Poised To Triple: Portfolio Update

by: Mark Gomes

Since 2009, I've been introducing Seeking Alpha readers to stocks that have the potential to triple in value. This article will provide an update on our current picks. It will also preview our newest Poised To Triple candidate, which we'll be unveiling next week.

Starting with the current portfolio, it's been a good month for our picks:

Poised to Triple Portfolio

Company Ticker Date Initial Price Peak Price Peak Return Current Price Current Return Current Classification
Seagate STX 11/11/2011 17.94 42.88 139% 42.17 135% Gold Mine
Lions Gate LGF 3/20/2012 12.14 27.98 130% 26.55 119% Gold Mine
Attunity ATTU 4/27/2012 3.36 9.75 190% 5.72 70% Wait Time
Lantronix LTRX 7/9/2012 1.82 2.45 35% 1.69 -7% Sell *
Facebook FB 10/29/2012 18.06 32.51 80% 25.16 39% Gold Mine
Himax HIMX 3/4/2013 3.44 8.19 138% 7.00 103% Wait Time
QAD QADA 3/24/2013 11.73 14.24 21% 12.71 8% Value Stock
Averages 105% 67%

Source: PoisedToTriple.com

Since our last update, three of our picks have established new 52-week highs: Himax, Lions Gate, and Seagate. STX's move has been most gratifying. Two weeks ago, the shares fell $2 in the wake of bearish comments from renowned investor, Jim Chanos. Our rebuttal harshly refuted Chanos' claims and marked a bottom for the stock, which rebounded 5% in less than two weeks. Looking at recent data points and earnings calls, we continue to believe that the demise of the PC is being more than offset by the rise of Big Data and cloud-based storage. With oligopoly-like status, we continue to feel positive about the prospects for STX, as well as rival Western Digital (NYSE:WDC).

Meanwhile, HIMX has weathered several bear attacks and topped $8 in recent weeks, nearly 140% higher than when we introduced the company to Seeking Alpha readers, less than two months ago. We have since reclassified HIMX as a "Wait Time" stock. Its rapid ascent and broad coverage disqualifies it as a "Great Find", while its LCOS business has yet to officially take off (so it is not yet a "Gold Mine"). We remain quite optimistic though. Microdisplay technology is clearly taking off and HIMX is well positioned to participate in many exciting new designs.

The key is to proceed with caution. Specifically, we're looking for signs that its relationship with Google (NASDAQ:GOOG) will move to the next level and that other vendors major start adopting its technology. Either way, no one can complain about its recent 140% run.

It hasn't been all good news though. A few weeks ago, we reclassified Attunity, moving it into the Wait Time bucket. Shortly thereafter, the company reported disappointing March quarter results, justifying our "downgrade". We believe this could be a "show me" stock until its new partnerships and direct-sales efforts start to bear fruit.

As for QADA, the company pre-announced an earnings miss, but explained that it was largely due to its ongoing shift to an on-demand model, along with a portion of its license revenue being recognized over time. As a result, the shares held their ground; a testament to the underlying value we see in this franchise. Even during down times, we believe the company's large installed base of maintenance-paying customers gives QADA the flexibility to switch between investment mode and cash-flow mode, virtually at will.

Lastly, we are closing out our position on LTRX. After a long review of our selection methodology, we believe we can improve our investment returns by focusing on companies that meet a more stringent set of criteria. Our new and improved criteria dictated that we close out that position and move forward. The shares performed admirably for awhile, peaking with a 35% return. However, we'll be booking a 7% loss in our portfolio tracker.

Netting it all out, the good outweighed the bad. Our portfolio gained more ground since our last update and we have built an exciting pipeline of new potential winners. In fact, we are currently completing our due diligence on a new selection that could make its way into our portfolio. Like this year's biggest winner, HIMX, we have gathered evidence that this company will be a key supplier for a highly anticipated new product. We'll discuss the product and its component supplier in next week's update.

Disclosure: I am long STX, LGF, ATTU, FB, HIMX, QADA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I have closed my position in LTRX.