Tag - NASDAQGM:MXWL

Whew. As much of the country sweltered in July's heat, and all eyes were on the spending stalemate in Washington, stock investors scurried to find safe havens.

A wave of positive earnings news on Friday helped small-cap investors generally pick out some individual winners and emerge from the month in better shape than their large-cap brethren.

However, the two leading indexes that track small caps, the Russell 2000 Index and the Standard & Poor's Small Cap 600, both finished July with substantial losses: The Russell was off 3.6 percent, with the S&P Small Cap down 3.3 percent.

Jim Nelson is the managing editor of the Penny Sleuth e-letter, a free daily newsletter that focuses on small-cap, options and high-growth opportunities. Along with analysts Greg Guenthner and Jonas Elmerraji, Jim is an editor of Penny Stock Fortunes, a premium small-cap newsletter. Jim is also the editor of Lifetime Income Report, Agora Financial's new income investment advisory that launched in February.

 

I recently sat down with him to give us a little perspective on the small-cap market these days. As a big fan of small-cap stocks myself, I'm always interested in hearing what other small-cap experts have to say. Plus he'll share with you a few of the stocks he's watching now. Here's what he had to say…

 

Ian: Jim, first and foremost, "penny stocks" are one of the most misinterpreted investments on the market. How do you define them?

Jim: Ian, the term "penny stock" is misleading to many investors. Basically, we consider penny stocks to be any small caps that trade under $10 per share. But share price isn't the most important thing here — total market capitalization is.

We define a small cap as any stock whose total market cap rings in at $1.5 billion or less. While those cutoffs can be subjective, those are pretty common ranges for penny stocks to trade in.

Ian: Some investors tell me they think penny stocks are risky. What's your response to that?

Jim: Risk is a very important question when it comes to penny stocks. You see, small companies behave very differently than larger companies like GE or Microsoft. That said, the stocks we look at are real companies with growing, sustainable businesses — while they may be subject to somewhat bigger price swings than blue chip stocks, they also bring the potential for much bigger profits because most of their growth is ahead of them.

The vast majority of small caps we look at trade on major exchanges like the NYSE or Nasdaq… only a select few carefully vetted over-the-counter stocks reach our readers.

Ian: How are penny stocks performing in this market?

Jim: For the most part, penny stock performance mirrors the rest of the market. But what's unique about penny stocks is the fact that historically, they lead the charge out of recessions and into prosperity.

That changeover is something we've seen a lot of — probably more than many blue chip investors — in 2009… While we generally focus on broadening Penny Sleuth readers' "investment toolboxes" in our free daily issues, we do occasionally talk about specific small-cap opportunities in the Sleuth. Two of our most recent mentions were Xinhua Finance Media (Nasdaq:XFML) and GP Strategies (NYSE:GPX) — these penny stocks brought in returns of 45% and 77%, respectively, during a rough time for the rest of the market.

And in Penny Stock Fortunes, our premium newsletter, in which we recommend small-cap plays every month, we've closed gains as high as 279% already this year.

Ian: What's your fundamental strategy right now?

Jim: With an economy that's still far from recovered and credit that's hard to come by, three of the biggest metrics we've been targeting have been a strong balance sheet, positive free cash flow and a bargain-priced price-to-book ratio.

In this climate, we're after penny stocks that can thrive and not just survive this economy… that's why a solid balance sheet position and positive free cash flow are so important. We've seen scores of businesses deemed "too big to fail" collect emergency funds from Uncle Sam to keep from going belly up; penny stocks don't have that luxury. That makes ensuring that a small-cap company can pay its bills on the top of our priority list.

And an attractive price-to-book ratio shouldn't be discounted either… when the stock market "fell through the floor" in 2008, it dragged just about every publicly traded company with it — whether or not the company was overvalued at the time. In the aftermath, we've found that there are many companies trading vastly below their fair values. That's true even today. We've been lucky enough to snap up many beaten-down companies early enough that we were left with respectable gains after more mainstream investors realized the value proposition that was going on at the time.

Ian: You said that penny stocks historically lead the way out of recessions… Where will this recovery come from?

Jim: It's funny you mention that — a few months back, we set out to create a small-cap recovery index to determine exactly which industries were leading the charge to recovery, as well as how far along recovery actually is.

The project is a complicated one. It involves the selection of hundreds of stocks and additional metrics like unemployment and savings rates. Once these benchmarks are selected and compiled, we will begin to see a picture developing that will reveal investor sentiment and market performance. Eventually, when enough data are compiled, we will have a more accurate picture of where the market is headed. 

Ian: More specifically, into which industries are you putting your money?

Jim: Two industries sure to set fire to the market over the next few years are "green tech" and telecommunications. Green tech stocks are, obviously, on every investor's mind — especially people who put their money in small-caps. Finding the right ones is the hard part.

For instance, Maxwell Technologies (Nasdaq:MXWL) popped on our radar awhile back. We got in while it was still trading as a penny stock. We've since booked our gains on that one, but we're always watching in case we get a second chance to act.

