3SOF

Good morning

I've been working on the Stocks Covered List to put it in alphabetical order, but I'm still halfway to get the job done. Then it will be easier to find a stock on the list, and relevant comments posted on this message board about that stock.

When Ramsburg gets back from his holidays we'll study the possibility of introducing a 3 SOF ranking (like for example, "positive", "negative" or "neutral") and perhaps categorizing stocks in groups or sectors. But that's still a long shot.

I'm not planning to sell the 3 Stocks on Fire Portfolio holdings, which are CPNE.OB, ETLT.OB and PFSW, soon, but I welcome your suggestions and requests for analysis.

Thanks for your participation

What do you think of NTWK?

XIDE is running and I think XIDEW will one of the biggest gainers today

how about ONT?

how about XNN?

very very interesting today

VEGF


great news out

ICOC may be interesting today also.  ENPT has no recent news and a current ratio < 2, but on fire recently, at all time highs today...

IMOT.OB

Quote from: tokyopua on February 08, 2007, 09:42:21 AM
What do you think of NTWK?

NTWK has been showing volume above average lately, but the medium term trend is still bearish. The stock will face important resistance just above $1.90, as you can see on the chart below. Today it opened a gap between $1.74 and $1.79, it might go down a bit to close that gap.

Fundamentally:

- $30.3 M market cap. The Company is an end-to-end information technology and business consulting services provider for the lease and finance, banking and financial services industries.
- Balance sheet is OK, the current ratio is 2.4 and the price to book value is just 1.2.
- Revenue trend is positive, with revenues growing every year since 2003 and expected to continue rising
- Losing some money over the last couple of quarters, but estimates point to $0.14 EPS for the next fiscal year, so it looks cheap.

I like NTWK, not much risk here.

Quote from: cramercramer on February 08, 2007, 09:46:14 AM
XIDE is running and I think XIDEW will one of the biggest gainers today

Yes, XIDE, what a shame. Although I've been very positive on it, I failed to buy it for the 3 Stocks on Fire Portfolio or the Main Portfolio.

Anyway, I saved prodigykid6 from that short, so something was gained.

Great stock, congrats to holders and ... and I should buy it ! (but not today, no capital available)

gm David,could you have a look at dddc for me ? New hod and +.04 @1.44 now.Thanks

Quote from: huayilu on February 08, 2007, 09:47:47 AM
how about ONT?

Technically the stock is perfect, coming back up after a correction to the rising 50 days moving average.

Fundamentally you need to really believe video on the web and its future to own ONT, and I'm a believer as you can read on the analysis I made on December 28th, 2006:

1. Profile

On2 Technologies, Inc. (ONT) operates as a video compression technology firm. It develops a proprietary technology platform and video compression/decompression (codec) software to deliver video to closed area networks, such as set-top boxes, Internet, and wireless devices.(complete profile here)

2. Technical Analysis
2.1. All History Chart



ONT is one of those dead corps of the tech bubble debacle. I tend to like this kind of stocks now that a new bull market in technology is unfolding.

2.2. Medium Term Chart



I see a pattern of higher lows and higher highs since 2005. Also there was a golden cross about a month ago (the 50 days moving average crossed above the 200 days SMA).

2.3. Short Term Chart



The short term trend is bullish. I sure like the technical picture, let's check the fundamentals.

3. Fundamental Analysis
3.1. Number of Shares Outstanding



This company has been living from issuing and selling shares. I see heavy dilution not just every year, but every month. A bit less dilution in 2006, though.

The current market cap is 101,199,303*$1.09 = $110.3 M.

3.2. Liquidity



The current ratio stands at 5.24, the company doesn't have a short term liquidity problem, with about $4.6 M in cash.

3.3. Revenues



Revenues were incipient until 2005. But in 2006 they're growing quite strongly from 2005 levels as you can see on the graph above. I can clearly see revenues increasing even on a quarter by quarter basis. For Q1 I have $1.217 M, for Q2 $1.535 M and for Q3 2006 I have $1.703 M. If ONT makes, say, $1.9 M in revs in the 4th quarter, it will show full year revenues of $6.355 M.

Still, the revenue multiple would be an excessive $110.3 M/$6.355 M = 17. Excessive? It depends on the gross and net profit margins.

I see, for DIVX gross margin is 92% and net profit margin is 20%. This is very high. By the way, DIVX's revenue multiple is 15.

3.4. Profits



The company lost big bucks over the last seven years.

4. General Overview

I can understand the recent tick up in the stock, revenues are growing a lot from a very small base. DIVX is the leader in this video compression industry and probably ONT is its closest competitor.

These two companies are still so small in revenue terms. But their gross and net income margins (well, ONT is still losing money) perhaps justify the extremely high revenue multiples.

They look like a biotech or software wonder.

You have to believe the online video mania to buy ONT. Do I believe video will be the way of communication of the future? I do.

Damn it, I should have made this analysis earlier, the stock is up 12% today

Despite all the financial problems this company had, the market always looks to the future, and $110 M doesn't look like a very high price to pay to be involved in the current "go video" global trend. Also, the quarterly tick up in revenues might be saying ONT's time is arriving.

Good luck

This analysis was conducted by David Randolph from the 3 Stocks on Fire Team. If you would like to receive our newsletter with free analysis and join our 8,000 plus stock speculators community, please register.

PFSW just got an upgrade   ...here is the link

http://stockmarket.businessweek.com/stocks/analyst_ratings.html?NOTATION=279717

Good Morning David,

Hope you had a good time yesterday.  Glad that you are back.

BLUE could you take a look.  Big Gain yesterday.  I was able to buy and sell some on yesterday's strength and rebought back again today.

Not on fire today since it's currently down 8% but would like a closer analysis

Thanks

Quote from: kpusan63 on February 08, 2007, 10:36:05 AM
Good Morning David,

Hope you had a good time yesterday.  Glad that you are back.

BLUE could you take a look.  Big Gain yesterday.  I was able to buy and sell some on yesterday's strength and rebought back again today.

Not on fire today since it's currently down 8% but would like a closer analysis

Thanks

Second that im in BLUE for the mid term unless support breaks down at 2.00.