Google Acquisition of Motorola Mobility Could Be Start of Takeover Season

One takeover begets another. That’s our thinking following the announcement May 22 that Google had officially completed its $12.5 billion acquisition of Motorola’s phone business, called Motorola Mobility. Whenever there is a big takeover like this, a jolt rumbles through the rest of the niche as investors look around for other takeover targets.  

Graphic courtesy of topnews.in

This niche would be telecom, which Motley Fool agrees is in an all-out acquisition mode now because of  the “spectrum crunch” (http://beta.fool.com/liveinvestor/2012/05/22/sprint-says-time-isnt-ripe-merger/4730/?source=eogyholnk0000001).

Here are a few randomly chosen small cap companies that operate in the telecom space:

Bellevue, WA-based Clearwire Corp. (Nasdaq: CLWR, http://www.clearwire.com), a subsidiary of Sprint Holding Co., provides fourth generation wireless broadband services across the U.S. While it’s a company remembered for having one of the worst post IPO first weeks (it lost 17 percent of its market value) it remains a very high-profile stock. For whatever reason, CLWR has been experiencing a selloff throughout May without any real news from management (http://seekingalpha.com/article/595911-investigating-the-may-sell-off-in-clearwire-who-or-what-is-responsible?source=yahoo). CLWR was finally up 10 cents to $1.30 on May 22 with a staggering 48 million-plus shares traded, followed by another 10 million shares traded on May 23, closing down 8 cents at $1.22. Its 52-week range is $1.00-$4.77 and market cap is $640 million. It’s certainly a stock that many people are following.

Another high-profile stock is San Diego-based Leap Wireless International (Nasdaq: LEAP, http://www.leapwireless.com), which provides digital wireless services under the Cricket brand name. The talk has focused on how Leap could be the target of an AT&T takeover, although it’s all rumor at the moment. LEAP is trading near the bottom of its 52-week range of $4.68-$17.66 and market cap is $430 million. LEAP closed on May 23 at $5.47, up 4 cents on the day.

Oslo-based Opera Software (http://www.opera.com) is a maker of free browsers for computers, mobile phones and devices and earned international headlines when its Opera Mini Browser was chosen by Apple to be the only non-Apple browser to be used on the iPhone, which means there are millions of users all over the world. Opera Software trades as OPERA.OL on the Oslo exchange, and also trades in London and Frankfurt. Its ADR listing on the OTCQX market in the U.S. is OPESY.PK. It closed May 23 at $12.57, with no change on the day.

One very small company is Plano, TX-based ViewCast (or ViewCast.com) Inc. * (OTCBB: VCST.OB, http://www/viewcast.com). ViewCast develops hardware and software for the capture, management, transformation and delivery of digital media over IP and mobile networks. New CEO John Hammock has announced his intention to target the telcom space, as well as cable and other international markets. The stock has declined in recent months and closed May 23 at $0.14, down 1 cent for the day. Its 52-week range is $0.08-$0.39. Its market cap is $8.7 million.

Bellevue, WA-based Telanetix Inc. (OTCBB: TNIX.OB, http://www.telanetix.com) is an IP communications service company offering business customers an alternative to phone service and a wider range of support options than traditional telecom providers. Its services include hosted IP voice and conferencing products to text and collaboration products. Like ViewCast, TNIX is very small with a market cap of about $7 million. It’s also thinly traded with an average daily volume of about 1,000 shares. Its 52-week range is $0.04-$5.25.

Plano, TX-based Interphase Corp. (Nasdaq: INPH, http://www.interphase.com) sells broadband communications products to telecom equipment manufacturers for telecommunications and networking infrastructure solutions, among other things. Its stock has been on a slow but steady rise for the past few months, and has a 52-week range of $3.27-$7.39. Its market cap is $32 million. INPH closed May 23 at $4.69, down 3 cents on the day.

* Denotes client of Allen & Caron, publisher of this blog

Solar Stock Winners Hard to Find following Tariff News on Chinese Solar Panels

For the U.S.-based solar power industry, the news on May 17 was what many panel manufacturers had been looking for: the U.S. Commerce Department announced it was slapping a high tariff on solar panels from China (http://www.nytimes.com/2012/05/18/business/energy-environment/us-slaps-tariffs-on-chinese-solar-panels.html?ref=business).

While it was certain to “infuriate” Chinese officials, according to the New York Times, just how good the news was for the industry was hard to tell. More importantly for our blog, what does this decision to impose antidumping tariffs of more than 31 percent on solar panels from China mean for solar stocks? Based on the early reactions of the stock market and the fact that the overall market has been hit so hard in recent days, the results are difficult to read.

First, however, some of the fine print. This is a preliminary decision , not set in stone, and it won’t actually go into effect until October, if at all. There is some talk that it would be retroactive to February 2012, however.

Second, solar panel manufacturers based in Taiwan, like AU Optronics Corp., which has become a big player in the thin film solar panel business, won’t be affected. Third, some of the Chinese manufacturers like Trina Solar (which has moved its manufacturing outside of China and won’t be affected) and Yingli announced that their retail prices would not be affected by the tariff. So it will be interesting to watch what the Commerce Department actually does, what it all actually means and how the market reacts.

