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Friday, March 27, 2009

VIFL - A Stock To Watch in 2009

I bought VIFL this week on my alert at $1.35-$1.40 See Blog Post - Here is my reasoning:

VIFL - Food Technology Service, Inc.- 2.8m Shares outstanding and 2m Float per Bloomberg

Food Technology Service, Inc. engages in the ownership and operation of irradiation facility located in Mulberry, Florida. Its irradiation facility uses gamma radiation produced by Cobalt 60 to extend the shelf life of and/or disinfect fruits, vegetables, and meat products; and for the sterilization of medical, surgical, pharmaceutical, and packaging materials. The company provides contract sterilization services to the medical device, food, and consumer goods industries. In addition, it irradiates packaging, cosmetic ingredients, horticultural items, and consumer goods. The company was founded in 1985 and is based in Mulberry, Florida.

Company Website

VIFL is a small ($2.4m revenue run rate) yet profitable company ($0.07 EPS for Q3). Read More Here

1) The Company well positioned to profit on food and medical device irradiation.

Food Technology Service, Inc. CEO Dr. Richard Hunter said, “I am pleased with our growth in revenue and income during this year. Customer demand for medical sterilization continues to grow and there is increasing interest in food irradiation. The Company remains well-positioned to take advantage of that interest as food producers recognize the food-safety benefits of irradiation.” Read More here

Management attributes increased revenue to a growing customer base that requires irradiation of products on a regular basis. The majority of revenue growth is occurring in medical sterilization but strong interest has developed in food irradiation due to recent food recalls and illness outbreaks. Read More Here

While the medical device irradiation business appears to be strong and growing, the food irradiation business could be poised to take off. The Obama administration is focused on food safety and the irradiation debate is heating up. Read More Here

JOURNAL OF AMA MAR 5 2009 Coming to Grips with Foodborne Infection — Peanut Butter, Peppers, and Nationwide Salmonella Outbreaks
Dennis G. Maki, M.D.

Finally, we already have the capacity to improve food safety by adopting a technology that can protect against safety breakdowns during production, preparation, or cooking: routine irradiation of the final commercial product in the case of poultry and hamburger, processed foods containing eggs or milk, and selected leafy and other vegetables eaten raw could greatly reduce the incidence of bacterial foodborne disease. Research has shown that irradiation kills pathogens or markedly reduces pathogen counts without impairing the nutritional value of food or making it toxic, carcinogenic, or radioactive.5 Food irradiation has been endorsed by the World Health Organization, the CDC, the FDA, the USDA, the American Medical Association, and the European Commission's Scientific Committee on Food and is already used in many other countries. In the United States, irradiation of fresh meat has been allowed since 1997; last August, the FDA approved the irradiation of iceberg lettuce and spinach. The CDC has estimated that irradiation of high-risk foods could prevent up to a million cases of bacterial foodborne disease each year in North America. I believe it is time to launch a major effort to gain public acceptance of irradiation of high-risk foods. It is time to stop reliving history.

2) The FDA recently approved lettuce and spinach for irradiation and some large producers are considering it Read More Here

The industry group wouldn’t name salad suppliers ready to start irradiating. But it expects niche marketing to trickle out first - bags of spinach and lettuce targeted to high-risk populations such as people with weak immune systems “who right now may be afraid to eat uncooked produce,” said GMA’s chief science officer Robert Brackett.

“It’s one big step forward in improving the safety of fresh produce,” he added.

California-based produce giant Dole Food Company confirmed it is considering irradiated lettuce. “We are currently doing extensive testing with irradiation and it looks to be very promising,” said spokesman William Goldfield.

3) VIFL is considered a leader in irradiation and one of a handful of facilities that are approved for food irradiation and is considered a leader in the field

"But most U.S. irradiation facilities treat medical products, and only a handful are set up for food."

