On the strength of news today that previously owned U.S. homes surged to their highest sales level in over two years last month the bulls eventually took control of the broader markets and helped to send some SmallCap stocks into new 52-week high territory including: EPAY, SNMX and SCSS. 

An Upgrade on Earnings and a 52-Week High, an FDA Approval

and a Q3 Bounce-back to a 52-Week High    

Gaining over 17% this morning is Bottomline Technologies Inc., (EPAY) http://www.bottomline.com/ on an upgrade and a positive Q1 earnings report. EPAY doubled its 3-Month average daily trading volume in the first few hours this morning. EPAY is currently trading on the $15 range, beating its 52-week high of $13.34 set on 09-18-09.

The EPAY upgrade came this morning from research house Needham and its rating went from 'Buy' to 'Strong Buy'. For me, I'm falling in line and giving this stock a Strong Buy, not only because of top-line performance, but because its entrenchment in its business niche and its customer list.  

On trailing twelve month revenues of $138 million, EPAY, a provider of collaborative payment, invoice and document automation solutions, posted Q1 revenues of $36.6 million, an increase of $1.1 million from Q1 09 and a sequential increase from Q4 09 of $1.7 million.  Year over year revenue growth was 8% in Q1 on a consistent currency basis. EPAY gross margins were $21.1 million and net income per share was $0.05.

"We had a very strong first quarter across all financial metrics highlighted by the achievement of an important financial milestone," said Rob Eberle, President and CEO of EPAY. "Strategically, we introduced several new products, built upon a strong pipeline and completed our acquisition of Bank of America's electronic settlement network known as PayMode. It was a great start to what I believe will be a strong fiscal year."

The EPAY PayMode acquisition, with 90,000 current vendors, positions the Company with the biggest market-share in financial supply chain automation. And here's a little of that customer list that has so impressed my Strong Buy reasoning:

Cabot Corporation, Cisco Systems, County of Fairfax (VA), EverBank Financial, First American, Foster Farms, Investec Asset Management, the John Lewis Partnership, Scottrade, Target, Thermo Fisher Scientific, Quincaillerie Richelleu and the YMCA of Metropolitan Los Angeles. Also the EPAY expansion into Healthcare among hospitals and healthcare organizations with new orders and expanded deployments at: Baxter Healthcare, Catholic Health East, Lourdes Health Network, MCG Health, St. Elizabeth Medical Center, Singing River Hospital and Tift Regional Medical Center.

EPAY also extended its existing relationship with Deutsche Bank, serving as the technology provider for the bank's new outsourced payment initiative. This initiative, which uses EPAY's WebSeries platform, is the latest engagement between EPAY and Deutsche Bank to focus on increasing payment efficiency. EPAY could hit $20 a share in the near-term on a HealthCare reform. One more time: Strong Buy.

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EPAY

Gaining 7.5% this morning is Senomyx Inc., (SNMX) http://www.senomyx.com/ which topped its previous 52-week high this morning of $4.25 set on 11-19-08. SNMX traded 6 times its normal 3-Month average trading volume in the first few hours of today's session. I believe the chart below clearly shows a three month threshold set at $4 and the stock will continue to climb as it strengthens its revenues through product and supply chain improvement. I think this is a very affordable 'Buy' at this level and will test the $5 floor in the near-term.

Generally Recognized As Safe

SNMX announced today that it has been notified by the Flavor and Extract Manufacturers Association (FEMA) that its sucrose enhancer, S6973, has been determined to be Generally Recognized As Safe (GRAS) under the provisions of the Federal Food, Drug and Cosmetic Act, administered by the United States Food and Drug Administration (FDA).

"Receiving GRAS determination for our S6973 sucrose enhancer is one of Senomyx's most important achievements and represents a significant commercial opportunity for the Company," said Kent Snyder, Chief Executive Officer of Senomyx. "By enabling a meaningful reduction in sugar content without altering the sweet taste, S6973 could allow manufacturers to offer appealing products with lower calories and improved nutritional profiles."

SNMX engages in the discovery and development of flavor ingredients in the savory, sweet, salt, bitter, and cooling areas using proprietary taste receptor technologies. The company has product discovery, development, and commercialization collaborations with seven food, beverage, and ingredient supply companies including: Ajinomoto Co., Inc., Cadbury plc, Campbell Soup Company, The Coca-Cola Company, Firmenich SA, Nestle SA, and Solae.

SNMX                                                              SCSS

Another 52-Week High Today

Gaining 18% this morning is Select Comfort Corporation (SCSS) http://www.selectcomfort.com/ with over a million shares traded early in the session. SCSS had a previous 52-week high of $6.74 set on 10-14-09, but easily topped the $6.80 mark today by investors and traders who got a good look at the SCSS Q3 earnings report released after market yesterday.

With trailing twelve month revenues of $548 million, SCSS posted Q3 EPS of 15 cents, twice what street analysts were looking for and Q3 sales of $147 million easily beating analysts who were looking for $134 million.

SCSS also had some good bottom-line numbers including its operating expenses dropping 22% to $236.5 million. Good job: Top-line growth and bottom-line reductions.  

SCSS is the leading bed retailer in the U.S. and it really had to fight the retail downturn during the 'Great Recession' to produce those numbers yesterday. With 14% fewer stores than the previous year, total sales declined 6 percent compared to the prior-year period, with positive same-store growth of 9% in Q3. SCSS closed 14 stores during Q3 and 65 stores year-to-date, with plans to close an additional six stores by the end of 2009. As of January 3, 2009, SCSS had 471 company-owned stores and 801 retail partners.

The SCSS Q3 gross profit margin was 63.4%, up 120 basis points from 62.2% in the prior-year period and 180 basis points on a sequential basis from 61.6% in Q2. SCSS not only closed stores in 'the fight to stay viable', management also produced greater efficiencies in manufacturing. I'm impressed by management at this company and would 'Buy' SCSS on this strength alone. This is a true retail turn-around story. SCSS expects full-year 2009 earnings of between $0.02 and $0.08 per diluted share.

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