Singular Research Director’s Letter: December performance 2019

SingularLogo

Singular Research’s December 2019 Director’s Letter

 

In December, markets trended higher as the first phase of a trade deal between the U.S. and China was reached.  Similarly, the Fed has opted out of an interest rate cutting stance, as they believe the U.S. economy is resilient and sound.  However, investors remain cautious as manufacturing data and business confidence indicators say otherwise.  The December Purchasing Managers Index (PMI) registered 47.2 percent, a decrease of 0.9 percentage points from the November reading of 48.1 percent.  This reading is the lowest PMI reading since June 2009 when the index was at 46.3 percent. Similarly, the Conference Board Leading Economic Index® (LEI) for the U.S. was unchanged in November at 111.6 (2016 = 100) following a 0.2 percent decline in both September and October.  On a positive note, the unemployment rate remained stable at 3.5%, one of the lowest rates since December 1969.

 

singular dec 2019 monthly performance

 

For the month of December, the Singular coverage list underperformed the S&P 500 and Russell 2000 by 250 and 235 basis points, respectively.  For 2019, the Singular coverage list has outperformed the S&P 500 and the Russell 2000 by 904 and 1,367 basis points, respectively.  As the U.S./China trade war shows positive signs combined with better than expected earnings results from domestic corporations, investors may be favorably looking to 2020’s growth prospects.

 top 5 performers dec 2019

 

GEOS was our top performer in December after the company reported fiscal Q4 revenue growth of approximately 40%.  The company appears to be on track for a strong recovery in 2020 as demand for their rental equipment increases.   ALG, ACU, and ZEUS were all strong performers for the month as easing trade talks with China have provided revenue clarity and relief for investors.

 worst 5 performers dec 2019

 

ROKU was our worst performer for the month after the CFO, Steve Louden, stepped down.  Investors remain cautious of ROKU’s growth prospects amidst weakening gross margins and increased competition.  We believe the company still has a first mover advantage and will continue to surprise investors to the upside in 2020.  HNNA reported a weak fiscal year-end with adjusted revenue and net income for 2019 decreasing 21.8 and 33.6 percent from the prior year.  The company is navigating through industry headwinds and has done so while increasing their dividend and repurchasing six percent of their total outstanding shares.  Lastly, AMRK decreased roughly 13 percent as a result of a mutual fund selling approximately 200,000 shares.  Because of this sale, we believe AMRK’s stock price is undervalued and does not truly represent the operational improvements underway at this time.      

 

dec 2019 new initiations

 

For December, we initiated coverage on Comtech Telecommunications Corporation (CMTL).  Comtech Telecommunications is a leading provider of secure wireless communications systems for both commercial and government customers worldwide. The products include satellite earth station modems, troposcatter systems, and wireless 911 systems.  The company is looking to take advantage of the transition to 5G and has made several 2019 acquisitions that have positioned the company for strong growth in 2020 as a market leader.  We wish to thank our clients for their support and belief in our process.  To learn more about Singular Research and register for a 14-day trial offer, please follow the link below.  

14-Day Trial Offer

Thank You

Robert Maltbie, CFA
Singular Research, President
818-222-6234(office)
This email address is being protected from spambots. You need JavaScript enabled to view it.

Free subscription offer

Singular Research New Initiations Composite Up 46% in 2019

SingularLogo

Singular Research New Initiations Composite Up 46% in 2019

 

Our New Initiations 2019 composite average is up 46% through 12/10/19, outperforming the Renaissance Capital IPO, LD Micro, Russell Micro-Cap, Russell 2000, and S&P 500 indices YTD.  Our 2019 New Initiation’s composite constituents and their respective performance since their 2019 initiations are listed below.  New subscribers will receive immediate access to all new upcoming initiations.  

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

singular new initiations 2019

 

Top 3 Performers

                For 2019, our new initiations composite was led by ROKU (+264%), LUNA (+90%), and GDNP.V (+62%).  ROKU, the leader and first mover in the growing consumer transition from traditional cable television to streaming television over the internet, experienced exponential growth as active accounts, total streaming hours, and average revenue per user grew 36, 68, and 30% YoY, respectively.  LUNA completed the accretive acquisitions and integrations of General Photonics and Micron Optics and reported their 8th consecutive quarter of double-digit revenue growth.  Our November initiation of GDNP.V had YoY revenue growth of 217% in the third quarter of 2019. 