"You'll see gradual adoption and early adopters … who convince others to try," says Richard Hunter, CEO of Food Technology Service, a 13-employee food-irradiation company in Florida that's considered a food-irradiation leader but which relies on medical devices for 70% of its revenue.

Read More Here

4) VIFL has been expanding capacity and expected growth before the new FDA approval for lettuce and spinach

As previously mentioned, the Company installed additional Cobalt during the second quarter at a cost of approximately $530,000. The Company paid cash for this Cobalt. Management anticipates increased revenue during the remaining quarters of 2008 based on growing demand for irradiation services. Read More Here

Summary : The possibility exists that in the future the FDA will expand this initiative to other vegetables and ready to eat foods. However, keep in mind that food irradiation is an intensely debated subject and widespread rapid adoption is unlikely. Also, some customers may not want to advertise their use of irradiation. Additionally, the challenge with all small caps is whether or not the management is ready to get a facts based story to the street to enhance shareholder value or play the small meek Company that only releases earnings and doesn't keep the street updated on contract wins and other good news.

That being said, with the small share structure of VIFL and the already profitable existing business, it would not take much for this Company to throw off some growth and strong EPS. Food borne illness outbreaks as well as contract announcements could bring strong momentum to low float VIFL. At any rate it is undervalued here in the $1's. Depending on circumstances playing out (contracts, outbreaks), it is my opinion that VIFL could become a strong momentum play in the future that could take it much higher.

Valuation: VIFL alluded that EPS should be good this quarter all the way back in last year's 10-k (see below)

The EPS comparable they are up against is nil - If they can do $0.07-$0.10 EPS this quarter (They did $0.07 EPS last quarter) then they will have a $0.28-$0.40 run rate.

10 PE $2.80-$4.00
15 PE $4.20-$6.00
20 PE $5.60-$8.00

With the potential for big growth or major theme stock if irradiation adoption for food continues or new outbreaks dominate the news. Also they currently have a IBD EPS rating of 95.

I never buy and hold into earnings and never recommend it. But here I did with a small position and would add if earnings confirm my assumptions.

From last years 10-K

Although there is no assurance, management anticipates continued profitability during 2008 with revenues exceeding those in 2007. The majority of revenue increases are anticipated for the third and fourth quarters after the Company installs additional Cobalt to increase capacity. Management does not anticipate any significant increases in actual processing costs or general and administrative expenses during 2008. 10-K

And in the last 10-Q:

Management anticipates increased revenue during the remaining quarter of 2008 based on growing demand for irradiation services. 10-Q

Wednesday, March 25, 2009

In some VIFL before earnings (Breaking My Rule)

Breaking one of my rules and buying a stock before earnings. It can be very risky so I will always have a small position when I do this. In some VIFL $ 1.35 - earnings due any day.....easy comps.....last 10-Q said they expect higher growth......irradiation of medical devices and food recession proof? Current IBD EPS 95. Downside is approximately .30-.50 in my opinion. Upside depends on results and momentum.

Tuesday, March 17, 2009

NIV - New China IPO - 550k Float - Growth

I bought NIV today at $3.80 and added in the low $4's. It is a brand new Chinese IPO Read Herewith a 550k float for 90 days. Last Quarter they had 188% Rev growth & 160% EPS growth. $49m in sales vs $17m year ago Quarter & $0.13 EPS vs $0.05 year ago Quarter Read Income Statement

They are the biggest product manufacturer on interactive speech technology in China. See Website

This is the same investment banker behind the IPO's of KUN, RCH, TYM - they all had the same capital structure and all had large initial runs after the IPO. China stocks have started to move this week with the results from FEED and HOGS. NIV is a speculative play with a small position so there is not a big portfolio risk. But if it acts like fellow IPO's RCH (hit $22), KUN (hit $20's), and TYM (hit $8-$9), we could be in for a nice ride. Low float stocks can be high risk / high reward and I find they are best played with small speculative positions and not to be chased. NIV started to get volume/interest at the end of the day. The high was $4.70.

