As I mentioned in my previous article, Bsquare (NASDAQ:NASDAQ:BSQR) is a very unique corporation in a niche market. The small market cap and relatively low coverage has kept the stock at a very low volume. As it only traded 38,000 shares yesterday, there's a very limited opportunity for price movement. Bsquare's stock tends to trade on news and hype.
Last Monday it was noted that Bsquare's DataV is now compatible with Microsoft Azure IoT (MSFT) suite and Microsoft IoT hub. This will better serve businesses, as the combined software is able to better help predict business failures and improve utilization, among many other things. The price of the stock spiked up to $6.30 as a result. The price declined shortly after though. It is important to note that this stock has the opportunity to fluctuate a lot.
When the earnings report came out last May and showed the company was going into the business of DataV and the Internet of Things - the stock went from being traded 21,000 a day to 4 million that day. The price went from $4 to $5.50 within a few hours. The price continued to grow until it reached its peak in November. The fund I'm with is currently long on Bsquare and are pricing it more or less as an option with its volatility. The downside risk at this price is very low as they currently hold almost $30M in cash with a float of only 11.4M. At a price of $5.80 this makes this stock a very safe bet. Almost half of the value of this company is backed in cash. The reasons for this could be many so there is no reason to speculate. But at this price with no debt and high amounts of cash. Bsquare could still be a great acquisition. Bsquare also announced in November last year that it will be a few quarters until DataV really takes off. The opportunity for a huge growth opportunity exists this May during earnings. I do not see any real downside potential in the short term. All news that has recently come out is positive and the neutral earnings did not have any negative impact on the price. I currently believe the market is pricing Bsquare as an underperformer and any big news could send the price up significantly.
In conclusion I still believe this stock should be priced around $11. The low coverage and low interest are currently the reason for the low price but this makes for an excellent entry point. The Internet of Things is still very young and the future can be very profitable for Bsquare.
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Disclosure: I am/we are long BSQR. 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.