 

Bottom 3 Performers

                Our worst three initiations for the year were GSKY (-56%), FSTR (-17%), and FND (+1%).  In the second quarter, GSKY, a point-of-sale lender, reported they would be seeking strategic alternatives and suspended their guidance.  As a result, we became less confident in their business and dropped coverage due to a lack of visibility.  FSTR, a leading manufacturer and distributor of products and services for transportation and energy infrastructure, has shown signs of weakness from the upstream market in their Tubular segment.  This weakness has further been enhanced from a timing of revenue order recognition which has made their revenue appear weaker than normal.  We believe FSTR’s management can overcome these issues and have a 34% upside on the stock.   And, lastly, our short position on FND, a multi-channel specialty retailer, has not worked in our favor and the stock has mostly traded sideways since our initiation in April.    

 

Most Recent Initiation

            On December 17, we initiated coverage on Comtech Telecommunications Corporation (CMTL) with a Buy rating.  CMTL should benefit from a favorable business environment for advanced communications, strong order backlog, and exposure to large, growing markets.  Fiscal 2020 is expected to be the fifth consecutive year of increased revenue and the fourth consecutive year of increased adjusted EBITDA.  We have a $43.50 price target on the stock which is a 20% upside from current levels.

We hope you have a great holiday season.  For more information on our new initiations and to subscribe, please email This email address is being protected from spambots. You need JavaScript enabled to view it. or call us at 818-222-6234.

 

Thank You

Robert Maltbie, CFA
Singular Research, President
818-222-6234(office)
This email address is being protected from spambots. You need JavaScript enabled to view it.

Free subscription offer

"Best of the Uncovered" Conference in San Francisco: Booklet

Undercovered Gems Headline the Singular Research’s “Best of the Uncovered” Conference in San Francisco on 12/12

SingularLogo

Undercovered Gems Headline the Singular Research’s “Best of the Uncovered” Conference in San Francisco on 12/12

 

At Singular Research, we focus on small and micro-cap stocks that are undercovered on Wall Street.  These stocks have a niche business model and have yet to be widely discovered.  Many of the global threats in the stock market today do not affect these stocks.  Our small-cap investor conference in San Francisco will focus on top ranked emerging growth, undervalued, and undercovered companies that exemplify our research and provide exciting alpha opportunities.  Please see below for our conference presenters, the schedule of presentations, the venue, and a brief description with valuation metrics on the companies that are presenting.  

towr img 1

 

Acme United Corp. (ACU)

$24.00 Price Target, Buy, Current Price: $21.64 (12/4/19)

Acme United Corporation is one of the largest worldwide suppliers of innovative cutting devices, measuring instruments and safety products for the school, home, office and industrial markets. The company has facilities in the U.S., Canada, England, Germany, Hong Kong and China. Acme sells its products in countries. It had 421 employees at the end of 2017.

acme

 

 Amazing Energy Oil & Gas Corp. (AMAZ)

N/A Price Target, Buy, Current Price: $0.15 (12/4/19)

Amazing Energy Oil and Gas, Co., together with its subsidiaries, engages in the exploration, development, and production of oil and gas in the United States. As of July 31, 2019, the company had leasehold rights to approximately 70,000 acres in Pecos County, Texas, and 5,385 acres in Lea County, New Mexico with estimated net proved reserves of 499,666 barrels of oil equivalent. It also owned 26 oil and gas wells in the Permian Basin and 7 oil wells in Lea County, New Mexico. In addition, the company provides oilfield services to oil and gas well owners. Amazing Energy Oil and Gas, Co. is headquartered in Plano, Texas.

sf conference 4

 

Comtech Telecommunications Corp. (CMTL)

N/A Price Target, No Rating, Current Price: $36.50 (12/4/19) 

Comtech Telecommunications Corp. designs, develops, produces, and markets products, systems, and services for communications solutions in the United States and internationally. The company operates through Commercial Solutions and Government Solutions segments. Comtech Telecommunications Corp. was founded in 1967 and is headquartered in Melville, New York.

sf conference 5

 

 EVIO Inc. (EVIO)

N/A Price Target, No Rating, Current Price: $0.11 (12/4/19)

EVIO Labs is the nation's leading provider of accredited analytical testing, scientific research and advisory services to the regulated cannabis industry. EVIO Labs provides state-mandated ancillary services that are required to ensure the safety and quality of the nation's cannabis supply.

