GEO Investing

Call(s) to Action:

ESYS ($12.11, up > 13% in early trading) handily beats analyst EPS estimates by 62% with EPS of $0.26 vs analyst estimates of $0.16.  However, the company offers limited commentary and can experience EPS volatility quarter to quarter.  So it is unclear if this quarter was an aberration based on the commentary giving by management. We will continue to track.

OPTT ($1.53, down >30% in early trading) Short – Will have to give back $64 million in fund money it was giving in relationship with Australian project they intended to provide work for that has now been cancelled.  Please see Seeking Alpha article from 4/3/2014 for more color on the story.

Here are the stories that the GeoTeam is following today… (Please see full disclosures at bottom)

  • ChinaHybrids
    • YGE ($3.39) – Announced has signed an Engineering, Procurement and Construction contract with Senelec, the stated owned utility company of Senegal,for a 2MW ground-mounted PV plant, one of Senegal’s flagship PV projects.
  • U.S. News
    • SWRL ($0.73) – Doubled earnings in Q1 2015; commentary was strong indicating that growth will be strong for next 3 quarters as the company integrates recent acquisitions.  We interviewed the company about a year ago when the stock was trading at about the same price as now.  We will attempt to re-interview management to see if they can maintain profitability in their seasonally weakest quarters (Q3 and Q4).  Coding as a GeoBargain on the radar $0.73.
    • MEA ($1.21) – Offered strong guidance, reversing prior year’s loss. Trading well below book.
    • HIIQ ($12.4) – Announced acquisition of HealthPocket, CEO stated “this is game changer with how Americans buy health insurance”
  • GeoBargains/GeoBargains on the Radar
    • GeoBargain FTDL ($4.00) – Reported slight increase in EPS for Q2 2014 on flat sales.  EPS for Q2 2014 of $0.11 vs $0.10 in the prior year.  Press release offers no commentary.  We are becoming more tepid on the story, and will wait for the 10-Q for more color.
    • GeoBargain GTT ($10.85) – Announced an agreement with Equinix to provide businesses with direct access to Amazon Web Services (AWS), Salesforce.com and other cloud services available on the Equinix Cloud Exchange.

For more timely information, particularly during the daily trading session, we urge our members to read our message board posts daily.

Disclosure: Long GTT, FTDL; Short OPTT Other Long Positions; Other Short Positions; Pump & Dump Positions (Password GEO2014)

Summary of general highlights:

On the Asian Front:

Yingli Green Energy (NYSE:YGE) ($3.39) -or the “Company”), the largest vertically integrated photovoltaic (“PV”) module manufacturer in the world, known as “Yingli Solar”, today announced that its wholly owned subsidiary, Yingli Green Energy Spain, S.L.U (“Yingli Spain”)

has signed an Engineering, Procurement and Construction (EPC) contract with Senelec (Societe Nationaled’Electricite de Senegal), the stated owned utility company of Senegal,for a 2MW ground-mounted PV plant, one of Senegal’s flagship PV projects.

According to the agreement, the Company will co-develop the 2MW project located in Dakar, Senegal with Senelec. The project will supply clean energy to the new international conference center Diamniadio in Dakar where the renowed “XV Francophonie Summit” will take place in November 2014. Construction will begin in July and the plant is expected to be in operation by November 2014. As the project’s exclusive PV module supplier, the Company will supply its multicrystalline modules that, upon installation, will spread over approximately 2.5 hectares.The project is anticipated to generate 3.7 MWh of electricity per year, enough to power more than 1,000 typical homes in the area.

“This project is an opportunity for Yingli Solar to integrate its technology in the west African energy market and an opportunity for Senelec to build the future of clean energy in Senegal. I hope this example of cooperation between Senelec and Yingli will be enlarged to various domains of Yingli technology. With this project, Senelec realizes the vision of the President Macky SALL, for an energy mix giving more place to clean energy,” said Mr Papa DIENG, General Manager of Senelec.

“We are pleased to realize this project together with the national utility company of Senegal. This turnkey project is a new milestone for the Company’s development in emerging markets and will enhance our position as a solar energy solutions provider throughout Africa. We are committing to promoting the development of clean energy in Africa through our expertises and high-quality products,” said Mr. Liansheng Miao, Chairman and Chief Executive Officer of Yingli Green Energy.

