The Good, The Bad, and The Ugly (ACRG, AOB, AVCA, HQSM, NMKT, PTLD, SMTX, TGB, VTEK)

by: Microcap Speculator

The Microcap Speculator submits: Microcaps traded fast and furious over the past week, most reflecting the buoyancy seen in the rest of the markets. Here are some of the bright and not so bright spots:


TGB: The strength in copper finally boosts Taseko's share price.

AVCA.OB: Despite the termination of a contract to sell one of its nursing homes, Advocat Inc. continued to show a lot of strength. AVCA.OB has already moved about 30% since reader Phil G. brought it to my attention, but I think the move is just beginning. Keep in mind that it could double from here and still trade at less than 10x '06 earnings, and a price-to-sales ratio below industry comps.

ACRG.OB: I also think that ACR Group has a ways to go. The HVAC service provider broke out of its trading range with decisive volume and should continue to benefit from the HVAC replacement cycle, natural gas prices, and regulatory changes.

VTEK: VoIP and traditional telecom equipment provider Vodavi Tech. continues to hold support and appears to want to move to a higher trading range. I'd like to see more volume and a sustained move over 6 though.

AOB: Like Vodavi, American Oriental Bioengineering sure looks like it has based and is poised for a move north. AOB options were just introduced on the CBOE; if we get a quick move up I may sell some calls against my common.

SMTX: After dropping precipitously on the last trading day of 2005, SMTC Corporation rallied hard today on 3x average volume. I think the down leg is over for this modestly-valued semiconductor equipment company.


HQSM.OB: When I first started covering HQ Sustainable Maritime, the company was executing well on its growth plan. The idea was to move the sales office to Seattle and start locking in major sales contracts. Several months in, shareholders have yet to hear of any payoffs from the move. Where are the contract announcements? All I ever hear about HQSM is that another paid coverage pumper has been retained to write glowing reports. Enough with the pumping, now its time to deliver.

NMKT.OB: Despite massive revenue growth over the past two years, NewMarket Technologies has had its share of problems: a complicated share structure, restated earnings, a failed spinoff, etc. Tuesday the shares plunged through support but ended higher on heavy volume. This high volume reversal, if it holds, should mark the end of the recent down leg in NMKT.OB. I have high hopes for this stock, and anticipate it will soon be listed in "The Good" category.


PTLD.PK: Petrol Industries continues to drift down on ever-waning liquidity. Unfortunately I still own some of this dog. No recovery is expected here until CEO David Taylor levels with shareholders regarding the financials. I expect a minor restatement, and will be very concerned if we see more dilution.

DISCLOSURE: I am long AVCA.OB, AOB, ACRG.OB, VTEK, SMTX, NMKT.OB, HQSM.OB and PTLD.PK. I have no position in TGB at the moment. Not a recommendation to buy or sell any security. For informational and educational purposes only.