sf conference 6

 

Good Natured Products (GDNP.V)

$0.20 Price Target, Buy, Current Price: $0.16 (12/4/19)

Good Natured Products Inc., formerly Solegear, is an award-winning, publicly traded bioplastics company founded in 2006 and based in Vancouver, British Columbia, Canada. Good Natured is an innovator in the field of next generation bioplastics made from annually renewable plant-based sources.

sf conference 7

 

IEC Electronics Corp. (IEC)

$9.50 Price Target, Buy, Current Price: $8.25 (12/4/19)

IEC Electronics is a provider of electronic manufacturing services to advanced technology companies that produce lifesaving and mission critical products in the medical, industrial, aerospace, and defense sectors.

sf conference 8

 

L.B. Foster Co. (FSTR)

$26.50 Price Target, Buy, Current Price: $19.02 (12/4/19)

L.B. Foster Co. engages in the manufacture, fabrication, and distribution of products and services for the transportation and energy infrastructure. The company operates through the following segments: Rail Products and Services; Construction Products; and Tubular and Energy Services.

sf conference 9

 

Olympic Steel, Inc. (ZEUS)

$18.00 Price Target, Buy, Current Price: $17.40 (12/4/19)

Olympic Steel is a leading U.S. metals service center focused on the direct sale and distribution of large volumes of processed carbon, coated and stainless flat-rolled sheet, coil and plate steel, aluminum, tin, pipe and tubular products.

sfconference 10

 

Salem Media Group, Inc. (SALM)

$4.00 Price Target, Buy, Current Price: $1.47 (12/4/19)

Salem Media Group is America’s leading Christian and conservative multi-media company. The Company operates through Radio Broadcast, Digital Media and Publishing segments. It owns and operates 116 radio stations, many in the top 25 media markets, and produces several of the largest nationally syndicated radio shows on the air today.

sfconference 11

 

Seabridge Gold, Inc. (SA)

$17.50 Price Target, Buy-Long Term, Current Price: $13.13 (12/4/19)

Seabridge Gold (SA) is a development stage company engaged in the acquisition and exploration of gold properties located in North America. 

sf conference 12

 

Transcat, Inc. (TRNS)

Price Target Under Analysis, Buy, Current Price: $32.60 (12/4/19)

 Transcat, Inc. (TRNS) is a leading provider of accredited calibration and laboratory instrument services and a value-added distributor of professional grade test, measurement, and control instrumentation to highly regulated industries.

sf conference 13

 

To register for the webinar of our San Francisco conference on December 12, please follow the link below.

https://register.gotowebinar.com/register/3165675798756851981

 

For a complimentary research report on any of these companies mentioned, please e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. or call 818-222-6234

 

Thank You

Robert Maltbie, CFA
Singular Research, President
818-222-6234(office)
This email address is being protected from spambots. You need JavaScript enabled to view it.

Free subscription offer

Singular Research Director’s Letter: November performance 2019

SingularLogo

Singular Research’s November 2019 Director’s Letter

 

With signs of optimism that a deal with China can be reached in December, investors have become cautiously optimistic on the economy. Liquidity indicators point to a bullish rebound as there was an increase in large mega mergers and all-cash buyouts (Luis Vuitton & Tiffany’s and Novartis & Medicines). However, investors remain cautious as the November Purchasing Managers Index (PMI) registered 48.1 percent, a decrease of 0.2 percentage points from the October reading of 48.3 percent. Similarly, the Conference Board Leading Economic Index® (LEI) for the U.S. declined 0.1 percent in October to 111.7 (2016 = 100), following a 0.2 percent decline in both September and August, and a 0.4 percent increase in July. On a positive note, the unemployment rate remained stable at 3.5%, one of the lowest rates since December 1969.

 

november 2019 monthly performance

 

For the month of November, the Singular coverage list underperformed the S&P 500 and Russell 2000 by 27 and 84 basis points, respectively. Year-to-date, the Singular coverage list has outperformed the S&P 500 and the Russell 2000 by 1,210 and 1,643 basis points, respectively. As the trade war with China continues and European markets falter, there appears to be an apparent shift to domestic small cap stocks that are not affected by international affairs.