In the meantime, here are how some randomly chosen solar stocks closed on Friday, May 18, a day after the news broke. If there were real winners, like U.S.-based First Solar and SunPower, it was hard to tell by stock price.  Most of the China-based companies took an initial hit, but then stabilized.

Tempe, AZ-based First Solar (Nasdaq: FSLR, http://www.firstsolar.com), which specializes in thin-film solar modules, continues a drastic slide that began a year ago. Many insiders say their costs are  just too high and margins too low to stop the decline. FSLR, which traded as high as $142 last summer, has fallen all the way down to small cap territory. It closed May 18 at $13.66, down $1.26 for the day. It’s market cap is only $1.2 billion.

Ontario, Canada-based Canadian Solar (Nasdaq: CSIQ, http://www.canadian-solar.com ), which sells a variety of solar products, has seen its stock price stabilize since December. Last summer CSIQ traded for over $12 but by late August it had dropped to about $6.75. It closed May 18 at $2.70, down 25 cents on the day. Market cap is now $117 million.

San Jose, CA-based SunPower Corp. (Nasdaq: SPWR, http://www.sunpowercorp.com) makes a wide variety of solar products and systems. Like the rest of the industry, SPWR stock is now trading near the bottom of its 52-week range ($4.94-$23.36) and its market cap has dropped to $601 million. SPWR closed May 18 at $5.08, down 51 cents on the day.

China-based Suntech Power Holdings (NYSE: STP, http://www.suntech-power.com/), makes photovoltaic products and provides construction services. STP stock tanked on the news, tried to rally back briefly early in the day May 18, but ultimately closed at $2.00, down 13 cents on the day.

China-based LDK Solar Co. (NYSE: LDK, http://www.ldksolar.com/)) manufactures solar products and silicon materials. LDK, which was trading for nearly $5 in late December, closed May 18 at $2.85, down 6 cents on the day. Its 52-week range is $2.54-$7.90 and its market cap is $373 million.

China-based Trina Solar Ltd. (NYSE: TSL, http://www.trinasolar.com/)) designs, manufactures and sells photovoltaic modules worldwide. It has a chart similar to many of the other solar stocks, which reached highs last summer but have been sliding for the most part since. It closed last Aug. 31 at $15.88 and by Dec. 23 it had dropped to $7.39. It closed May 18 at $5.70, down 38 cents on the day. Market cap is now $464 million.

China-based Yingli Green Energy Holding Co. (NYSE: YGE, http://www.yinglisolar.com) makes photovoltaic products including cells, modules and systems. YGE’s 52-week range of $2.75-$9.85 and its market cap is now $396 million. Like most of the other solar stocks, its best days were last summer. It closed May 18 at $2.52, down 28 cents on the day.

Looking for Silver Linings in Small Cap Energy Storage/Electric Power Market

All of us at Smallcapworld are optimists at heart, so when it’s time to write about battery companies, we look for the good story lines. It’s a “glass half full” philosophy.

PbC batteries courtesy Axion Power International

For that reason we are temporarily ignoring lithium ion battery maker A123 Systems (Nasdaq: AONE), which on May 11 posted a first quarter net loss of $125 million, more than twice the loss it reported in  the fourth quarter of 2011 and the first quarter a year ago. Quality problems and a slack demand for electrical cars are mostly the blame, according to press statements.

Perhaps we can put another lithium ion technology company, Valence Technology (Nasdaq: VLNC), in the same category, being that it is trading at the very bottom of its 52-week range (67 cents as of May 14 with upper end of range $1.34) for many of the same reasons as A123. As optimists, however, we might argue that these low valuations (A123 closed May 14 at 91 cents and was as high as $6.20 last June) may be good bargains. We shall see. If you want to know more about VLNC, listen to the company results conference call May 23 at www.valence.com).

So where are some silver linings in the small cap energy storage/battery market? Here are a few randomly chosen companies where you might find some hope:

San Diego-based Maxwell Technologies (Nasdaq: MXWL, http://www.maxwell.com) makes ultracapacitors and high voltage capacitors that provide energy storage and power delivery solutions for applications in many industries including transportation, automotive, information technology, renewable energy and industrial electronics. It also makes microelectronic products for satellites and spacecraft. While management reduced sales growth guidance durings its earnings call May 9, four insiders bought 48,000 shares at prices between $9 and $10.20, suggesting perhaps that they thought it was a good buy, according to Renewableenergyworld.com.  (http://www.renewableenergyworld.com/rea/news/article/2012/05/maxwell-technologies-mxwl-buy-or-steal). Market cap is about $233 million, 52-week range is $8.62-$21.49. MXWL closed May 15 at $8.26, up 21 cents for the day.

