Dirt cheap ain't always a bargain

All week long, trading was about fucked-up Euro economies, overheating in China's economy, currencies and carry trades and fear ...

This afternoon, I'm screening the bottom of the barrel for value. Fundamentals.

Criteria

• below $10
• prior year sales positive
• 1-yr sales growth 50% or more
• prior year's net income positive
• price-to-book 5.0+

There are six stocks that fit the criteria. Now I'll see if any of them has zero debt.

Osiris Theraputics (OSIR)
Stock price: 6.24 (May 21, 2010)
Profile: stem cell/biotech.
Key info: Growth prospects negative, but debt is minimal ($1,000). Majority of shares (53%) owned by insiders. Keep watching. CEO makes 605K.
Grade: D
http://finance.yahoo.com/q/ks?s=OSIR+Key+Statistics

Sharps Compliance (SMED)
Stock price: 5.60 (May 21, 2010)
Profile: medical waste solutions
Key info: Profitable, excellent return on assets and equity, but yoy revenue growth down 39%. Cash 19.8m, debt 0. 34.91% of shares held by insiders, 33% by institutions. Tiny float: 9.13m. CEO pay not listed; VP of sales/marketing 250k.
Grade: B. The only minus is yoy rev growth (recession?). Why isn't the CEO pay made public?
http://finance.yahoo.com/q/ks?s=SMED+Key+Statistics

Keryx Biopharmeceuticals (KERX)
Stock price: 4.98 (May 21, 2010)
Profile: biotech
Key info: No debt, revenue growth -100%. Cash 33.93m. Drug in development/Phase III. Stock was 34¢ in February. Without FDA approval, could easily drop back to 1.00. Float 54m. CEO makes 295k; principal financial officer 340k.
Grade: B-
http://finance.yahoo.com/q/ks?s=KERX+Key+Statistics

Immunomedics (IMMU)
Stock price: 3.34 (May 21, 2010)
Profile: biotech (health care/diagnostic substances)
Key info: Phase III clinical trial products for cancer. Cash 24.85m, no debt. No listed negative stats. Float is 63.15m. Only 8% owned by insiders, 34.4% by institutions. CEO makes 692k, CFO 416k, founder/chairman/chief scientific officer 700k.
Grade: B-
http://finance.yahoo.com/q/ks?s=immu

Biodelivery Sciences International (BDSI)
Stock price: 2.94 (May 21, 2010)
Profile: biotech
Key info: Onsolis approved by FDA for pain caused by cancer. Bema Buprenorphine in Phase II development. Cash: 23.87m, debt "N/A". Float 16.32m. Rev: 62.8m. No info on CEO pay ("N/A")
Grade: C. Worth a look even though the debt issue and CEO pay are very sketchy.
http://finance.yahoo.com/q/ks?s=BDSI+Key+Statistics

Symntroleum (SYNM)
Stock price: 2.02 (May 21, 2010)
Profile: oil/gas refining and marketing
Key info: Rev 11.48m, cash 26.81m, debt "N/A". CEO makes 1.58m! Lot of negatives in the stats. Float is 65m.
Grade: D
http://finance.yahoo.com/q/ks?s=SYNM+Key+Statistics

Now a new screen.

• $1 or lower
• minimum $100m sales
• positive profit margin

8 stocks qualify. One is already listed above: AZZ, which had 357m in sales and one of the highest profit margins (10.6%) of these sub-$1 stocks.

AutoInfo (AUTO.OB)
Stock price: 0.45 (May 21, 2010)
Sales: 183.9m
Profit margin: 0.8%
Profile: services/trucking
Key info: CEO pay "N/A". Growth slowed (-21.8%). Cash 67k. Debt is 18.65m. 73% of shares held by insiders. Float 8.97m.
Grade: D
http://finance.yahoo.com/q/ks?s=AUTO.OB+Key+Statistics

Compton Petroleum (CMZ)
Stock price: 0.71 (May 21, 2010)
Sales: 190m
Profit margin: 12.9%
Profile: oil/gas drilling and exploration
Key info: Debt is 554m. Mixed signals on stats. Operating margin -27%. Float 252m, 2.3% owned by insiders, 39% owned by institutions. CEO is paid 578K.
Grade: D+
http://finance.yahoo.com/q/ks?s=CMZ+Key+Statistics

Footstar (FTAR.OB)
Stock price: 0.32 (May 21, 2010)
Sales: 462.1m
Profit margin: 11.5%
Profile: "Footstar, Inc. is in the process of liquidation and dissolution pursuant to the plan approved by the company's Board of Directors on March 5, 2009." No officers available.
Key info: How did a bankrupt company have such a healthy profit margin? Goes to show how useless that particular statistic is. I can only imagine how much execs got paid before Chapter 7.
Grade: n/a
http://finance.yahoo.com/q/pr?s=FTAR.OB+Profile

Hooper Holmes (HH)
Stock price: 0.82 (May 21, 2010)
Sales: 176.8m
Profit margin: 0.6%
Profile: Healthcare company, assists insurance companies.
Key info: CEO makes 508K. Growth slowed (-11.6%). Cash 17.7m. No debt. Stats are mostly positive. 14.2% owned by insiders, 67% owned by instututions. Float 62m.

