Anyone have any small cap value stocks to recommend?

[BadBoyBenny]

I've been lazy for about the last six months, and haven't done any research or screens or anything cause I was happy with what I owned. Now I'm thinking about selling some shares and am looking for buying opportunities. Sitt lazy, and I was hoping to narrow down the field to a few recommendations I could reasearch instead of doing screens to get a baseline. I only buy small to mid caps, and look for great fundamentals and a solid, growing business model. Please, no hyper growth/high valuation stocks. And please no not-yet to be profitable but has a great technology stocks. I only buy businesses I feel I can put a value on, and I'm not good enough to do it without some earnings hisory.

Suggestions?

[RocketManJames]

OVRL - Overland Storage

I wouldn't call this a "value" stock. But, I do think that there's value in the company. And their VR^2 royalties will continue to ramp over time. One of the problems I see with them is that they are dependent on too few 'large' customers that make up large percentages of their revenue.

Let me know what you think.

-RMJ

[AceHigh]

VNBC - Vineyard Bank. 300 mill. company, value and growth, p/e 24.

[RollaJ]

If you want a good penny try MCZ or madcats. They make gaming system peripherals (ps2, xbox, nintendo.....etc) I dont know about you but I never buy the OEM when buying an extra controler, or accessories.These secondary manufacturers usually charge 25-50% less and have added features.

You can see their products all over bestbuy, and other major retailers. /images/graemlins/diamond.gif

[BadBoyBenny]

RMJ

When browsing their financials nothing strck me as exceptional except their sqeaky clean balance sheet. Inventory was growing faster than sales, sometimes a bad sign, but management seems to think sales will grow faster in '05.

They seem to be a mid tosmall sized played in a competitive market with admitted low barriers to entry. Grnated, they also seem to get along with the big boys pretty well.

Saying they are dependent on too few large customers is an understatement, they are dependent on one customer, HP for 59% of 2004 revenues.

VR2 sounds to me like a great technology, but I don't know enough about the tehcnology to know if someone else can come up with a similar way to implement TPRM without violating patenets. Also, right now VR2 is only about 1.5% of their revenues, I don't know how muich growth can be expected. Management seemed to be more optimistic about growth in REO based appliances whatever they are.


If you have any idea how to interpret this please let me know, I think one of the senetences is supposed to say 2004 but I can't figure out which one. Anyway, either its ambiguous, or it''s saying total revenues for VR2 are declining, or its saying that royalty revenues are declining.

[ QUOTE ]
VR2 revenues during fiscal year 2003 amounted to $3.8 million and were comprised of chip sales of $2.0 million, engineering service fees of $50,000 and royalties of $1.7 million.
VR2 revenues during fiscal year 2003 amounted to $3.5 million and were comprised of chip sales of $785,000, engineering service fees of $775,000 and royalties of $1.9 million.

[/ QUOTE ]

I did a rough DCF analisys based on what I thought were fair assumptions and found a business value of about 198 million using 15% discount rate. Add in 72 milloin for cash and short term investments and I get a fair value of 270,000,000 factor about 1% annual dilution for 5 years and you end up with about $259 million.

Market cap is 221 million so there is a discount of about $38 million. Trading at about 85% of fair value.

Not enough of a discount for me, but not a bad price. I normally stick to things that end up below 70% of my value estimate.

[TripleH68]

Take a peek at ANDE.

Disclaimer: total rookie.

[Warren Whitmore]

company , ROC 5yr , profit , P/E , Div
rpi 0.8 , 10.9 , 1.1 , 62.1
tru 29.3 , 93.9 , 8.0 , 9.1
pdl.b 6.2 , 18.9 , 3.9 , 6.7
algi 15.4 , 7.1 , 5.2 , 0.0

[adios]

Here's a few I've mentioned in the past:

RWT - Redwood Trust. Yeah the yield curve is flattening, the real estate market is cooling some, and RWT just paid a $5.50 a share special divvy (which they've basically made up since they went ex div) but this company still hasn't paid out $1.70 a share in taxable earnings and that's only for the first 3 qtrs of their fiscal year. They'll like use 4th qtr earnings to pay next years regular divy and accrue a big special again. They're an MREIT and are required to pay out 90% of taxable earnings as divys. Typically they've paid 100%. Last year they had a special divy in the 1st qtr and I would expect that again. I like the management at this one as well. It has a market cap of $1.5 so I don't know if it qualifies as a small cap.