Reading, PA-based EnerSys (NYSE: ENS, http://www.enersysinc.com) is a little big for our blog (market cap is $1.52 billion) but we’re looking everywhere for some good news. We found it at Motley Fool (http://www.fool.com/investing/general/2012/04/10/1-reason-to-expect-big-things-from-enersys.aspx) which apparently believes that ENS inventory levels indicate the company may see increased demand on the horizon. ENS makes industrial batteries, battery accessories, chargers and power equipment. Its 52-week trading range is $17.35-$36.51. Daily trading volume is about 390,000 shares a day. It closed May 15 at $31.44, down 32 cents on the day.

Newark, NY-based Ultralife Corp. (Nasadaq: ULBI, http://www.ultralifecorp.com) operates in three segments: Battery and Energy Products, Communications Systems, and Energy Services. It makes a lithium 9-volt battery as well as various other rechargeable and non-rechargeable batteries. Management confirmed its previous guidance of year-over-year revenue growth “approaching double digits,” according to Reuters. ULBI has a market cap of about $74 million and its 52-week trading range is $3.88-$5.50. It closed trading May 15 at $4.16, down 30 cents for the day.

New Castle, PA-based Axion Power International * (OTCBB: AXPW.OB, http://www.axionpower.com/) manufactures high-performance, low-cost lead-carbon (PbC(R)) batteries for a variety of markets, including for “mild” and “micro” hybrid vehicles, which are anticipated to be the commonest form of hybrid in the US within a couple of years (and already the most common in Europe). Its PbC batteries are as easy to manufacture as the older lead-acid batteries, but they use activated carbon instead of half the lead.  They are lighter and 100% recyclable (unlike lithium ion batteries), and have a higher charge acceptance and faster recharging rates, making them ideal for the growing  micro-hybrid and mild hybrid markets.  AXPW announced in April that Norfolk Southern had placed an initial order for the company’s PbC batteries for a battery-powered locomotive. AXPW has a market cap of $46 million and a 52-week trading range of $0.25-$0.84. It closed May 15 at $0.38, down 4 cents for the day.

Danbury, CT-based FuelCell Energy Inc. (Nasdaq: FCEL, http://www.fuelcellenergy.com) makes high temperature fuel cells for clean electric power generation. FCEL sells its products to electric utilities, independent power producers, universities, waste treatment facilities and other customers. The company has posted three consecutive quarters with “positive gross margins, revenue that beat expectation and a strong backlog, according to Seeking Alpha (http://seekingalpha.com/article/546321-fuelcell-energy-strong-quarter-and-a-shot-at-fuel-cell-profitability?source=yahoo). FCEL has a market cap of $151 million and a 52-week trading range of $0.80-$1.97. It closed May 15 at $1.09, up 5 cents for the day.

* Denotes client of Allen & Caron Inc., publisher of this blog

Are You Ready for the New Genomics ‘Bubble?’

Are you ready for another bubble? Not a real estate bubble, how about a “genomics bubble?”

Graphic courtesy of Pennington Biomedical Research Center

Yes, thanks in part to the much lower cost of genome sequencing, a crowded field of health care companies is vying to take advantage of the recent significant advances in molecular analysis. The cost of genome sequencing, a hefty $300 million only 10 years ago, is now on its way down. Way, way down. A recent Motley Fool article suggested it will be less than $1,000 by the end of 2012 and it’s now “time to start buying into the next bubble” (http://www.fool.com/investing/high-growth/2012/04/13/its-time-to-start-buying-into-the-next-bubble.aspx).

The article suggests that “automating medical processes with computing power is within reach of many presently mature software companies.” An industry group called The Personalized Medicine Coalition, which is dedicated to promoting molecular analysis, indicates that prominent treatments and diagnostics in its field have grown from 13 to 72 products in six years, according to the Motley Fool article.

Of course, for bubble building, it’s always good to see a big acquisition to get the buzz flowing. In April, Bedford, MA-based Hologic (Nasdaq: HOLX) purchased San Diego-based Gen-Probe (Nasdaq: GPRO), a diagnostic test maker,  for $3.72 billion.  And FiveStarEquities also primed the pump with an announcement May 9 that the biotech industry has become a “hotbed” of merger and acquistion activity due in part to the fact that many large pharmaceuticals are facing major patent expirations in 2012 (http://finance.yahoo.com/news/biotech-industry-hotbed-merger-acquisition-122000039.html).

But these are relatively large companies (market caps $4.51 billion and $3.66 billion, respectively), compared to our small cap focus.

Genomics is an industry with a wide variety of notable companies. Here are a few, selected at random.

Carlsbad, CA-based GenMark (Nasdaq: GNMK, http://www.genmarkdx.com) is a molecular diagnostics company that develops the testing equipment used by labs for the detection and measurement of DNA and RNA targets in patient treatments. Its eSensor detection technology enables the detection of up to 72 distinct biomarkers in a single patient sample, Its XT8 System has been cleared by the FDA and is designed to support a range of molecular diagnostic tests with a workstation and disposable test cartridges. GNMK has a 52-week trading range of $3.63-$6.95 and a market cap of $106 million. It closed May 11 at $4.95, down 4 cents for the day.