Grade: B, but does new fed policy on health care kill HH?
http://finance.yahoo.com/q/ks?s=HH+Key+Statistics

Integrated Healthcare (IHCH.OB)
Stock price: 0.07 (May 21, 2010)
Sales: 392m
Profit margin: 0.5%
Profile: owns/operates hospitals/health care facilities in Orange County, Calif. This was a 1¢ stock in July '09. CEO is paid 144k. CFO paid 422k. COO 422k. Consultant 529k.
Key info: Debt is 87m. Cash is 4.2m.
Grade: D+
http://finance.yahoo.com/q/ks?s=IHCH.OB+Key+Statistics

Radiant Logistics (RLGT.OB)
Stock price: 0.27 (May 21, 2010)
Sales: 135m
Profit margin: 0.7%
Profile: Air delivery, freight services.
Key info: CEO pay "N/A", COO 180k. Cash 478k. Debt is 8.7m. Float 18.6m. 50% owned by insiders. 0.80% owned by institutions.
Grade: D
http://finance.yahoo.com/q/ks?s=RLGT.OB+Key+Statistics

Tigrent (TIGE.OB)
Stock price: 0.35 (May 21, 2010)
Sales: 170m
Profit margin: 5.9%
Profile: Education/training services.
Key info: CEO paid 84k; CFO paid 286k. Cash 10.7m. Debt 5.5m. Shares outstanding 11.7m, float 6.5m. No info on insider and institutional holding. Growth stats positive.
Grade: B-. I like that the execs are not overpaid.
http://finance.yahoo.com/q/ks?s=TIGE.OB+Key+Statistics

I'm not interested in buying any of this, hell no. But I'm interested in the ones that show potential, have zero debt. Then I'll dig more and more and more. If there's anything I've learned about tiny stocks, pennies, etc. is that they tend to be scammish in nature (not all). Just look at how little they generate in revenue and how much their executives skim off the top. They don't give a shit about shareholders. They're good at it, too.

There are also those pennies that were one-day or one-week wonders. Xybernaut (XYBR) was going to develop a computer system built into eyewear, perfect for all kinds of work. Right... Then there was Skins Inc. (SKNN), which made a shoe that you could fold up and carry around. Why the hell anyone wants to carry folding footwear, I do not know, but there were plenty of Kool-Aid drinkers.

There's a reason why most pennies are almost worthless. That should tell you everything you need to know. But that being said, there is always going to be a gem or two in the rough, a stock that is clearly undervalued. That's why I dig.

What now, Blockhead?

Jeffrey Powers at Geek News Central suggests Blockbuster Video as a reasonable acquisition target for Google. He has good point about how BBI would fit with YouTube, though I have to say, Google has enough mojo and moola to build its own video distribution network without entangling itself in Blockbuster's enormous debt ($1 beeeeeelllion).

Worth a read nonetheless. BBI (0.40 -0.0050 -1.23%) couldn't get a better reprieve than one like this.

Spooky Specs

Thinking of specs, a.k.a. penny stocks, I can't help but use trashy analogies. I mean, a 44-cent stock has no business being a big part of any portfolio. That's like asking the Octomom to be your wife and offering to sire her next eight offspring.

With that in mind, a little spec-wreck observation never hurts. Beats wasting money in Las Vegas because although 9 out of 10 pennies will crash and burn (my official guess), that one penny that survives and rises out of the ashes ... you never know.

• JMBA. I like Jamba Juice. Tastes so good. Fricking expensive now, though. It was 3.75 or so for an "original" sized drink two years ago. Now it's almost 5 bucks. Holee shit. But I digress.

Several months ago, I saw JMBA at 2.00 and dug into the data. I couldn't pull the trigger. Now it's nearing 4.00. But it's still cheaper than a Jamba drink. Might last longer, too.

• BBI. Did some reading on Blockbuster. I was at one of their locations in Honolulu during a closing-the-shop sale. I had no idea it had gotten that bad. But at 44¢, BBI isn't dead yet. The CEO refuses to give up and has locked in a deal that will allow Blockbuster to rent fresh flicks — while Netflix has to wait a minimum of 28 days.

There are a multitude of issues at Blockbuster. Can they stream efficiently and shut down those expensive brick-and-mortar expenses? Is it too late? Is there a stigma? I think people want cheap goodies and they want it fast. So BBI could justify being a $2 stock in the near term, if things go perfectly in their favor. Damn, 44 cents! What can you get for 44¢ any more, maaan?!

• FNM. I actually took a chance on Fannie Mae a few months ago. What a damn stupid trade that was. There's hopeless, and there's FNM. Even with Uncle Sam's full protection, this stock can't get anywhere. Goes to show, you gotta have something of value when you come to the table. Not a bunch of stupidass, dumbed-down mortgage policies that cost the Fed beeeeeeeellions of buckos. Never touching FNM again. Really.

• C. Whoever bought Citigroup below a buck is a genius. Case closed. Now, at around 4.20, I still wouldn't feel comfortable holding C shares for the long term. Trading it short term is another thing, but long term? Schizo, roller-coaster action that makes normal humans puke.

There are lots of people who can buy something like C at 80¢ and forget about it for five years. That would be best. I'm not one of them. Not with all of Planet Earth going through financial hell, followed by the equivalent of plastic surgery/makeovers, ingesting massive amounts of steroids and other human growth hormones ... but they do have nice smiles and look good in photos.

More penny painsters later.