 

top 5 performers nov 2019

 

EHTH, IEC, and LUNA all performed well as investors were thrilled from continued growth stories. IEC continues to grow revenue backlog while their quarter-ending revenue grew 28% YoY and gross margin expanded 150 basis points. QNST reported record sales and they are in the process of looking for strategic alternatives. LUNA reported 72% revenue growth YoY, its 8th consecutive doubledigit quarter of revenue growth.

 

worst 5 nov 2019

 

NVEE took the largest hit for the month with a 34% decline.  The company posted better than expected revenue (+25%) and backlog (+35%) growth.  However, from the acquisition of seven companies in 2019 and the costs associated with their integration, NVEE guided for lower revenue results for the full year of 2019.  The company remains on track for higher revenue and EPS estimates for 2020.  ANIK and IRMD both posted solid earnings results and guided higher, but investors may have been anticipating even stronger results which has led to their stock price declines.  DAKT reported flat quarterly revenue growth with a decline in operating income of $5 million, mainly due to increased prices from China trade war tariffs.  To strengthen results, they are looking at ways to improve operations and cut ties with China.      

 

november 2019 new initiations 

For November, we initiated coverage on Good Natured Products, Inc. (GDNP.V).  Good Natured Products designs, produces and sells plant-based packaging for baked goods, prepared meals and fresh produce, and “green” home and business products like recycling bins and totes.  The company is targeting for annual sales growth of 30-50% over the next three to five years.  We wish to thank our clients for their support and belief in our process.  For a complimentary report for new subscribers, to provide feedback, or to share some valued insights, please e-mail me using the link below.  

 

This email address is being protected from spambots. You need JavaScript enabled to view it.

Thank You

Robert Maltbie, CFA
Singular Research, President
818-222-6234(office)
This email address is being protected from spambots. You need JavaScript enabled to view it.

Free subscription offer

FOMO time we project S&P 500 target 4000 before end of Bull Market

SingularLogo

FOMO time we project S&P 500 target 4000 before end of Bull Market

 

Powered by better-than-expected earnings, stronger than expected retail sales and progress on the trade front with China, the major market indices marched still higher, again this week. 

 Nearly a trillion dollars has matriculated into Bond and money market funds this year.

 Fomo (fear of missing out) may now be creating a reversal of some of this run for safety. 

 Based on current interest rates our model points to S&P 500  fair value of 4000 powered by expanding PE multiples and 9 to 10% earnings growth in 20 20 

Our top performers of the week were Roku (ROKU) up over 20 points as we upgraded our Target to $155 which ROKU hit immediately, rebounding strongly from last week's sell-off. NMI Holdings Inc. (NMIH) has traded nearly 10% higher posting better-than-expected earnings riding the wave of continued strength in the housing market. 

 Still, Micro caps remain undervalued at a 30% discount to big caps. We expect this undervaluation to close significantly over the next 6 months as investors fearful of investing in overvalued large-cap growth stocks, seek out the value in micro and small-cap stocks.

 

roku 

 

Free subscription offer   

 

Thank You

Robert Maltbie, CFA
Singular Research, President
818-222-6234(office)
This email address is being protected from spambots. You need JavaScript enabled to view it.

Free subscription offer

Sports Gaming Industry Up To Bat For Q3 Earnings

SingularLogo

Sports Gaming Industry Up To Bat For Q3 Earnings

 

Summary

  • We see tremendous upside in the sports gaming industry.
  • Score Media and Gaming is the purest play in the US sports gaming market.
  • We estimate upside for Boyd Gaming of up to $40 over the next 12-18 months.

 

Leading Off

Score Media and Gaming (OTC:TSCRF) ended August 31st, its first full quarter of New Jersey gaming, with their app the sports bet. The company achieved a new cue for revenue record of 6.4 million compared to 5.1 million last year, a 25% increase.

Although average monthly sessions only increased 6% the score social sports content reached 242 million users in the quarter a new record demonstrating year-over-year growth of 150%. Total video views of the sports the scores esports content achieved a new record of 85 million impressively posting year-over-year growth of 157%.

With with its partnership agreement with Penn national gaming (PENN) the company will be able to access and offer mobile sports betting to about 30% of the US population.

The company beat top-line estimates by 5% and matched EPS estimates for the quarter. 3 analyst follow Score Media and Gaming with an average price target of a dollar a share. (OTC:TSCRF) closed at $CAD0.57. The company represents the purest play on the US sports gaming market in public traded equities at this time.

score1

Data by YCharts

Other Notable EPS Reports

Boyd Gaming (BYD). also reported earnings meeting estimates and slightly missing on revenues the company achieved improvement in operating margins across their various segments.