Menlo Park-based Pacific Biosciences of California (Nasdaq: PACB, http://www.pacificbiosciences.com) has developed an integrated platform for genetic analysis. The company is focusing on the DNA sequencing market and has created what it  calls its single molecule, real-time (SMRT) technology to record individual biochemical events as they occur. PACB is still in the development stage (it reported revenue of $10 million for the first quarter of 2012 and a net loss of $27.4 million) and its market cap is $146.3 million. It’s 52-week range is $2.25-$12.38. The stock closed May 11 at $2.52, down 13 cents for the day.

San Diego-based Sequenom (Nasdaq: SQNM, http://www.sequenom.com) made headlines in recent months with the announcement of its fetal Down Syndrome test. SQNM operates in two segments: molecular diagnostics and genetic analysis. The company is focused on translating the results of genomic science into solutions for biochemical research and other areas. SQNM trades actively (a daily average of 3,641,360) and a year ago the stock was trading for more than $8.70 (its 52-week range is $3.52-$8.71) but has been declining since. The market cap as of May 11 was $593 million. SQNM closed May 11 at $5.18, down 7 cents on the day.

Mountain View, CA-based Complete Genomics (Nasdaq: GNOM, http://www.completegenomics.com) is a life sciences company that has developed a DNA sequencing platform for human genome sequencing and analysis. Its genomic analysis platform provides its customers (academic and government research centers, biopharmaceutical companies, healthcare providers) with data to be used for genome-based research. The 52-week range for trading of GNOM stock is $2-$18.55 (the high was about a year ago) and its market cap is about $70 million. It closed May 11 at $1.98, down 7 cents for the day.

Irvine, CA-based CombiMatrix Corp. * (Nasdaq: CBMX, http://www.combimatrix.com/ operates mainly in molecular diagnostics and genetic analysis with a specialty in pre-natal chromosomal microarray testing. Combimatrix focuses its efforts on the developmental (pediatric) and pre-natal markets and is the only independent public company specializing in genomic arrays.  CombiMatrix has posted annual growth rates in excess of 35% for the past three quarters. Its 52-week range is $0.76-$4. It closed May 11 at $1.01, up 1 cent on the day.

Los Angeles-based Response Genetics (Nasdaq: RGDX, http://www.responsegenetics.com) develops and sells clinical diagnostic tests and pharmacogenomic tests used in the treatment of cancer. It offers tests for non-small cell lung cancer, colorectal cancer and gastric and gastroesophageal cancer. The company also develops tests for other types of cancer that identify genetic profiles of tumors that recur after surgery. RGDX has a 52-week trading range of $0.81-$3.05 and market cap is about $40 million. The stock closed May 11 at $1.50, down 11 cents on the day.

* Denotes a client of Allen & Caron Inc., publisher of this blog

Construction Industry a Home for Variety of Small Cap Stocks

Photo courtesy of catalin on upcall.co

Much was made in the media recently of the  construction of the exoskeleton of 1 World Trade Center, which, topping out at 1,271 feet, makes it 21 feet higher than the Empire State Building, according to the New York Times (http://www.nytimes.com/2012/04/30/nyregion/1-world-trade-center-will-reclaim-the-sky-in-lower-manhattan.html?_r=1). For many months the building, also called Freedom Tower, has been and will continue to be the workplace of a variety of construction teams and workers which, at Smallcapworld, serves as a reminder that construction-related activities are the focus of many diverse small cap companies specializing in a variety of trades.

Here are four companies heavily involved in construction, in one form or another. They were selected randomly and we have no connection to any of the companies included in this blog post.

Minneapolis-based Apogee Enterprises (Nasdaq: APOG, http://www.apog.com) designs and develops glass products and services in North America and Europe in two segments: Architectural Products and Services, and Large-Scale Optical Technologies. The architectural segment installs and maintains the outside skins of commercial and institutional buildings. APOG was recently featured in stockpker.com as one of “5 stocks insiders love right now (http://stockpickr.com/5-stocks-insiders-love-right-now.html-9). Average volume is 117,000 shares a day but it has recently been higher. 52-week range is $7.79-$16.44 and market cap on May 8 was $455 million. It closed May 8 at $16.17, up 1 cent on the day.

Houston-based Comfort Systems USA (NYSE: FIX, http://www.comfortsystemsusa.com) is in the commercial heating, ventilating and air conditioning (HVAC) business. It specializes in large scale office buildings, retail centers, apartment complexes and manufacturing centers. The company was founded in 1917.  On May 2, FIX announced a $0.05 a share dividend for shareholders of record at the close of business May 14. Average daily volume is about 111,000 shares a day and market cap is $364 million. It’s 52-week range is $7.81-$13.05. FIX closed May 8 at $9.95, up 13 cents on the day.

Humboldt, KS-based Monarch Cement Co. (OTCBB: MCEM.OB, http://www.monarchcement.com) manufactures and sells portland cement under the MONARCH brand name to residential, commercial and governmental customers. Founded in 1908, its chief customers are based in the Midwest. The stock is very thinly traded–only about 2,250 shares a day. Its 52-week range is $20.51-$28.50 and market cap is about $99 million. MCEM closed May 8 at $24.69, down 31 cents for the day.

