Singular Research Director’s Letter December 2017:

A solid year for large caps small caps continue to lag.

The Singular Research coverage list out performed up 1.64% in the month of December. Still, this was not enough to catch up to the strong outperformance again registered by large caps. With growth lead value by a stunning 13% in most asset classes.  The Singular list was up 7.3% trailing the Russell in S&P due to its micro-cap value Focus.

SINGULAR MONTHLY PERFORMANCE STATISTICS

 

Last Month

YTD

Trailing 12 Mo’s

SINGULAR LIST

1.64%

7.30%

7.30%

S&P 500

0.98%

20.79%

20.79%

RUSSELL 2000

-0.56%

13.17%

13.17%

The silver lining for micro and small caps may have been the Trump Administration and Congress’s passage of the tax cut package which should benefit small caps on the margin more than big caps providing a basis for outperformance in 2018.

The Singular Research list was led by Clear One (CLRO) up 26.9% in December. After falling to book value from a very oversold condition CLRO benefited in anticipation of patent awards for its video and audio technology. Gray Television   (GTN) bounced 16.3% up from its large secondary stock offering that was used to pay down debt. Stamps.com (STMP) rose 11.6% in anticipation of a strong Christmas selling season.

 
Symbol Rating Target Month Return
CLRO BUY  $  13.00

26.9%

GTN BUY  $  18.00

16.3%

STMP BUY  $250.00

11.6%

Laggards were led by Biolase (BIOL), down 14%, which may be due to heavy tax loss selling as the stock has underperformed in 2017. Control 4(CTRL). was down 10.5%, likely some profit-taking consolidating a more than 200% move up from early February this year. 

WORST PERFORMERS FOR THE MONTH
 
Target Month Return
 $ 2.00

-14.0%

 $ 28.00

-10.5%

WORST PERFORMERS FOR THE MONTH
       
Symbol Rating Target Month Return
BIOL BUY  $    2.00

-14.0%

CTRL SELL  $  28.00

-10.5%

Thank you for your continued confidence and support as we will continue to seek to uncover the forgotten, the forlorn and the misunderstood in 2018. Hail to Alpha.

Singular Research 

Video: Singular on Seeking Alpha : STAMPS.COM

Video: Singular on Seeking Alpha : STAMPS.COM

Putting a Stamp on E-Commerce

Seeking Alpha Author Robert Maltbie joins Cheddar to discuss his “buy” rating on Stamps.com. Projections for an above-average Christmas shopping season and e-commerce participation benefitted this company immensely. Maltbie puts a $250 price target on the company.Screenshot 2018 03 03 16.28.17

View Video

Seeking Alpha Author Robert Maltbie joins Cheddar to discuss his "buy" rating on Stamps.com. Projections for an above-average Christmas shopping season and e-commerce participation benefitted this company immensely. Maltbie puts a $250 price target on the company. 

Stamps.com's strategy to emphasize marketing initiatives this year boosted results well above Maltbie's prior expectations. Last quarter, revenue was $116.1 million, up 38% compared to a year ago 2016. Mailing and shipping revenue was $111.8 million, up 37% year-over-year.

Maltbie talks about Stamps.com's partnerships with Amazon Marketplace and USPS. He discusses some challenges for the company and what his expectations are for 2018. 

Singular Research Director’s Letter September 2017: Small Caps Outperform

Singular Research Director’s Letter : September 2017

Small Caps Outperform

The small and micro-cap sectors of the equity markets have been on a tear since the mid-August lows. We perceive that is partly due to the YTD underperformance of the small and micro cap sectors, but a huge boost occurred in September which we anticipate has some long legs, its tax reform. Lower corporate taxes is beneficial to investors, but in the current environment when small caps have underperformed and considering the domestic focus of small and micro cap companies, it is no wonder that this group will be supported by any positive news on domestic tax reform. Our contrarian indicators support the continuation of the latest rally. Short selling is at its highest level since before the 2016 election, and individual bullishness is below average.

For the top performing companies in September on the Singular Research coverage list, most reported strong fundamental performance in Q2, along with positive outlooks. Arotech Corp. (ARTX) was the top performer in September. The company provides engineering and security solutions to government agencies, municipalities and commercial organizations. The company recently received a new contract from the Army National Guard. Harvard Biosciences (HBIO) makes scientific equipment and consumables that are used by researchers worldwide. The company is benefiting by growth in China, increased spending from the National Institute of Health (NIH). The company is benefiting from the expanding gene editing market. Century Casinos (CNTY) has casino operations in a diverse set of venues including cruise ships and horse racing. The company beat earnings estimates in Q2. Control4 Corp (CTRL) provides smart home and business solutions that integrate audio, video, lighting, temperature, security, and communications. The company was a recent new initiation and has consistently been beating estimates.  Biolase (BIOL) makes laser dental products that are very patient friendly and recently introduced two new products in Q1. Sales of new products are ramping up slowly and the is rebounding after recent underperformance.

