Oct 16, 2009 @ 12:44 PM PDT
When the recession hit, Audiovox was already in the process of cutting its fat, whereas other companies were only just beginning.
SALM: Cash Tender Offer for Debt Propels Stock and Credit Ratings
CYTX: Begins Study of it Regenerative Products for Breast Reconstruction
MFLX: Q4 09 Momentum Continues with Insider and Institutional Support
Gaining 13.97% this morning is Salem Communications Corporation (SALM) http://www.salemcommunications.com/ currently trading in the $5.53 range. SALM flew right past its 3-Month average daily trading volume this morning as its cash repurchase of $89.7 million debt offer took hold. SALM topped its 52-week high of $5.19 set on 11-17-09 as the tender offer program started to bring in new buyers.
With $202 million in trailing twelve month revenues, SALM has a 3-Month floor of $4 that dipped to $3 on its Q3 09 earnings but rebounded to its current $5+ level on news of the debt retirement. This is a near-term 'Watch Closely' stock for me. I think it can pick up some change if the whole tender offer is successful and perhaps move into the $6 range, but based on its Q3 decreases, I don't know if it's sustainable beyond $5.50. So where's the $1+ money to be made? A new top-line sale would increase my interest to buy shares.
The Bad News
On November 5, SALM reported Q3 2009 revenues decreased 10.2% with a net loss of $0.19 per share (which is better than its net loss of $0.47 per share a year ago). For the nine month period ended September 30, 2009 compared to the nine month period ended September 30, 2008: SALM total revenue decreased 11.3%. The SALM Q4 09 outlook by management forecasted a total revenue to decrease of 8% to 10%.
The Good News
SALM did close some stations in bottom-line cost cutting measures in 2009 and still owns approximately 93 radio stations along with its publishing business. On Monday, November 16, Moody's said it may raise its credit ratings for SALM. Moody's said improving credit conditions should allow the company (SALM) to refinance its $321 million in debt, which matures over the next year. Moody's also put SALM's B3 corporate family rating and Caa1 probability of default rating on review for possible upgrade.
Also on Monday, Standard & Poor's Ratings Services said it has revised the CreditWatch implications on its corporate credit ratings related to SALM to "developing" from "negative." S&P said its ratings on SALM, including the "B-" corporate credit rating, would remain unchanged for the time being. If SALM is successful in refinancing its capital structure, S&P said it would expect to raise the corporate credit rating by one notch, to "B" with a stable outlook.
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SALM 3-Month SALM 1-Month
Gaining 10.10% this morning is Cytori Therapeutics Inc., (CYTX) http://www.cytoritx.com/ currently trading in the $4.36 range. CYTX is a heavily traded SmallCap. CYTX is approximately 78 cents off its 52-week high of $5.14 set on 01-30-09. CYTX has 3-Month $3 floor and some support at $3.50. CYTX spikes a lot into the $3.60 and $3.80 ranges, but I'm not convinced it can hold its current $4 range. This is a near-term (3 Mo) 'Watch Closely' stock for me.
CYTX on Monday completed enrollment in a 70-patient, international breast cancer reconstruction study called 'RESTORE 2'. The study is evaluating the use of cell-enriched fat grafting to restore functional and cosmetic deformities in women who have undergone partial mastectomy for early breast cancer.
CYTX will report on December 12 about the first 32 patients who have reached the six-month follow-up period and good news could prove it can capture and sustain a $4 floor. Good news at this point would be a 'buy' signal to me.
Currently, there is no generally accepted reconstructive method for partial mastectomy patients as the majority of these women are not implant candidates, leaving patients with limited options. "Completion of the RESTORE 2 study is important because it lays the foundation for optimal reimbursement in Europe for Cell-Enriched Breast Reconstruction using the CYTX Celution800 System," said Alex Milstein, MD, vice president of clinical development at CYTX.
On November 9, CYTX released its Q3 2009 report. CYTX had a net loss of $6.8 million
I really like this company. They are innovators. And they have a pipeline for the treatments of cardiovascular disease, spinal disc degeneration, gastrointestinal disorders, liver and renal disease, and pelvic health conditions. Using a patients own biology in the healing process is new territory in these areas of treatment and some 'good results' from studies underway could bring in new investors and start some commercial revenue streams increasing shareholder value.
CYTX 3-Month MFLX 3-Month
Gaining over 7% this morning is Multi-Fineline Electronix Inc., (MFLX) http://www.mflex.com/ currently trading in the $26.85 range. MFLX picked up $1.68 this morning and easily surpassed its 3-Month average daily trading volume as Insiders and Institutions bought shares in support of the Company's strong November 5, Q4 2009 earnings. The current surge in value is a momentum 'play' to me. I really like that MFLX has trailing twelve month revenues of $778 million with a corresponding diluted EPS of $1.66 during the 'great recession'. MFLX held its own during the roughest of times of the 'great recession' in the semiconductor sector.
For SmallCap investors, the chart shows a 3-Month floor at $25 with a support level at $27 (in its current range). MFLX spikes galore over $30 on good news and could set a new floor at $27. But it will need a strong Q1 2010 rebound to accomplish that. This is a near-term 'Watch Closely' stock for me.
On November 4, MFLX posted Q4 2009 net sales of $199.2 million, a 6.5% decrease from net sales of $213.1 million in Q4 2008. But net sales in Q4 grew 14% sequentially from Q3 09. Net income at MFLX for Q4 09 was $11.6 million, or $0.45 per diluted share, compared to net income of $7.6 million, or $0.30 per diluted share, for Q4 08.
"Our solid fourth quarter and record full-year results validate our value-added service model..." said MFLX CEO Reza Meshgin, adding, "We believe the traction that we have gained with the leading smartphone and consumer electronic device OEMs affirms our approach and we look forward to building upon this momentum in fiscal 2010 and beyond."
GUIDANCE
For Q1 2010, MFLX expects net sales to range between $225 and $240 million, and gross margin to range between 14.0% and 16.0% based on the projected product mix and ramp of new programs. MFLX makes and sells flexible printed circuit boards and related component assemblies for the electronics industry.
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