FF - First Financial. They're a CEF that has one year end distribution. This year it was $5.10 a share and were at $23 and change when they went ex div. They've also recovered some of the ground they lost when they went ex div. The last 3 year end pay outs have been substantial. They're trading approximately at NAV I believe.


As a side note, I recommended NFI (an MREIT) after it got hammered on the WSJ article last spring as I had a price target of $50. I've lightened up on it but it's trading between $57 and $58. I've read some good arguments pro and con on this one. The pro side expects taxable earnings to be huge resulting in an eventual bigger divvy. The con side states that their portfolio of MBS will shrink due to an expected decline in originations combined with the payoff of existing loans. I honestly prefer RWT to this one simply on a valuation basis but I will say that mortgage rates are still low so perhaps originations will do better than what people think.

[applej25]

VDYS, coming off a class action lawsuit last summer, this oil technology company looks to rebound to the 10.00 plus range.

[AceHigh]

[ QUOTE ]
I recommended NFI (an MREIT)

[/ QUOTE ]

I don't think now is a good time to buy NFI, unless you know something about the Q4 dividend I don't. In fact, I might be selling most of my shares in the next few days, depending on what I think is going to happen short term with the stock.

Have you looked at IMH? It's another MREIT and it's yield is around 13%. Similiar to NFI in a lot of ways, with a higher yield at this time.

[ QUOTE ]
the real estate market is cooling some

[/ QUOTE ]

BTW, I don't agree with this. Have you seen what the home builders have done this month? Take a look at the charts for TOL and LEN, to name 2 I'm familiar with.

http://finance.yahoo.com/q/bc?s=TOL&t=3m

http://finance.yahoo.com/q/bc?s=LEN&t=3m

[RocketManJames]

Right... HP does make up a huge percent of their revenues. I was definitely understating that concern. The story is that originally they landed Compaq. Then HP/Compaq merger took place, and it was decided that Overland would be kept. And, Calisi is a former Compaq exec. There are definitely some strong links there.

As far as royalties... I see royalties as "super high margin" profits. And, with royalties in the $2MM region with less than 14MM shares outstanding, they become important. But, I might be naive about all of this. Not sure which typo is which in the quote of yours.

In any case, my first purchse of OVRL was a long time ago in the $6.50-9 range. I am mostly out of it ($12 - $18), but have been thinking hard about getting back in.

Thanks for your analysis. It was appreciated.

-RMJ

[adios]

Yeah I think there's probably better deals in the MREIT sector than NFI. The NFI bulls claim that the divvy will be increased substantially but we'll see. I've lightened up on it myself. I like IMH as well, it's a good long term.

By any measure that I use the home builders look cheap. Seems like the street has low expectations. I think the housing market in the aggregate will continue to do well, maybe not spectacularly well (what ever that means /images/graemlins/smile.gif) but well nonetheless.

[Anadrol 50]

DAVE restaurant chain on the way up.
WPTE Many on here have mocked this company, but I made some sweet cash on it, and it continues to rise. It is World Poker Tour.

[RollaJ]

[ QUOTE ]
If you want a good penny try MCZ or madcats. They make gaming system peripherals (ps2, xbox, nintendo.....etc) I dont know about you but I never buy the OEM when buying an extra controler, or accessories.These secondary manufacturers usually charge 25-50% less and have added features.

You can see their products all over bestbuy, and other major retailers. /images/graemlins/diamond.gif

[/ QUOTE ]


Anyone happen to buy any?

[Dan Rutter]

applej25,
what makes you think this company will rebound. I read that there has been improvements in its technology in relation to being able to better meet its customers demands. This was related to its drilling technology.

[RollaJ]

[ QUOTE ]
[ QUOTE ]
If you want a good penny try MCZ or madcats. They make gaming system peripherals (ps2, xbox, nintendo.....etc) I dont know about you but I never buy the OEM when buying an extra controler, or accessories.These secondary manufacturers usually charge 25-50% less and have added features.

You can see their products all over bestbuy, and other major retailers. /images/graemlins/diamond.gif

[/ QUOTE ]


Anyone happen to buy any?

[/ QUOTE ]

pat on the back bump