Powered by recent acquisitions Boyd posted 34% revenue growth and 70% earnings growth and is expected to earn a dollar 97 and 2020 relative to its current market price of 27 spot 25 Boyd looks like a value. At 20x 2020 EPS estimated, we see upside to $40 in the next 12-18 months.

boyd gaming corp

Data by YCharts

 

Top Performers

Since May when we created our sports gaming index leaders are:(WIMHY) +42.78%(CHDN) + 40.49%(CZR) + 34.76%(PENN) + 16.22%

 

Singular Research aims to be a trusted supplier of independent research on micro/small cap companies. We provide initiation reports and quarterly updates on roughly 40 uncovered companies.

Try Best of the Uncovereds

Start free trial

Coverage of under-followed companies from an experienced team.

Best of the Uncovereds offers new initiation reports, quarterly earnings reports on covered companies, and flash reports. We go further by providing interviews with management teams and post our monthly "Market Indicators and Strategy Report."

 

 

Go to Singular Research for More Great Stock Ideas!

 

Thank You

Robert Maltbie, CFA
Singular Research, President
818-222-6234(office)
This email address is being protected from spambots. You need JavaScript enabled to view it.

Free subscription offer

Singular Research Director’s Letter: October performance 2019

SingularLogo

Singular Research’s October 2019 Director’s Letter

 

Amidst a prolonged trade war with China, slowing European economies, domestic signs of a recession, and overall positive third quarter results (80% of companies in the S&P 500 surprising net income to the upside), investors are faced with mixed signs.  To add to the confusion in the month of October, the Fed lowered the federal funds rate by 25 basis points to 1.75% and initiated a fourth quantitative easing program.  The October Purchasing Managers Index (PMI) registered 48.3 percent, an increase of 0.5 percentage points from the September reading of 47.8 percent.  The Conference Board Leading Economic Index® (LEI) for the U.S. declined 0.1 percent in October to 111.7 (2016 = 100), following a 0.2 percent decline in both September and August, and a 0.4 percent increase in July.  On a positive note, the unemployment rate remained stable at 3.6%, one of the lowest rates since December 1969.

 october monthly performance

 

For the month of October, the Singular coverage list outperformed the S&P 500 and Russell 2000 by 295 and 247 basis points, respectively.  Year-to-date, the Singular coverage list has outperformed the S&P 500 and the Russell 2000 by 1,206 and 1,688 basis points, respectively.  As the trade war with China continues and European markets falter, there appears to be an apparent shift to domestic small cap stocks that are not affected by international affairs.

 

october top 5 performers

ROKU, ANIK, and TRNS all performed well as investors were thrilled from continued growth stories.  Investors realized the September sell-off of ROKU was largely over-done and the stock price appreciated 45% for the month.  Transcat has continued to rebound as their recent acquisitions have increased revenue and bolstered margins.  ANIK, IRMD, and EHTH all added significant alpha for the month as investors cheered the growing global demand of their drugs and medical equipment.

 

october worst 5 performers

 

FSTR took the largest hit for the month of October, posting a 16% decline, as a slowdown in the U.S. agriculture market and European economies have lowered revenue expectations looking ahead.  HBIO was also lower due to lower quarterly revenue results (-4% YoY), but the company’s adjusted operating margin increased 90 basis points, signifying a potential turnaround story for 2020.  ALG’s quarter ending results were similar to that of FSTR’s, showing signs of a slowdown from the U.S. agriculture market and a decreasing backlog; however, the company recently acquired Morbark, a leading manufacturer of forestry and tree maintenance equipment that we believe will support revenue growth in 2020.

october new initaitiations

 

For October, we launched coverage on eHealth, Inc. (EHTH), the parent company of eHealth Insurance Services, Inc. the leading online source of health insurance for individuals, families, and small businesses.  We wish to thank our clients for their support and belief in our process.  For a complimentary report for new subscribers, to provide feedback, or to share some valued insights, please e-mail me using the link below.

 

Limited discount offer through December 30th, 2019.

https://singularresearch.com/index.php/en/trial-offer 

Thank You

Robert Maltbie, CFA
Singular Research, President
818-222-6234(office)
This email address is being protected from spambots. You need JavaScript enabled to view it.

Free subscription offer