Melbourne, FL-based Goldfield Corp. (Nasdaq: GV, http://www.goldfieldcorp.com) engages in the electrical construction and real estate development business throughout the U.S. Its electric business includes building transmission lines, concrete foundations, distribution systems and substations and other electrical installation systems for utility systems. Goldfield also installs fiber optic cable. Its real estate business includes the development of residential condominium projects, mainly in Florida. Goldfield Corp. was founded in 1906.  GV trades about 227,000 shares a day and has a market cap of about $32 million. GV stock was upgraded from hold to buy by TheStreet Ratings in April. Its 52-week range is $0.24-$1.29. GV closed May 8 at $1.31, up 11 cents on the day.

Could 2012 Be the Year for AG Stocks?

You can profit from Mother Earth, according to some followers of agricultural or “AG” stocks. While historically a slow

Photo courtesy Rural Route 3 blog

growth industry, many believe 2012 could provide a bountiful harvest for these agricultural stocks for a variety of reasons:

• Since the recession of 2008, food inflation has sky-rocketed, scaring consumers.
• Food price inflation is good for AG stocks. Starting in 2005, the International Monetary Fund’s food price index is up 90 percent. And 41 percent of food and beverage companies expect to increase prices in 2012, compared with 12 percent a year ago, according to http://www.grantthornton.com.au/files/ibr_food_and_beverage_nov11.pdf

• As the planets population has risen, the arable land available for planting hasn’t kept up.
• With new technology, AG products can be used in alternative fuels. 
• With the growth in organics and more healthy lifestyles for “baby boomers” worldwide, profits are perking up.

For general research on trends in the industry, take a look at http://www.agrifoodforum.com/.

For 2012, some experts suggest AG stocks should have good growth and offer some defense for a more speculative industry portfolio. What are some small cap stocks that fall into the “AG” category and could benefit as food prices keep getting higher? 

 Omaha, NE-based Lindsay Corp. (NYSE: LNN, http://www.lindsay.com) designs, manufactures, and sells irrigation systems that are primarily used in the agricultural industry to increase or stabilize crop production while conserving water, energy, and labor. LNN also manufactures and markets various infrastructure products. The company serves departments of transportation and roadway contractors, subcontractors, distributors, and dealers.   The stock has a 52-week range of $46.03 -$ 73.75 and a market cap of about $841 million with a daily average trading volume of 140,000 shares.  For the second quarter ending February 29, LNN beat analyst estimates on both revenue and earnings significantly. It closed May 3 at $64.90, down $1.26 on the day.

West Fargo, ND-based Titan Machinery (Nasdaq: TITN, http://www.titanmachinery.com), a recent IPO which has doubled, owns and operates a network of full service agricultural and construction equipment stores in the United States and Europe. It engages in the sale of new and used equipment. The company sells agricultural and construction equipment manufactured under the CNH family of brands, as well as equipment from various other manufacturers. Recent quarterly revenues were up 67 percent to $132 million with earnings of $6 million.  The stock currently trades about 425,000 shares a day and has a 52-week range of $15.58 – $36.92. Its market cap is near $730 million. It closed May 3 at $35.28, down 77 cents on the day.

Newport Beach, CA-based American Vanguard (NYSE: AVD, http://www.american-vanguard.com) manufactures and formulates chemicals for crops, human, and animal health protection. Its chemical products include insecticides, fungicides, herbicides, molluscicides, growth regulators, and soil fumigants in liquid, powder, and granular forms.  The stock’s 52-week trading range $8.92 – $25.34 with a market cap of about $700 million and volume of more than 280,000 shares traded daily. It closed May 3 at $25.28, down 75 cents on the day.

Port Washington, NY-based Aceto Corp. (Nasdaq: ACET, http://www.aceto.com) sources, markets and distributes the following:  Pharmaceutical intermediates and active ingredients, finished dosage form generics, nutraceutical products, agricultural protection products and specialty chemicals worldwide. The company operates in three segments: Health Sciences, Specialty Chemicals, and Agricultural Protection Products.  ACET stock has a 52-week range of $4.51 – $9.99 and an average daily volume of more than 190,000 thousand shares. Its market cap is about $240 million. ACET closed May 3  at $8.90, down 17 cents on the day.

A possible company for the more aggressive investor and further out on the natural pharmaceutical spectrum is tiny San Diego, CA-based Medical Marijuana (OTC: MJNA.PK, http://www.medicalmarijuanainc.com). MJNA which is a legal growth industry in California and 15 other states, provides various business management solutions to the hemp and medical marijuana industries in the United States. It also operates the Hemp Network, a network marketing platform that provides consumers with hemp products. MJNA offers tax and collection solutions to governments including revenue collection systems, turn-key management solutions, and marijuana testing and gradation. The company’s 4th quarter revenue increased in excess of 100 percent over the prior quarter to $430,000.  MJNA’s 52-week range $.01 to $.19 with a market cap of $22 million and volume of near 3.6 million daily shares. It closed May 3 at $.038, up $0.0015 for the day.