LZR 100% Stock Movement - TWICE

I first called LZR as a super-trades play on Dec. 23, 2008 See Blog Entry and the price was as low as $5.15 that day. On January 16, 2009 it hit $10.15 for a 97% gain. Then due to the overall market panic, LZR pulled all the way back to $4.45 on March 2, 2009. I pounded the table that it was a screaming buy because of my earnings estimate (which turned out to be amazingly accurate). Read Blog Entry Yesterday on March 16, 2009 LZR hit $9.00 for a 100% gain from the March 2, 2009 low. In the midst of the weakest market since the great depression, LZR has been a super-trades winner that went 100% higher TWICE !

I still think LZR will move higher. LZR has been an amazing super-trades small cap call during crazy market times. I believe there are other opportunities like LZR out there and I will be releasing some focus stocks for 2009 soon.

Wednesday, March 4, 2009

LZR Reports Blow Out Results

A RARE Low Float Small Cap Growth Stock With A Recession Proof Business:

LZR reported Q4 and year end results today. Read Press Release and I predicted the results almost to the dollar (in previous blog posts).

It is almost impossible to find any company with growth these days. Yet for Q4 vs prior year, LZR reported 75% EPS growth, 106% Net Income growth, 54% rev growth (all excluding a one time tax benefit.) They have easy comps for the next next 2-3 quarters, a low float, a business that is growing in a recession and will actually benefit from the Obama administrations policies, and excellent IBD numbers that give it potential for the IBD 100 list if it can make a run over $15. There is potential for more synergies and growth as they integrate their latest acquisition and stand to benefit from hospitals renting more than purchasing in this difficult credit environment.

LZR is a rare growth stock in this environment. It reminds me of PDO, a super-trades winner from 2008. Combine that with a low float and it could be THE small cap stock of 2009, in my opinion. It closed today at $6.51. The 52 Week high is $10.15. I am looking for it to move much higher in the coming weeks.

(As always in this environment, I use mental stops and monitor positions closely due to macroeconomic events that could materially shape the overall market.)

``Emergent Group achieved record fourth quarter and fiscal year 2008 results as our company continued to pursue strategies for growth and expansion,'' said Chairman and CEO Bruce J. Haber. ``We've reported strong performance despite a challenging national economic environment and believe there are additional opportunities to enhance our competitive position in the growing medical technology field. Some of these opportunities are expected to come from our August 2008 acquisition and subsequent integration of the Surgical Services Division of PhotoMedex, Inc.'' This is the first full quarter that includes results generated by the acquisition.

``As we look back on a record year,'' Haber said, ``our company remains focused on these growth strategies:

* Expanding per-procedure rentals of existing medical equipment and
sales of accompanying disposable items in markets covering 16
* Capitalizing on a growing number of medical procedures and upcoming
limits on physician ownership of equipment.
* Identifying and offering new, cost-effective medical technologies
to hospitals and physician groups with the aid of company-trained
* Pursuing future acquisitions that expand Emergent's sales and
geographic footprint."

Beyond these strategies, Haber noted that the company may also benefit as some hospitals take greater advantage of equipment rental opportunities to curb their capital expenditures in the challenging economic climate.

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Welcome to, blog home of Superman. Purpose of this blog is for me to discuss my trades and stock ideas (As well as opinions and rants on stock market related issues). I will mention the date and price I enter. As far as exits, I always try to take half off when I have some profit and if I believe in the stock, let the rest run further. I always also use mental stop limits, at which time I would exit and minimize any losses. I do not like to give price targets unless I can support them by P/E in some way or by comparison to another stock. I just post stock trades and ideas that I believe will go higher (or lower for shorts) and the reason I believe that. Individuals should have their own strategies for managing profits and losses. My stock picks tend to NOT be daytrades at all and many take time to move. I am not an investment advisor and this blog should not be considered or followed as investment advice.