Telecoms, at least in emerging economies, have the benefit of billions of potential customers and fat profit margins. Just look at Nortel Inversora (NYSE:NTL). This Argentinean telecom is growing its top line in a country where millions of new Internet and phone users are subscribing every year.

Ian: Say someone who had never invested in penny stocks before approached you. What would your first piece of advice be?

Jim: You need a discount broker you can trust — one that won't charge you an arm and a leg to buy and sell stocks. If you are paying $3 per share and getting charged $50 for each trade, you're putting yourself in a huge hole from the start. There are plenty of discount brokers, but you need to know what exactly you're looking for. We keep our Penny Sleuth readers up-to-date on which brokers are out there and of any changes to their fee schedules.

Jim, thanks for spending some time with us today and sharing your thoughts on penny stocks with Daily Profits readers.

Jim Nelson is the managing editor of the Penny Sleuth e-letter, a free daily newsletter that focuses on small-cap, options and high-growth opportunities. Delivered at least five times per week, Penny Sleuth shows readers everything from macroeconomic trends and technical analysis to individual penny stock and option investing ideas.

Click here to start your FREE Penny Sleuth subscription today!

Stocks reversed the downward course they were forging during Friday trading, and pared some losses after the U.S. government put rumors of bank nationalizations to rest. Some of today’s small-cap gainers were Soapstone Networks (Nasdaq:SOAP), Maxwell Technologies (Nasdaq:MXWL) and Sucampo Pharmaceuticals (Nasdaq:SCMP).

Other Market Watch highlights today included:

• A new report on consumer prices was released this morning. Economists predicted the Consumer Price Index likely rose by 0.3% last month, and the data turned out to be exactly in line with the predictions.  
• For the year, the Russell is down 17.72%, the Dow is down 16.07% and the S&P 500 is down 14.75%. 
• The Russell 2000 (NYSE:IWM) closed down 5.75, or 1.38%, to 410.96, while the Dow topped off Friday down 1.34% to 7,365.67, and the S&P 500 fell 1.14% to 770.05.  
• Stocks reversed the downward course they were forging during Friday trading, and pared some losses after the U.S. government put rumors of bank nationalizations to rest.

Small Cap Gainers:

• Soapstone Networks up 18% after the company announced it was reviewing strategic alternatives. See (Nasdaq:SOAP).
• Maxwell Technologies posts higher 4th quarter sales and gross margin, buoying shares 16% higher. See (Nasdaq:MXWL).  
• Sucampo Pharmaceuticals reports its third consecutive year of profitability with record FY 2008 results. Shares climbed 12% higher on the news. See (Nasdaq:SCMP).  
• Analyst lifts Red Robin's target; 2008 revenue Up, com. sales down. RRGB up 12.5%. See (Nasdaq:RRGB).  

Small Cap Losers:

• Chiquita Brands' Q4 loss widens, freezes executive salaries. Shares plunge over 40%. See (NYSE:CQB).
• IT company CIBER, Inc. down 22% after announcing pricing of common stock offering. See (NYSE:CBR).  
• WellCare suspends Medicare enrollments; shares fall 22%. See (NYSE:WCG).  
• Residential and commercial building material manufacturer Owens Corning down 20% as investors digest earnings, small cap mulls job cuts. See (NYSE:OC).  

Cabela's Inc. (Nasdaq:CAB), Breeze Eastern Corporation (Nasdaq:BZC) and Kindred Healthcare Inc. (Nasdaq:KND) are among the biggest percentage gainers in Friday's trading among companies with market capitalizations under $1 billion.

Also included among the results: WebMD Health Corp. (Nasdaq:WBMD), Maxwell Technologies Inc. (Nasdaq:MXWL), Group 1 Automotive, Inc. (Nasdaq:GPI), Red Robin Gourmet Burgers Inc. (Nasdaq:RRGB), Sucampo Pharmaceuticals Inc. (Nasdaq:SCMP) and Interline Brands Inc. (Nasdaq:IBI).

Maxwell Technologies Inc. (Nasdaq:MXWL), Genco Shipping & Trading Ltd. (Nasdaq:GNK) and DryShips Inc. (Nasdaq:DRYS) are among the biggest percentage gainers in Wednesday's trading among companies with market capitalizations under $1 billion.

Also included among the results: National CineMedia Inc. (Nasdaq:NCMI), Formula Systems Depository Receipt (Nasdaq:FORTY), WHX Corp. (Nasdaq:WXCO), Eagle Bulk Shipping Inc. (Nasdaq:EGLE), InterOil Corp. (Nasdaq:IOC) and Jones Apparel Group Inc. (Nasdaq:JNY).

The Russell 2000 (NYSE: IWM) futures are higher and the small-cap index will likely open in positive territory.

There is little in the way of economic or corporate releases today, but investors are stepping up to buy shares after a sharp decline on Friday following news of a worse-than-expected December jobs report.

