We find that many of our traders are looking for technology stocks outside of the big name stocks we typically look when we think top tech stocks. While this list does have one "big name stock" it is not as big a name as it was decades ago. You'll recognize that one, as it is at the bottom of the list. In fact, it is a bear pick on the list. This list is all from the NYSE MKT. After each I have a few comments as to why the particular stock is included in the list. Overall - the reason for inclusion is that we see these as six of the best technology related penny stocks on the NYSE MKT. We have stretched the word "penny" to one stock above $8, but most are below $5 as you would expect. Each of these in its in own niche, and we see an upside. The seventh represents an opportunity on the downside to play it short. The order of the list is somewhat "random." I am a believer in not falling in love. While not alphabetical, I picked these as I chose these. Let's start with number seven.
GlobalSCAPE (NYSE MKT: GSB)There is huge demand for secure information exchange solutions. This is their specialty, and they do it well. Here's a quote from the President and CEO of GlobalSCAPE in a press release on Tuesday:
“Our growth can be attributed to two critical factors: increased awareness that data and information are essential business enablers, and the resulting global demand for secure information exchange,” said Craig Robinson, president and CEO of Globalscape. “Companies focused on protecting critical corporate and customer data have chosen Globalscape and they are the force behind this award.”
eMagin Corporation (NYSE MKT: EMAN)eMagin describes their business as being "the leader in the technology, development, design and manufacture of Active Matrix OLED microdisplays for high resolution imaging products." First - yes - there were some disappointments in the earnings release that came out on August 1st. Keep in mind that the sudden drop in share price more than prices that in - in my opinion. I readily admit this is the first Company that I have seen that blames "sequestration" for a bad quarter. Still - there is demand for the product.
This from EMAN's President and CEO, Andrew G. Sculley in the same earnings release:
Mr. Sculley continued, “Strong demand from domestic and international customers, particularly in the military segment, reflects our continued technological leadership in the emerging OLED microdisplay industry. We intend to remain the technology leader in the OLED microdisplay space by offering new generations of super bright, super-efficient microdisplays, including our new OLED-XLS, which is ideally suited to meet even the most demanding military applications, and our new, direct patterning technology, which we view as the next technological step to higher brightness and efficiency.”With the Mideast on the brink, over the brink, and with an all out mess in that part of the world, demand for eMagin's products are going to be even more critical. I cannot see the demand going down from here. I think the recent price drop represents an opportunity - not a trend. Read about all of it. Look at the products. Make your own decision.
Servotronics Inc. (NYSE MKT: SVT)Here's how they describe themselves on their web site: "Servotronics, Inc. is dedicated to the satisfaction and support of our customers by fulfilling and exceeding their product requirements for Value, Quality, Reliability, and On-time Deliveries. The continuous advancement of the "State-of-the-Art" in all areas of our endeavors is of primary importance. This commitment to our customers manifests itself from the time need and concept are first determined through to and inclusive of design, development, prototype, production and ultimate end-use of our products. All challenges are viewed as achievement based opportunities for which continuous improvement has no end. Servotronics is a team player whose expertise, efforts and support synergistically combine to create the cutting edge of technology and value."
Why we we like them? go to the August 12th release:"Servotronics, Inc. (NYSE MKT: SVT) reported an 80% increase in net income to $504,000 (or $0.22 per share Basic and Diluted) for the second quarter ended June 30, 2013 as compared to net income of $280,000 (or $0.13 per share Basic and Diluted) for the comparable period ended June 30, 2012. Net income for the six month period ended June 30, 2013 was $681,000 (or $0.30 per share Basic and Diluted) as compared to net income for the six month period ended June 30, 2012 of $349,000 (or $0.17 per share Basic, $0.16 per share Diluted), which represents an approximate 95% increase in net income."
There is solid momentum here. That's why!
Universal Power Group (NYSE MKT: UPG)What is UPG? "Universal Power Group, Inc. (NYSE MKT: UPG) is a leading supplier and distributor of batteries and power accessories, and a provider of supply chain and other value-added services. UPG's product offerings include proprietary brands of industrial and consumer batteries of all chemistries, chargers, jump-starters, 12-volt accessories, and solar and security products. UPG's supply chain services include procurement, warehousing, inventory management, distribution, fulfillment and value-added services such as sourcing, battery pack assembly and coordinating battery recycling efforts, as well as product development." That's from their latest release. There is no doubt they have taken a hit with one client going into bankruptcy with a large outstanding balance and a decline in orders from ADT and others. However, the company is strong. Gross profit was nearly unchanged. Ultimately they were flat for the quarter and had a slight profit for the six months ended June 30th.
