of companies receiving research coverage from brokerage firms just when opportunities are expanding. At Dutton Associates, we provide research coverage on dozens of companies with exciting prospects for growth that, as yet, have not attracted broad research coverage. Within our universe of coverage, we have identified companies where we believe the share valuations are particularly compelling at this time with potential for capital appreciation of over 40% in the next 12 months, and where we believe risk levels may be acceptable for investors that are not comfortable with more speculative situations.
While this page provides brief descriptions of these companies, we recommend investors learn more about them, and the rest of our coverage universe, by browsing our website. Click on any name below to view all our published research on that company.
21st Century Holding Co (Nasdaq: TCHC) is a vertically integrated insurance holding company. Its internal infrastructure controls all aspects of its insurance underwriting, distribution and claims processing. The Company has achieved a history of solid growth in net premiums earned and revenues. 21st Century's excellent loss ratio record was interrupted by the four hurricanes that blew through Florida last August and September, but the Company is expected to rebound and post record earnings for 2005.
American Software Inc. (Nasdaq: AMSWA) is a leader in supply chain management software applications with particular strength in areas dependent on efficient inventory control and distribution. Logility, its 87%-owned subsidiary, has over 1100 clients. The Company has a strong balance sheet with more than $2 per share in cash and investments and no long term debt, and pays a $0.07 quarterly dividend which provides a 4.5% annual yield based on the shares' current market price. We believe that, after relatively flat results in the difficult April 2004 and 2005 fiscal years, the Company can achieve better than 50% earnings growth in fiscal 2006.
Ampex Corporation (OTCBB: AEXCA) has an active, aggressive, and currently successful program of licensing its intellectual property in the areas of rapid image retrieval and display, image data shuffling, feed forward quantization, and high speed image decoding. Existing royalty arrangements include license agreements with Canon, Sanyo and Sony. We believe that Ampex's current and potential patent settlements form the basis for share price appreciation of over 75% in the next 12 months.
Arcadia Resources, Inc. (OTCBB: ACDI) has combines a range of businesses that we believe make it an excellent play on the aging of the U.S. population and increased spending on healthcare. The Company is a significant player in two very attractive sections of the healthcare business: healthcare staffing and durable medical equipment. EBITDA has turned positive and we look for Company to report significant earnings in the March 2006 fiscal year.
DXP Enterprises (NasdaqSC: DXPE) is a distributor of capital equipment and maintenance, repair, operating and production products and services. The Company directly represents over 5,500 manufacturers and maintains an inventory of more than 170,000 items. We believe that the Company's growing integrated supply chain management program and strength in providing innovative pumping solutions to the oil and gas business will be factors as the Company achieves increasingly consistent earnings growth.
Elron Electronic Industries LTD. (Nasdaq: ELRN) Elron Electronic Industries Ltd. Elron represents a unique opportunity for investors seeking exposure to medical device, telecom, and semiconductor technology sectors, as well offers the opportunity to gain exposure to the highly volatile and speculative private equity market in a diversified and simplified manner.
Forgent Networks, Inc. (Nasdaq: FORG) currently generates a majority of its revenues and cash flow from the worldwide licensing of its patent portfolio related to its data-compression technology. Forgent now has license agreements with 38 companies. Since Forgent began its aggressive intellectual property program a little over three years ago, it has generated more than $100 million in royalties and lump sum payments.
I-Sector Corporation (AMEX: ISR) provides Cisco-centric network infrastructure and Internet protocol (IP) telephony solutions including related implementation and support services for enterprises. Revenues rose by 50% and the Company turned profitable in 2004. The March 2005 quarter is expected to be the Company's fourth consecutive quarter of profitability and this year should be another year of solid growth for I-Sector.
Internet Gold-Golden Lines Ltd. (Nasdaq: IGLD) is a leading Israeli Internet services provider with accelerating content revenues. The Company operates one of the most popular Israeli portals, MSN Israel.
Nutrition 21, Inc. (NASDAQ: NXXI), by legitimizing the use of the Company's chromium picolinate (Chromax®) to the scientific community and public by substantiating efficacy, is emulating a strategy that has been successful for compounds such as calcium and Omega III fish oil. Recently Nutrition 21 announced an investment by knowledgeable, institutional investors and favorable results for its clinical trial for Diachrome™ (Chromax and biotin) with regard efficacy in glucose control and hyperlipidemia.
NutraCea (OTCBB: NTRZ) has developed a line of consumer dietary supplement products based on stabilized rice bran, a nutrient-dense food. Its recent merger with a competitor, entry into several promising domestic marketing initiatives, and progress in the development of international food programs give the Company favorable prospects for revenue and earnings growth beginning in 2006.
On Track Innovations Ltd. (Nasdaq: OTIV) should be among the primary beneficiaries of the accelerating switch to contactless microprocessor-based smart card solutions in the banking, merchant, medical and other industries. We believe that OTI has begun to generate revenue from both MasterCard and Amex in the last quarter, which bodes well for the future given the relative immaturity of these programs. Whatever the timing of the US ePassport contract, we do believe that OTI will be among the contract winners given the maturity of the Company's standards-compliant technology and the strong track record.
Panhandle Royalty Company (AMEX: PHX) is a mineral and royalty interest oil and gas company with properties primarily in Oklahoma. We look for continued strong stock market performance for these shares based on continued strength for natural gas prices and the Company's unique structure as a diversified minerals holder. Furthermore, the Company will have a greater working interest in future wells drilled.
Pipeline Data Inc. (OTCBB: PPDA) is a financial services company specializing in providing systems and services for the credit card transaction processing industry. After two years of building itself into a significant player in this field, we believe that the Company now has the management, systems, facilities, and business to enter a stage of impressive growth.
Qiao Xing Universal Telephone (Nasdaq: XING), one of the top two indoor-phone companies in the Peoples' Republic of China, is significantly expanding its mobile-phone business. Net profit is projected to grow at a compound rate of 43% over the 2004-2006 period.
Seabridge Gold Inc. (AMEX: SA) is a North American-focused gold company with a well-thought-out model to provide investors with maximum leverage during a rising gold price environment and an acquisition strategy in a declining one. Seabridge recently received notice that it had been added to the American Stock Exchange (ASE) Gold Mining Index.
TMSF Holdings, Inc. (OTCBB: TMFZ) is a direct mortgage lender that funds residential mortgages throughout the United States. Its main operating unit is The Mortgage Store Financial, Inc. The Company's strategy to concentrate on purchase money mortgages has continued to deliver favorable results with loan originations up 140% vs. the year-earlier period in an environment where national loan originations increased just over 7%.
Touchstone Applied Science Associates, Inc. (OTCBB: TASA) provides educational testing and assessment tools and services to primary and secondary school systems. The Company is a beneficiary of the trend in recent years for school systems to shift away from using proprietary tests for educational assessment toward using custom developed tests.
Trinity Biotech plc (NasdaqNM: TRIB), headquartered in Ireland, develops, acquires, manufactures, and markets diagnostic products for the point-of-care and clinical laboratory segments of the diagnostic market. The broad line of over 500 different tests is used to detect infectious diseases, sexually transmitted diseases, blood coagulation disorders and autoimmune diseases. While Trinity accounts for a very small share of the rather fragmented $25 billion worldwide market for diagnostic reagents, consumables and instrumentation, we believe that this small share should be viewed as an opportunity to grow rapidly from a small base, aided by an aggressive acquisition program. | |
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