Helping fuel the bullish mood on pre-market trading today is speculation that the U.S. Federal Reserve will cut interest rates to prevent the economy from slipping into recession. The Fed is scheduled to kick-off a two-day meeting on Jan. 29. At its previous meeting on Dec. 11, it lowered the federal funds rate to 4.25% from 4.50%.

Here are the biggest percentage gainers and losers in pre-market trading among companies with a market cap between $100 million and $750 million:

Biggest percentage gainers:

• Amicus Therapeutics, Inc. (FOLD), up 14% on news of positive results from a clinical trial of a drug candidate.
• Maxwell Technologies, Inc. (MXWL), up 10% on news an automotive electronics maker selected its products.
• Origin Agritech Ltd. (SEED), up 9%.

Biggest percentage losers:

• American Railcar Industries, Inc. (ARII), down 8%.
• TiVo Inc. (TIVO) down 5%.
• ShoreTel Inc. (SHOR) down 4% on news it projects fiscal second-quarter revenue will be below the previously announced range.

FARO Technologies, Inc. (Nasdaq: FARO), Document Sciences Corp. (Nasdaq: DOCX) and Buffalo Wild Wings (Nasdaq: BWLD) are among the biggest percentage losers in Wednesday's trading among companies with market capitalizations under $500 million.

Here are today's biggest percentage gainers:

Maxwell Technologies, Inc. (Nasdaq: MXWL), a manufacturer and marketer of energy storage and power delivery products, said this morning that it is going to offer 1.3 million shares of common stock that it expects will raise approximately $13.6 million in proceeds.

The company said it plans to use the proceeds for working capital, debt repayment and general corporate purposes.

UBS Securities is acting as an underwriter and Maxwell granted UBS Securities an over-allotment option to purchase up to 195,000 additional shares.

The transaction is expected to close on Oct. 15.

Shares of Maxwell Technologies (MXWL) lost $0.22, or 1.89%, to $11.43 in pre-market trading. Shares of Maxwell Technologies have been trading in the range of $10.31 to $19.87 for the past 52 weeks.

This week, we feature three advisers who see large potential gains from the “smallest” of ideas—nanotechnology. This broad field involves the study and manipulation of matter at an atomic level. Given that this is a new and developing field, investors in nanotech should have a long-term view.

For those willing to incur the higher risks of selecting an individual stock in the nanotech space, we turn to two emerging growth experts. First, Gregg Early, editor of The Real Nanotech Investor, considers Maxwell Technologies Inc. (Nasdaq: MXWL), a stock with a market cap of $246 million, among his favorite speculative buys.

“The company specializes in a very arcane field, even by nanotech standards. Maxwell is one of the few companies involved in developing capacitors and increasingly, ultracapacitors,” he said. “This new generation of capacitor has the potential to revolutionize motive and stationary power storage and distribution as we know it.”

According to Early, the company was recently awarded a contract by Mercedes Car Group to design and produce ultracapacitors for an advanced engineering hybrid-electric drive train program that increases fuel efficiency and reduces emissions.

“This is also a very good sign for Maxwell because its new CEO, David Schramm, hails from the auto industry,” he said. “Landing a deal with a major innovator like Mercedes is an optimistic sign of things to come.”

Shares of Maxwell Technologies Inc. (Nasdaq: MXWL) are down on news before the opening bell that the maker of energy storage and power delivery systems has suffered a legal setback.

A U.S. federal district court in San Diego issued an order denying Maxwell’s request for a preliminary injunction against South Korean ultracapacitor technology maker NessCap Co., Ltd. In October 2006, Maxwell filed a patent infringement lawsuit, accusing Nesscap of patent infringement.

After two days of hearings, the court ruled that Maxwell has not shown that the accused devices fall within the limitations of claim, Nesscap announced today. Maxwell has not issued an official response.

Marchex, Inc. (Nasdaq: MCHX), Directed Electronics, Inc. (Nasdaq: DEIX) and Scientific Learning Corp. (Nasdaq: SCIL) are the biggest percentage losers in Friday's trading among companies with market capitalizations under $500 million.

Here are today's biggest percentage losers:

Cost Plus, Inc. (Nasdaq: CPWM), Novacea, Inc. (Nasdaq: NOVC) and Isramco, Inc. (Nasdaq: ISRL) are among the biggest percentage gainers in Thursday's trading among companies with market capitalizations under $500 million.

Here are today's biggest percentage gainers:

Manufacturer and marketer of energy storage and power delivery systems, Maxwell Technologies, Inc. (Nasdaq: MXWL) reported today that it appointed a new chief executive officer.

David J. Schramm will replace Richard D. Balanson, PhD as president and CEO of Maxwell Technologies. Schramm has spent most of his career in a series of senior management and engineering positions with General Motors and its parts supplier, Delphi Automotive Systems.

Shares of Maxwell Technologies edged down 0.13%, or $0.02, to $14.18 in pre-market trading.

These are the biggest percentage losers in Monday's trading among companies with market capitalizations under $500 million: