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, Think Finance (1,113 clicks)
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I just came across an interesting company. I was doing further research on Star Scientific (STSI), which is selling a dietary supplement. My main focus was on whether dietary supplements could be patented, since that's the basic preposition upon with Star Scientific's story rests with its Anatabloc product. While doing this research I came across a company defending just that kind of patent. The company was Mannatech (NASDAQ:MTEX).

Mannatech is incredibly small in terms of market capitalization, coming in at just $14.7 million. With Mannatech having $14.2 million in cash and no debt at the end of the September quarter, this quickly prompted a deeper look into the company. After all, even though its revenues have been falling, this was still a company doing $179 million in revenues in a TTM basis.

What this deeper look showed, was that MTEX is probably a decent investment, since:

  • MTEX costs "almost zero", in that its market capitalization is close to the cash it holds and it's trading at 0.75 price/book;
  • MTEX is cutting costs and reestablishing profitability, having reached a $0.84 EPS in the latest quarter;
  • MTEX Is trying to increase its sales force, which will probably bring about increased revenues and profitability in the following quarters;
  • MTEX is launching a new product and sales strategy (Extreme Food Makeover) which has the potential to increase sales and profitability in the following quarters (check the latest transcript);
  • MTEX insiders have bought some (few) shares recently (January and April 2012), and haven't sold any.

Conclusion

All in all, MTEX seems like a decent chance with earnings recovering and a catalyst for even better results in the short term, stemming from the effort to increase distribution and the launching of a new product and sales strategy which is seemingly being successful though it has not yet impacted reported earnings (since it started just in September).

I haven't yet bought MTEX due to its very low market capitalization. I will buy only after this article is published.

Source: Mannatech: Interesting Micro Cap With Possible Catalysts