Q4 2008 Earnings Call

February 19, 2009 10:30 am ET

Last week I was speaking with colleague Zack “Facebook” Miller about what to do with someone who I didn’t know who asked me to join his network on Facebook. I came across a great post by Nadira A. Hira about this dilemma that we all face: What to do when someone you don’t really want to be associated with, requests you join them on Facebook or Linkedin. As I was reading her post, my friend Steve called me with an equally troubling issue. “We are all familiar with the NBA officiating scandal, but do you think that there is an objectivity problem with the ref’s in professional wrestling?”

Disturbing question don’t you think?

Here is a list of ten Israeli stocks, and one Closed-End Fund that are worth looking into.

Despite being in different lines of business, all four companies have one thing in common. Since 2003, they have all enjoyed growth in both sales and profits. Therefore, in principle, the problem with these companies does not lie in current business ability but in their ability to attract the attention of investors.

The Microcap Speculator submits: Last week was a very heavy news week for microcaps. A few notable items:

• Mind C.T.I. (MNDO) rose 5.7% on over 4x average volume on Friday. I have no idea what caused the spike. MNDO is my largest position, even after I sold a chunk into the spike at 3.49.
• BSD Medical Corporation (BSM) rose over 12% Friday on news of its PreMarket Approval Application with the FDA. Lots of you have asked whether to chase it here. That's a decision each of us need to make for ourselves. I have not added to my initial position noted in the article Friday morning. Long term, there are only two likely outcomes. If the system continues to show promise, the stock could easily see double digits. On the other hand, if the FDA rejects the system though, or if negative stories arise, this stock could trade close to zero. I'm betting on the first outcome, but I also bet on BC to upset Villanova, so what do I know?
• Retirement home operator Advocat Inc. (AVCA.OB) announced an agreement with its lenders to extend the maturities of certain debt for two years, and amended the terms to bring Advocat into compliance. Now that Advocat is not in default, the indebtedness can once again be classified as a long term liability rather than a current liability, strengthening AVCA's balance sheet. More importantly, the move shows the willingness of the bankers to work with the company. This company is in the process of a huge turnaround, and I think it will succeed. Earnings are expected this week, and I anticipate a strong number.
• ACR Group, Inc. (BRR) moved from the OTC BB to the Amex in the beginning of the week and has performed well, rising just over 3%.
• Is NewMarket Technology, Inc. (NMKT.OB) CEO Phil Verges' compensation tied to the number and length of press releases the company puts out? I think this company is starting to execute well and has very bright prospects, but there is such a thing as too many press releases. Its unfortunate, because the company's real achievements (such as this announcement last week about $6 million in additional Latin American systems integration contracts) get lost amidst neverending jabbering about its strategic plans.

The Microcap Speculator submits: Mind CTI (ticker: MNDO) just reported strong earnings for the fourth quarter of 2005. The company earned $1.3M, or $.06/share for the quarter on revenues of $5.04M. Operating income was up 17% year-over-year, although net income slipped as interest income declined.

The company also declared a dividend of $.119/share, net of Israeli withholding tax. The dividend is payable on March 27, 2006 to shareholders of record on March 14, 2006.

The Microcap Speculator submits: Yesterday I talked about my recent purchases of Israeli software provider Mind CTI (ticker: MNDO). I began buying based on the fundamentals and basing pattern, and accumulated more because the stock was unduly pressured when investors got jittery about Ariel Sharon's health problems.

I got a little lucky today. The company just preannounced higher Q4 revenues and earnings, causing the stock to rocket up over 15%. My guess is that it still has a ways to go.

The Microcap Speculator submits: Most Israeli stocks have taken a hit over the past week as the world watches Prime Minister Ariel Sharon's declining health. I don't mean to be callous with a life in the balance, but I think the fear has created a buying opportunity.

Many of these stocks are dual listed on the Tel Aviv Stock Exchange and the Nasdaq. One Israeli microcap I have been accumulating is Mind CTI Inc. (ticker: MNDO). Mind sells telecom billing software to VoIP, Mobile, 3G and triple-play carriers worldwide. It recently acquired a company called Sentori that focuses on the growing MVNO (mobile virtual network operator) sub-market. Mind has about $.50/share in cash on the balance sheet, is consistently profitable, and is growing revenues. The chart shows a long basing period and strong support around $2.50. This may not be the most explosive stock in the market, but I think the risk/reward is fantastic.