Three Stocks Trending Up Despite Obstructions
NEWP: Upgraded Today by Thomas Weisel; Continues Retiring Debt
BANR: Cancels Stock Offering while Short-Sellers Hamper Value Gains
ININ: Product beats Oracle and Cisco Platforms for Healthcare Deal
Gaining 5.08% this morning is S&P SmallCap 600 company Newport Corporation (NEWP)http://www.newport.com/ currently trading in the $9.51 range. NEWP topped its 52-week high this morning. Its previous mark was $9.46 set on 09-23-09 on trailing twelve month revenues of $372 million. NEWP easily topped its 3-Month average daily trading volume of 128,563 shares early in the session. NEWP has a 3-Month $7.50 floor with strong support at $8 and spikes into the $9 range. $8 could become its new floor on topping its 52-week high and the spikes could move into $10 range.
Even though NEWP has a trailing twelve month diluted EPS loss of $4.28, this is a long-term (12 mo+) ‘Buy’ stock for me, even at its high. The incentive here is management. Strong Management. I also like the fact in this case that over 85% of the outstanding shares are owned by institutions and they support through aggregate buying a climb beyond $10. NEWP develops and manufactures technology lasers, components, instruments, subsystems, and systems for among others; the semiconductor sector which is making a strong comeback from the recession.
oday, Thomas Weisel upgraded NEWP to ‘Overweight’ from ‘Market Weight’ on an imminent rebound in metrics driven by semiconductors and streamlining. The Thomas Weisel price target jumped to $12 from $8. 2009 and 2010 EPS estimates increased to $0.12 and $0.44, respectively. I agree with the analyst; this is a $12 stock waiting to happen.
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On December 16, NEWP management used $18.7 million of cash to retire $20.2 million of its convertible subordinated notes. As a result of this transaction, the Company's results for Q4 2009 will be positively impacted by a total of $0.5 million due to the gain on extinguishment of debt and the lower interest expense for the period. In addition, due to the reduction in the company's total debt, it expects to incur lower interest expense in 2010 and beyond. NEWP estimates that this reduction will result in approximately $0.03 of incremental earnings per diluted share in 2010. NEWP had previously retired $28.0 million of its convertible subordinated notes in the fourth quarter of 2008, and after this additional $20.2 million retirement, the company now has $126.8 million in convertible notes outstanding.
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NEWP management also announced that day that its integration activities related to its acquisition of New Focus in July 09 and other previously announced cost reduction actions are now completed, including: Moving to a larger facility in Wuxi, China's export processing zone; Relocating New Focus manufacturing from Shenzhen, China, to Wuxi, China; Relocating New Focus activities from an Oclaro facility in San Jose, California, to other Newport facilities in California and Wuxi, China; Relocating the U.S. operations of its Lasers Division from Mountain View, California, to Santa Clara, California; and outsourcing the manufacturing of laser products from its Ottawa, Canada site, and closing that facility.
Robert J. Phillippy, President and CEO of NEWP said, “We have been very focused in 2009 on streamlining our operations and improving our competitive position during the worldwide downturn in macroeconomic conditions.” Well done Robert.
Gaining 5.41% this morning is Banner Corporation (BANR) http://www.banrbank.com/ currently trading in the $2.41 range. BANR has an average daily trading volume of 306,400 shares. BANR has surely fallen from grace this year as its 52-week high is $10.39 set on 01-05-09 with trailing twelve month revenues of $75 million. BANR has a 3-Month floor at $2.40 with strong support at $2.60 and it looks like its developing support at $2.80 with spikes into the $3 range.
The gain today has to be from momentum started last Friday when the Company announced that its December 7 decision to make a public offering of its common stock to raise gross proceeds of up to $75.0 million is cancelled. BANR management plans to make a new offering in 2010 after market conditions become more favorable and after it has released its operating results for Q4 2009.
BANR is the holding company for Banner Bank and Islanders Bank that provide commercial banking and financial products and services to individuals, businesses, and public sector entities. Management also said its Q4 results will represent an improvement over its Q3 results. Some of the key areas expected to improve include a higher net interest margin, lower provision for loan losses, lower loan write-offs, reduced operating expenses, a flattening of the level of non-performing assets and increased levels of core deposits. As of December 31, 2008, BANR operated 83 branch offices and 10 loan production offices located in Washington, Oregon, and Idaho, as well as conducts business from 3 locations in San Juan County, Washington. The company was founded in 1890.
This is a near-term (6 Mo) ‘Watch Closely’ stock for me. From the best research I could get my hands on, BANR has 20.27 million shares outstanding with 16.85 million in the public float. As of November 30, BANR had 4.66 million shares short. That’s 32.10%. I think short-selling is a good tool for a highly developed risk/reward system and necessary for an orderly and liquid market; to a point. But 32+%? I don’t think it’s the owners of the 15.90% of shares held by Insiders that are short-selling the stock to such a suppressing level and I can’t believe (though it may be in part to trading strategies) that it’s the owners of the 38.70% of shares held by institutions. 32%? I think the FDIC (which insures deposits) ought to nose around the market makers and transfer agent and find out who owns what (and why). Perhaps someone at Nasdaq too.
aining 5.24% this morning is Interactive Intelligence Inc., (ININ) http://www.inin.com/ currently trading in the $18.06 range. ININ has a 3-Month average daily trading volume of 158,651 and it was near topping that by mid-session today. ININ has a 52-week high of $24 set on 10-14-09 with trailing twelve month revenues of $126 million and a corresponding, positive diluted EPS of $0.42 during the ‘great recession’. ININ has a 3-Month floor of $16 with support at $18 and spikes into the $20-22 range. ININ is widely held by institutions.
ININ and its subsidiaries provide software application suites for voice over Internet protocol (VoIP) business communications and FirstCare Health Plans recently reported improved customer service and increased productivity using an all-in-one IP communications software suite from ININ. Did somebody say Healthcare?
The ININ software suite, called Customer Interaction Center has given FirstCare the ability to support multichannel communications, along with new quality monitoring, recording, e-mail and Web chat, and reporting applications using a single-platform architecture with real-time visibility into all interaction queues. ININ is obviously dedicated to top-line sales revenues and is a definite near-term (3 Mo) ‘Watch Closely’ stock for me.
By Dennis Askew
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