Israeli Micro Caps Are On Fire

by: Lionfin Capital

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Over the past year, Israeli micro cap stocks (companies with a market capitalization under 300 million dollars) gained an average of 84%. Of the forty Israeli micro cap companies, twenty-nine were positive for the year and six gained over 100%. I attribute the stellar performance of Israeli micro caps to technologically innovative companies and the strengthening Shekel.

Technological Innovators

Of the forty Israeli micro caps, twenty-eight are technology companies. Below, I have created a pie chart depicting the industry breakdown of the twenty-eight companies.

Of the five industries above, I will highlight 5 companies that will continue to move Israeli micro caps higher due to their cutting edge technology.

The first three technological innovators are CAD/CAM or 3D printing companies. Credit Suisse estimates that 3D printing will be a 3.1 billion dollar industry and will grow about 20% annually. The three companies are Cimatron (NASDAQ:CIMT), Camtek (NASDAQ:CAMT), and Nova Measuring Instruments (NASDAQ:NVMI). A table comparing the three companies can be seen below.

The first of the three, Cimatron, is divided into two parts. The first part of the company is called CimatronE. CimatronE is a CAM (Computer-aided manufacturing) software used for mold, die, and tool creation. Recently, Cimatron launched its most recent update to CimatronE, CimatronE 11 with the most advanced CAM software to date. Better yet, Cimatron announced that CimatronE 12, the next version, will contain an AMF (Additive Manufacturing File) that allows manufacturers to convert 3D models into digital files for 3D printing. The second part of Cimatron's business is GibbsCAM. GibbsCAM is also a CAM software, but is designed for specific use in the defense, energy, automotive, aerospace, and medical sectors. Cimatron is also actively expanding its business and recently announced a deal with Samara State Aerospace University to use both its CimatronE 11 and GibbsCAM software in the manufacturing of Russian aircrafts. The deal was closed for an undisclosed amount. Furthermore, Cimatron will be demonstrating its GibbsCAM software at SOLIDWORKS 2014, a 3D printing and CAD/CAM conference held in San Diego on January 27.

Camtek, the second of the three, creates two major products in the 3D printing space. The newer of Camtek's products is the GreenJet 3D printer. The GreenJet 3D printer is used in the PCB (printed circuit board) manufacturing process. Even better, Camtek's second 3D product is the ink used in its own 3D printer and other 3D printers. Camtek estimates the PCB market at 70-90 million dollars and the ink market at 500-600 million dollars.

Nova Measuring Instruments, the last of the three, penetrates the 3D printing market in three ways. Firstly, Nova sells the Nova V2600, a 3D printer used in the manufacturing of semiconductor chips. To compliment the Nova V2600 is the NovaMARS software package. The NovaMARS software package allows semiconductor manufacturers to design semiconductor chips with high measurement accuracy. Lastly, to generate further revenues, Nova sells the NovaHPC. The NovaHPC, a high power computing unit, provides users of NovaMARS with faster computing speeds. In Nova's most recent quarterly report they highlighted a positive foundry sector which they expect to, "continue growing and fueling our growth in 2014." Further positive news from the most recent quarterly report was a, "Successful V2600 market roll out."

The next two technologically innovative companies I will highlight are both cloud companies. The two companies are Attunity (NASDAQ:ATTU) and ClickSoftware Technologies (NASDAQ:CKSW). Below, I created table comparing the two companies.

Attunity, the first of the two cloud companies, sells CloudBeam. CloudBeam is a service which moves data between cloud environments. Attunity sells CloudBeam to over 2,000 customers. Some CloudBeam buyers include big names such as Cisco (NASDAQ:CSCO), GE (NYSE:GE), and HSBC (HSEB). IT industry analyst firm Neovise, in a recent report on Attunity said, "CloudBeam offers significant advantages over existing options when it comes to loading and synchronizing data to, from and between cloud storage environments."

The second of the two cloud companies, ClickSoftware, offers three different cloud solutions worldwide. The first solution, targeted toward a small to medium market, is called ClickExpress. ClickExpress, "addresses the unique mobility and scheduling needs of a growing company." ClickSoftware's second solution, targeted toward the enterprise market, consists of the ClickSoftware portfolio of products. The ClickSoftware portfolio includes ClickSchedule, ClickMobile, ClickRoster, ClickContact, and ClickAnalyze. The ClickSoftware portfolio is designed to optimize business practices through the cloud. Lastly, ClickSoftware offers ClickWorkforce, in conjunction with Salesforce (NYSE:CRM). ClickWorkforce was made to, "instantly deliver an optimized mobile workforce schedule."

Strengthening Shekel

The Israeli Shekel, the national currency of Israel, has been strengthening relative to the Dollar and Euro recently. Below, a 5 year chart of USD/ILS and EUR/ILS. Over the past two years the Shekel has strengthened 7.8% relative to the dollar and 14.4% over the past five years. Even better for Israeli companies, the Shekel has strengthened 3.3% relative to the Euro over the past two years and 11% over the past five years. The strengthening shekel benefits companies which do business in the Unites States and the Eurozone.


After a phenomenal year for Israeli micro caps, the run does not appear to be over. A strengthening shekel paired with technologically innovative companies such as Cimatron, Camtek, Nova Measuring Instruments, Attunity, and ClickSoftware will help propel the group higher in 2014.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.