The worst performing group of the Singular Research coverage list during September include several companies that reported lower than expected Q2 results. The worst performing stock of the coverage list was IntelGenx Technologies (IGTX) focuses on novel drug delivery systems. Although the company missed our analysts’ expectations for Q2, there are several promising items in the near term pipeline. The New Your Times (NYT) underperformed as a short. The company had a stronger than expected Q2. Vasco Data Security (VDSI) makes hardware and software security products. Revenues declined in Q2 as expected, but our analyst expects revenue growth to resume in Q3 driven by software and service-centric offerings. A-Mark Precious Metals (AMRK) is a full-service precious metals trading company. Q4 performance (June 2017) was below expectations but our analyst notes management’s focus on expanding the high margin revenue streams in logistics, storage, financing, and minting. Acme United (ACU) reported lower than expected revenue and EPS in Q2, but management cites a shift of Q2 revenue into the second half and maintained its earlier annual guidance.

We continue to work on new ideas in the small and micro cap space. At Singular Research, we continue to seek out investment ideas that have minimal to no Wall Street coverage. We thank our clients for your support of independent equity research

Video: How Tax Reform Is Helping the Little Guys

Video: How Tax Reform Is Helping the Little Guys

Seeking Alpha author Robert Maltbie joins Cheddar to discuss how “micro-cap” companies benefit from Trump’s new tax proposal. He thinks the policy has a better chance of passing than healthcare reform, because Trump is desperate for a win. Plus, he talks about the risk of investing in small-caps, as well as the companies best to invest in right now.

View Video

Video: “Why Singular?” : Small Cap Nation

Video: “Why Singular?” : Small Cap Nation

Small Cap Nation interviews Robert Maltbie of Singular Research to discuss independent equity research.

News Flash: Singular Research q2 2017 Top Beats & Misses

News Flash: Singular Research q2 2017 Top Beats & Misses

September 15, 2017

Top Beats:

ANIK +54%

STMP +40%

CTRL + 39%

GASS +33%

DAKT +26%

Top Misses

CLRO -1100%

IRIX -300%

REX-59%

EBS -54%

BIOL -50%

Singular Research Director’s Letter July 2017: Small Cap Companies Bounce Back

Singular Research Director’s Letter : July 2017

Small Cap Companies Bounce Back

The small and micro-cap sectors of the equity markets began to play catch-up to the broader market indices in the past month. The outperformance of the small caps is a necessary component for the longevity of this bull market since small caps have underperformed for some time. But we still anticipate there is likely to be some rough riding for the broader market in the coming months. The employment picture remains strong and is at the point where higher wages are anticipated and with that will come increasing inflationary pressures. Fed tightening is still in its early phase. So what might cause the bullishness to question itself? Any number of unforeseen events could occur but what we do see is a slowing in the aggregate earnings growth for the broader market. We are not forecasting a bear market at this time but it would be ‘normal’ to have some corrective pressures. This bull market seems a bit extended, and the seasonally weak autumn timeframe is coming soon.

For the top performing companies in June on the Singular Research coverage list, most reported strong fundamental performance in Q1. IntelGenx Technologies (IGXT) was the top performer in June. The company has designed oral film drug delivery systems and is working on several pharma products that are likely to be launched in 2018. In Q1, IGXT reported revenues above expectations and during June, the company received approval for a patent on its oral film dosage form, which will lead to long-term exclusivity for its products. The new patent allows for instant or sustained release. Lakeland Industries (LAKE) makes safety garments for industrial and public protective clothing markets. The company reported good unit volume growth and healthy gross margins in Q1 and beat our analysts’ estimates.  NV 5 Global (NVEE) provides professional engineering and consulting solutions for infrastructure, construction, real estate and energy markets. NVEE reported higher than expected revenues in Q1 with a record backlog. Gray Television Networks (GTN) owns television stations and digital assets in many US markets. GTN reported stronger than expected revenue and EPS in Q1:17, and the stock is rebounding after a weak performance in May. Stamps.com (STMP) provides online postage services and reported a Q1 that was far better than expected and increased guidance.

The worst performing group of the Singular Research coverage list during June include several companies that are correcting after strong runs. The worst performing stock of the coverage list was Biolase (BIOL) which makes laser dental products that are very patient-friendly, and recently introduced two new products in Q1. Supreme Industries (STS) had a weak Q1 due to delays in customer supplied chassis. Management noted the delays did not result in lost orders. Century Casinos (CNTY) has casino operations in a diverse set of venues including cruise ships and horse racing. CNTY reported a strong Q4 with adjusted EBITDA up 40%, and the stock is correcting after a strong run. Multi-Color Corp. (LABL) makes labels for consumer products, and our analyst has increased estimates after the strong Q1 that was above expectations. The stock has been correcting after a strong run. ClearOne (CLRO) provides audio/video conferencing tools for Fortune 500 companies. The company has developed new products that are expected to drive growth in 2H17, but the product transition was detrimental to Q1 results. Q4:16 was below expectations.

We continue to work on new ideas in the small and micro cap space. At Singular Research, we continue to seek out investment ideas that have minimal to no Wall Street coverage. We thank our clients for your support of independent equity research.