Economic Recovery Finally Starting to Lift Small Cap Vacation Industry Stocks

Another industry that suffered mightily during the recent Great Recession was tourism. Stocks of companies based on the vacation and tourism industry were not only hit hard during the recession but they have  tended to lag behind the overall recovery.

But that could be changing. On April 26 the U.S. Department of Commerce announced  that 4.2 million international

Photo Courtesy Marriott Vacation Club

visitors traveled to the US in February (http://tinet.ita.doc.gov/tinews/archive/tinews2012/20120426.html). That was the 11th straight month of increases in total visits. These international visitors spent an estimated $13.3 billion on tourism-related expenses, nearly a $1.6 billion (or 14 percent) increase over spending in February 2011. In addition, many countries worldwide are experiencing similar tourism and vacation bookings growth as the top nine overseas regional markets posted increases in visits during February 2012.

Here are some randomly chosen small cap vacation- and tourism-related stocks that could be beneficiaries of these increases:

Miami, FL based Interval Leisure Group (Nasdaq: IILG, http://www.iilg.com/) is a leading provider of membership and leisure services to the vacation industry. IILG offers travel- and leisure-related products and services to approximately 2 million member families who are enrolled in various programs.  In March IILG reported strong fourth quarter 2011 results, net income rose 40.7 percent from $6.4 million to $9 million with revenues up over 20 percent.  IILG has a 52-week range of $10.19 to $17.90 and a market cap above $968 million with about 200,000 shares trading daily. IILG closed April 30 at $17.28, no change for the day.

Boca Raton, FL based Bluegreen Corp.(NYSE: BXG, http://www.bluegreenonline.com/) is a marketing, and management company focusing on the vacation ownership industry in the United States. It operates Bluegreen Resorts and Bluegreen Communities.  BXG sells and manages “timeshares” in resorts that are developed and owned by others.  BXG also provides property and homeowners association management. The company had 34 percent quarterly revenue growth during Q1 and a record earnings per share growth. BXG has a $167 million market cap, trades about 69,000 shares daily with a 52-week range of $1.87 – $6.43. It closed April 30 at $5.30, down 7 cents for the day. 

With an enviable vacation stock ticker, Orlando, FL based Marriot Vacations Worldwide (NYSE: VAC, http://www.marriottvacationsworldwide.com/) develops, sells and manages vacation ownership and related products in the United States including the Marriott Vacation Club, resort residential real estate vacation ownership developments under the Grand Residences by Marriott brand, and luxury vacation ownership products under the Ritz-Carlton brand.  VAC has a $1 billion market cap, trades more than 403,000 shares daily with a 52-week range of $15.75 – $29.63. It closed April 30 near its 52-week high at $29.50, up 29 cents on the day.

Madison, WI-based Great Wolf Resorts (Nasdaq: WOLF, http://www.greatwolfresorts.com) operates in North America as a family entertainment resort company. It owns, licenses, operates, and develops drive-to destination family resorts featuring indoor water parks and other family-oriented entertainment activities under the Great Wolf Lodge brand name including themed restaurants, ice cream shop and confectionery, full-service adult spa, kid spa, game arcade, gift shop, miniature golf, interactive game attraction, family tech center, and meeting spaces.  The stock has a 52-week range of $2.10 – $8.11, trades about 723,000 shares a day and currently has a $247 million market cap. It closed April 30 at $7.84 down 1 cent on the day.

Finally for those short vacations focused more on adults who also like to gamble, Monticello, NY-based Empire Resorts (Nasdaq: NYNY http://www.empireresorts.com) operates in the hospitality and gaming industries and owns Monticello Casino and Raceway, a video gaming machine and harness horseracing facility that conducts pari-mutuel wagering through the running of live harness horse races. It also simulcasts harness and thoroughbred horse races into its facility and exports its races to offsite pari-mutuel wagering facilities. NYNY also operates approximately 1,090 video gaming machines and 20 electronic table games at Monticello Casino and Raceway.  Its market cap is just over $67 million with a 52-week range of $1.25 – $3.90 and an average daily volume of about 26,000 shares a day. It closed April 30 at $2.25, down 6 cents on the day.

Looking Like A Much Smoother Road Ahead for Recreational Vehicle Industry

The recreational vehicle industry–those motor homes, all-terrain vehicles (ATVs), snowmobiles, powerboats and their brethren– traditionally takes a mighty hit when the economy tanks, and typically lags during a recovery. But recent signs show that financial strength is picking up for this segment.

Many mid- to large-cap recreational vehicle stocks have been posting strong earnings for the first quarter of 2012. For

Photo courtesy of Courierpostonline.com

instance, Polaris Industries (NYSE: PII) ended the week of April 20 10 percent higher after beating first quarter earnings estimates. As a result, PII received an upgrade in the outlook for the remainder of the year (http://seekingalpha.com/article/517251-polaris-industries-strong-results-and-outlook-boost-the-share-price?source=yahoo).