They dominate in their business. I trust they will stay strong.
Tel-Instrument Electronics Corp (NYSE MKT: TIK)
This I bring forth as a short term play.
Let me say that this one is already up. We have a company here with assets and a struggling business model.They did say this in their latest release: "The Company is expecting continued revenue and profitability growth for the balance of this fiscal year as a result of higher shipments on the U.S. Army TS-4530A and U.S. Navy ITATS programs."
They also talked about exploring "strategic alternatives." Here's that paragraph:The Company also announced that it has retained OEM Capital as its exclusive financial advisor to explore strategic alternatives, including debt recapitalization, merger, sale or business combination of the Company with a third party with a goal to enhance shareholder value. There can be no assurance that any transaction will occur, and there is no defined timeline for the process. The Company does not intend to comment further regarding the process until such time, if any, as the Company determines that disclosure is appropriate or required. I see this as a play when shares pull back some. With such an odd statement, they have something going on. Now, if it is positive we could see shares move sharply up. If not... You know how it goes. Play this one with care.
Breeze-Eastern Corporation (NYSE MKT: BZC)
The story is laid out well in it's press release from July 31:Breeze-Eastern Corporation (NYSE MKT: BZC) today reported its fiscal 2014 first quarter financial results.
- Net sales: $19.6 million versus $14.4 million for fiscal 2013 first quarter.
- "No Further Remediation" letter received for one site reduced our environmental obligation, producing a $1.2 million benefit that lowered selling, general, & administrative expenses and increased net income and Adjusted EBITDA (as described under "Non-GAAP Financial Measures" in this press release).
- Net income/(loss): net income of $1.4 million, or $0.14 per diluted share, versus a net loss of $(0.8) million, or $(0.09) per diluted share, for the same period last year. Excluding the non-recurring benefit of the environmental reserve reduction, net income would have been $0.6 million, or $0.07 per diluted share.
- Adjusted EBITDA: positive $2.6 million, versus a negative $(0.9) million in the first three months of fiscal 2013. Excluding the non-recurring benefit of the environmental reserve reduction, Adjusted EBITDA would have been $1.4 million.
- Bookings: $16.0 million, versus $14.8 million in the fiscal 2013 first quarter. The book-to-bill ratio for the fiscal 2014 first quarter was 0.8 and was 1.0 in the fiscal 2013 first quarter.
- Debt: Continues to be zero.
That's a real turn around!
BEAR PICK: A VERY STRONG SELL: Emerson Radio Corp (NYSE MKT: MSN)While this is a "top technology" stock that trades on the NYSE MKT, it is not a pick for us. I see a strong shorting opportunity here. Reading today's press release all I can say is that I wish I put this bear pick out yesterday as planned. The Company's press release from yesterday reads kind of sad as Emerson was once a household name (in low, low end) electronics. "Operating income for the first quarter of fiscal year 2014 was $1.3 million, a decrease of $3.1 million, or 69.9%, from operating income of $4.4 million for the first quarter of fiscal year 2013 due to the lower year-over-year net revenues and higher year-over-year SG&A expenses, due primarily to a year-over-year increase in legal fees, tax consulting fees and a reduced benefit in bad debt recoveries, partially offset by a decrease in compensation costs. "Net income for the first quarter of fiscal 2014 was $1.4 million, as compared to $3.8 million for the first quarter of fiscal 2013, a decrease of $2.4 million, or 64.3%, due to the year-over-year decrease in operating income. Diluted earnings per share for the first quarter of fiscal year 2014 were $0.05, as compared to $0.14 for the first quarter of fiscal year 2013, a decrease of $0.09 per diluted share, or 64.3%.
THE CEO BLAMES WAL-MART NOT CARRYING THEIR PRODUCTS:
Duncan Hon, Chief Executive Officer of Emerson Radio, commented, "Our first quarter fiscal 2014 revenues and net income declined significantly as compared to the prior year due primarily to the decision by Wal-Mart to discontinue purchasing, effective Spring 2013, from the Company two microwave oven products sold throughout fiscal year 2013 by the Company to Wal-Mart, the last shipments of which were made in February and March 2013, and intense competition, including downward pricing pressure, within all of our product categories. We expect these factors to affect our year-over-year comparisons throughout the remainder of fiscal 2014. The Company seeks to implement pricing and product strategy initiatives to improve the Company's results of operations, although there can be no assurance that such initiatives will be successfully implemented or have the desired effects on the Company's results of operations and financial condition."Personally, I had very little in the way of its products. I sort of remembers emerson turntables from way back. I found a really pretty one as you can see above. I think it even plays '78's!