A Robotic Port, a New Business Division

and a Competitive Acquisition Fuel Upward Trends

While the broad markets wait for reports on manufacturing activity, pending home sales and construction spending to decide which way to move, trending up this morning is ATS Medical (ATSI) and Chinese electric motor maker Harbin Electric (HRBN) on expected Q3 2009 earnings news (today and 11-10 respectively) and engineering firm ENGlobal Corp., (ENG) propelled by heavy trading volume in support of its recent creation of a government business unit.

Gaining 4% this morning in early trading is ATS Medical Inc., (ATSI) http://www.atsmedical.com/ currently trading in the $2.80 range. The gain this morning is due in part to the ATSI conference call scheduled for after the market today to discuss its Q3 2009 earnings. The other driver this morning is ATSI news that its 3f Aortic Bioprosthesis device was used in the first human robot assisted endoscopic aortic valve replacement by Allen Raczkowski, M.D., at Banner Baywood Health Hospital in Phoenix, Arizona.

"The (ATSI) 3f Aortic Bioprosthesis is the only valve that has the extreme flexibility necessary for small access robotic ports and it provides excellent hemodynamic characteristics which are important for the patient's quality of life," said Dr. Raczkowski.

Success.

It's always great news for a company when one of its primary products 'works' in application. Theories are fine, but in surgery, the ATSI 3f valve is the first truly stentless valve in the world, it has no rigid supporting stent. As a result, the valve is completely pliable which allows it to be folded into a small diameter and introduced to the body through small ports using minimally invasive techniques. No other commercially available valve can be manipulated in this manner.

At $2.80, ATSI is off its 52-week high of $3.58 set on 08-03-09. Can it make up the 78 cents? Yes. Could news today on its Q3 wouldn't hurt in making up the difference. ATSI is a very heavily traded stock for a SmallCap and the institutional support for the stock could push it back towards its $3.40 price in August and develop a floor in the $3-3.25 range.

I like the fact that ATSI has trailing twelve month revenues of $72 million and an expanding product line of minimally invasive devices including the ATSI CryoMaze Surgical System and the Simulus family of annuloplasty products.

ATSI also created the distinct position of "Business Development Manager of Minimally Invasive Procedures" to focus increased resources on the development of procedures and products to drive adoption, expand markets, and provide less traumatic surgical options for patients. I also like the fact that ATSI sells to cardiac surgeons and hospitals in the U.S., France, Germany, the United Kingdom, Belgium, the Netherlands, and Switzerland. ATSI has existing distribution for its products. ATSI is headquartered in Minneapolis, Minnesota.  

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ATSI

Gaining 5% this morning is ENGlobal Corp., (ENG) http://www.englobal.com/ currently trading in the $3.04 range. ENG is a momentum play for the near-term. Its Up-Trend today is based on trading volume a very smart move by management to focus on government infrastructure dollars (from systemic sources and the TARP). At $3.04, ENG is less than half of its 52-week high of $6.47 set on 04-30-09. The chart shows the ENG trough and peak in August-September and the $4-5 variance in October.

On the plus side, ENG did produce a trailing twelve month diluted EPS of $0.35 on revenues of $432 million. On the negative side was ENG's Q2 2009 results of $0.00 in earnings compared to $0.24 in Q2 2008. Q2 09 revenues fell by 41%.

"Our second quarter results reflect the decline in U.S. energy-related project spending, which has led to a contraction in our business, lower margins and a competitive pricing environment," ENG CEO William A. Coskey said at the time.

Also on the plus side: an 8-K filed by ENG management on October 15 said the Company is forming a Government and Infrastructure business unit that will utilize ENG's the Company's technical services division that provides automated fuel handling systems and instrumentation and control services to branches of the U.S. military. ENG promoted from within and appointed a new President of the Government and Infrastructure Group. Good, ENG means business.  

ENG operates in four segments: Engineering, Construction, Automation, and Land. In the near-term, if the Company can bring in a deal from its new unit and add some cash-flow from sales to its revenues, the stock could settle in the $4 range. This is a 'Buy' for me at the current price.  

ENG                                                            HRBN

Gaining 5% this morning is Harbin Electric Inc., (HRBN) http://www.harbinelectric.com/ currently trading in the $16 range. HRBN is also heavily traded for a SmallCap stock. Lots of support. I like this stock because of what they do and where they do it. HRBN manufactures electric motors in China. This stock likes $16. It hit the valley floor in September at $12 and then jumped to $20 in October (setting a 52-week high of $20.26 on 10-14-09). HRBN did give shareholders 75 cents in diluted EPS during the 'great recession' on trailing twelve month revenues of $143 million. Not bad.

HRBN announced last Friday it will announce its Q3 2009 numbers on November 11 and that makes HRBN a near-term momentum play for me. HRBN bought competitor Simo Motor on October 19 in a good deal (a purchase price equal to no less than six (6) times and no more than eight (8) times the 2008 audited net profits of Simo). Simo was in the industrial rotary motor business. HRBN knows electric motors: they make motors for everything from cranes to food processing to autos to medical devices to postal sorting machines. As far as risk/reward goes; good Q3 numbers can push HRBN beyond its current $16 and aggregators and institutions may find that $20 is a number they can support. Considering the PRC's recent 8%+ GDP, this is a near-term 'Watch Closely' for me.    

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