But the industry has a few notable small-cap representatives as well. Here are a random few:

White Plains, NY-based Drew Industries Inc (NYSE: DW, http://www.drewindustries.com/) manufactures and markets various components for recreational vehicles and manufactured homes in the United States. It operates in two segments: Recreational Vehicle Products (RV) and Manufactured Housing Products (MH).  Earnings estimates are $2.19 per share for the year ending December 2013. DW’s revenue is in the $800 million range. The stock has a 52-week range of $17.49 – $30.15, trades about 68,000 shares daily with a market cap about $618 million.  ACAT closed April 25 at $27.78, up 90 cents for the day.

Forest City, IA-based Winnebago Industries Inc (NYSE: WGO, http://www.winnebagoind.com/) manufactures and sells recreation vehicles primarily for leisure travel and outdoor recreation activities. The company offers motor homes with a diversified product line. Estimates are $0.47 per share for the year ending August 2013. WGO’s revenue is near $600 million. The stock has a 52-week range of $6.02 – $12.84 with a market cap of about $283 million and average volume of 250,000 shares daily. The stock closed April 25 at $9.67, up 37 cents for the day.

Thief River Falls, MN-based Arctic Cat Inc (Nasdaq:  ACAT, http://www.arctic-cat.com) manufactures, and markets snowmobiles and all-terrain vehicles (ATVs) under the Arctic Cat brand name in the United States and internationally. It also offers related parts, garments, and accessories.  The earnings estimate is $2.54 for the year ending March 2013, with revenue in the $600 million range.  The stock has a 52-week range of $11.55 – $47.46 with an average volume of 250,000 shares daily and a market cap of about $565 million. It closed April 25 at $44.68, up 10 cents on the day.

Jackson Center, OH based Thor Industries Inc (NYSE: THO, http://www.thorindustries.com/) engages in the manufacture and sale of various recreation vehicles, and small and mid-size buses, as well as related parts and accessories in the United States and Canada. It provides a range of travel trailers and motor homes, including Airstream International. The earnings estimate for the year ending July, 2013 is $2.67 per share, with revenue near $3 billion.  The stock has a 52-week range of $17.62 – $34.17 with volume more than 400,000 shares daily. THO is at the high end of the small cap range with a $1.7 billion market cap. THO closed April 25 at $32.73, up 74 cents on the day.

Atlanta, GA based Marine Products Corp. (NYSE: MPX, http://www.marineproductscorp.com) engages in the design, manufacture, and sale of recreational fiberglass powerboats in the sport boat, deck boat, cruiser, sport yacht, and sport fishing markets in the United States and internationally. MPX has a 52-week range of $3.12 – $7.75.  The stock trades about 50,000 shares daily with a market cap of about $227 million.  The stock closed April 25 at $6, up 2 cents on the day.

Signs of Progress: Digital Media Stocks on Display

If you want to see the latest forms of digital signage, take a look at  Times Square on New Year’s Eve. Digital displays, in all their electronic glory, are literally everywhere on that night. But thanks to the rapid growth of the digital media industry, digital signage displays showing video or television programming, advertising, even menus and street signs, are popping up everywhere.

LCD or LED signage, as well as plasma displays or projected images, have taken over cities, retail stores, hotels, restaurants, corporate buildings, even bathrooms and elevators. Smartphones, too, use the same digital media technology.

You can use digital media technology for integrating social and location-based interactivity so you can send Twitter messages, SMS and text messages to advertising displays. Digital signage displays can be controlled by personal computers or servers via proprietary software programs.

To date, China has led the world in the number of digital signage displays with the country’s largest digital signage firm, Focus Media Holding (Nasdaq: FMCN), operating thousands of displays. San Antonio, TX-based Clear Channel Outdoor Holdings (NYSE: CCO) is another huge outdoor advertising company with close to 1 million displays in more than 40 countries across five continents. But those are large companies with market capitalizations in the billions of dollars.

Smallcap investors have opportunities to invest in digital media, too, by focusing on such things as the hardware, software or network infrastructure that support

Times Square, New Year's Eve

the industry.

Brookings, SDbased Daktronics (Nasdaq: DAKT, http://www.daktronics.com/) designs, manufactures, and sells various electronic display systems and related products. It offers indoor and outdoor scoreboards, digit displays, scoring and timing controllers, statistics software, and transportation products comprising various light emitting diodes-based displays for road management, parking, mass transit, and aviation applications. The company did pay a dividend in December, even lumping an additional $0.40 on top of the regular payout, which is now twice rather than once per year. DAKT trades about 150,000 shares daily, has a market cap of $340 million and a 52-week range of $8.00 – $12.25. It closed April 20 at $8.08, up 1 cent.

Cincinnati, OH-based LSI Industries (Nasdaq: LYTS, http://www.lsi-industries.com/) provides corporate visual image solutions around the world.  The company offers exterior and interior visual image elements related to graphics for use in graphics displays and visual image programs. Its graphics products include signage and solid state LED video screens for the sports and advertising markets designing and engineering custom designed electronic circuit boards, assemblies, and sub-assemblies used in various applications.  LYTS trades near $7 with a $165 million market cap and an average daily volume of about 600,000 shares.  The 52-week range is $5.45 – $8.91. It closed April 20 at $6.71, no change on the day.

Prague-based Kit Digital (Nasdaq: KITD, http://www.kitd.com/) provides end-to-end video asset management software and related services to enterprise clients. It offers the KIT Video platform for managing Internet protocol (IP)-based video assets across browser environments, mobile and tablet devices, and connected television (TV) sets and Digital Signage. KITD also enables delivery of social video apps to connected TVs, set-top boxes, game consoles, tablets and smart phones.  KITD has had some hiccups lately. Its stock has a 52 week range of $5.93 – $12.73, a market cap of about $360 million and an average daily volume of about 1, 265,000 shares.  In March and April 2011, the company announced delayed their 10-K filing and announced changes in the board of directors and management as well as some indications that the company may be putting itself up for sale.  But it appears there has been some short covering and buying in the past weeks. The stock closed April 20 at $6.99, down 51 cents on the day.

Seattle-based RealNetworks (Nasdaq: RNWK, http://www.realnetworks.com/) makes the RealPlayer media player software on computers, including features and services that enable consumers to discover, play, download, manage, and edit digital video. RNWK develops and markets software products and services that enable the creation, distribution, and consumption of digital media and signage, including audio and video.   RNWK has a 52-week range of $6.81 – $15.08, trades nearly 140,000 shares daily, and has a $326 million market cap. It closed April 20 at $9.43, up 3 cents on the day.

A more vertically and horizontally integrated company is Poland-based ADV Group* (ADV’s ADR is GPVSY, http://www.grupa-adv.pl/) which trades on the OTCQX market in the U.S. (www.otcqx.com.) (ADV shares also trade on the main floor of the Warsaw Stock Exchange under symbol ADV.) A fast-growing internet and digital media advertising company, ADV is the leading new-media agency in Poland operating in digital communications, innovative new technologies, IT outsourcing, dedicated application design, and mobile device applications.  GPVSY has enjoyed revenue and earnings growth for the past few years, including 74 percent revenue growth in 2011.  GPVSY is a relatively unknown stock in the U.S. with very little analyst coverage. Its market cap is just under $50 million and its average daily trading volume is less than 100,000 shares daily.  The Polish ordinary listed ADV stock trades over 14 PLN or zloty – the Polish currency. (1 Polish zloty = 0.31 US dollars as of April 12) and has a 52-week range of 7.10 – 15.59 PLN.

*Client of Allen & Caron, publisher of this blog.

Boom in Gun Sales Tied to Economy, NRA, and Women

Courtesy of womenshooters.com

Call it a sign of the times, the economy or the power of the NRA. But gun sales are surging. And it’s due in some substantial part to the fact that women are buying more and more of them, according to CNBC (http://www.cnbc.com/id/47032016). So much so that gun retailers and gun ranges are starting to hold “Ladies Nights” and include pink targets to take away the intimidation factor for women, the story notes.

Today, nearly 47 more women are shooting guns than a decade ago and a 2011 Gallup poll found that 23 percent of women in America now own at least one gun. A Tulsa, OK gun club says enrollment is up 400 percent in a “conceal-carry class” for women, according to the story.

Of course the story sights other factors in the growth of gun sales. The fear of President Obama winning another term and then pushing for gun control, and people just feeling unsafe, which may be tied to the economy.

Whatever the reason, the surge in gun sales has led to a surge in valuations of gun manufacturers, particularly since the start of 2012. That may be good news for smallcap investors, because some of the bigger gun names are owned by smallcap companies.

Southport, CT-based Sturm, Ruger & C0. (NYSE: RGR, http://www.ruger-firearms.com) has been manufacturing and selling firearms under the Ruger name in the U.S. and through distributorships overseas since 1948. That includes rifles, shotguns, pistols, revolvers and related products. RGR has had a good three-month run: Back in late January the stock was as low as $36.59. On April 18 it closed at $51.46, up $1.44 (up almost 3 percent) on the day. Its market cap is $984 million and 52-week range is $18.65-$53.29.

Springfield, MA-based Smith & Wesson Holding Corp. (Nasdaq: SWHC, http://www.smith-wesson.com) was founded way back in 1852. As you might expect from a holding company, it sells more than firearms (ncluding handguns and rifles) and firearm-related accessories. It sells “perimeter security solutions” including guard booths, inspection systems, mobile barriers, signs and systems, plus much more. On April 12 SWHC unveiled a new polymer pistol, the M&P Shield, “a high performance option” to their line of firearms. SWHC stock has a similar three-month chart as RGR, showing a low of $4.69 back on Jan. 17, then rising to close at $8.05 April 18. Market cap is $522 million and 52-week range is $2.29-$8.60.

Out of our smallcap focus with a market cap of $2.67 billion is Sidney, NE-based Cabelas Inc. (NYSE: CAB, http://www.cabelas.com) has a broader range of hunting, fishing, camping and outdoor-related merchandise. But they do offer Smith & Wesson handguns, as well as Walther pistols. CAB has also enjoyed the run-up in valuation brought on by the recent surge in gun sales. Back in January, CAB was trading for less than $25. It closed April 18 at $39.15, up 2 cents on the day.