On the U.S. Front…

GeoBargain/Specials…

Firstime Design (OOTC:FTDL) ($4.00) – GeoBargain FTDL, through its subsidiary, License Products, Inc., designs and distributes decorative clocks and other home decor product. FTDL reported second quarter 2014 results:

  • Net sales was $1.9 million vs $1.9 million in the same period last year.
  • EPS  was $0.11 as compared to $0.10 for the same quarter last year.

We are becoming more tepid on the story, and will wait for the 10-Q for more color.

Gtt Communications (AMEX:GTT) ($10.85) –  GeoBargain GTT is a cloud network provider to the world. The company announced today that it has reached an agreement with Equinix to provide businesses with direct access to Amazon Web Services (AWS), Salesforce.com and other cloud services available on the Equinix Cloud Exchange.

Quotes from management:

“GTT is excited to work with Equinix to bring businesses direct access to best-of-breed cloud services over our global network,” said Rick Calder, GTT President and CEO. “Our EtherCloud portfolio of wide-area-network services enables enterprises to seamlessly connect to any location around the world with direct access to any cloud service on the Equinix Cloud Exchange. This provides the security, performance and reliability many organizations need to fully adopt cloud services.”

U-Swirl (OOTC:SWRL) ($0.73) РSWRL operates and franchises self-serve frozen yogurt caf̩s in the United States and internationally. The company reported its first quarter 2015 financial results:

  • Revenue increased 46% to approximately $2.5 million, compared with approximately $1.7 million in the first quarter of the previous fiscal year.
  • Non-GAAP EPS of $0.02 compared to $0.01 in prior year.

Quotes from management:

“……In summary, we look forward to the balance of Fiscal 2015, which should further confirm the potential of our industry consolidation strategy. Based upon information currently available, we expect to report record revenue and earnings for the current fiscal year, which ends in less than eight months (February 2015),”

We interviewed the company about a year ago when the stock was trading at about the same price as now. We will try to re-interview the management to see if they can maintain profitability in their seasonally weakest quarters (Q3 and Q4). In the meantime, we are coding the company as a GeoBargain on the radar at the price of $0.73.

In Other U.S. News…

Elecsys Corp (NASDAQ:ESYS) ($12.11) – ESYS provides machine to machine (M2M) communication technology solutions, data acquisition and management systems, and custom electronic equipment for critical industrial applications worldwide. The company reported strong fourth quarter 2014 financial results:

  • Revenue was $8,697,000, an increase of 16%, or $1,185,000, from $7,512,000 in the previous fiscal year.
  • Non-GAAP EPS of $0.26 as compared to $0.16 in the prior year.
  • The Non-GAAP EPS of $0.26 this quarter beats the analyst estimate of $0.16 by 62%.

Quotes from management:

Karl B. Gemperli, Chief Executive Officer, stated, “We are pleased to report a very successful year with continuing revenue growth, enhanced gross margins, and a substantial increase in earnings. Sales increased over 20% compared to the prior year driven by shipments of our proprietary M2M products and solutions. As a result, our overall gross margins increased to nearly 39% while net income grew by nearly 47% to $0.62 per share. Our performance this year was a direct result of long-term strategic decisions to invest in new M2M product development, enhance the profitability of our custom OEM business, and penetrate new markets and applications for industrial data communication solutions.”

Gemperli continued, “Elecsys has established its position as a leading industrial M2M technology provider, and we are committed to making significant investments to develop new M2M solutions for other industrial applications, a key component of our future expansion. In conjunction with our ongoing new product development initiatives, we believe that our continued sales and marketing efforts will not only expand business for Elecsys proprietary products in our existing market sectors, but will also create business development opportunities in additional industries, both domestically and internationally. Although global market and economic uncertainties abound, we expect to continue our growth this coming year and remain focused on expanding our market presence as we build the company and grow earnings over the long term. We are, as always, thankful for the dedicated and talented team of people at Elecsys who consistently work towards our long-term success.”

We will keep tracking the story to see if results like this quarter are sustainable.

Ocean Power Technologies, Inc. (NASDAQ:OPTT) ($1.53) – OPTT makes PowerBuoys that product electricity from the motion of waves. According to the 8K filing from OPTT on 07/14/2014:

“an indirect consolidated subsidiary of OPTT, Victorian Wave Partners (VWP) tendered a notice to the Australian Renewable Energy Agency of its intent to terminate the Renewable Energy Demonstration Program Funding Deed, dated as of 09/09/2010, entered into between Victorian Wave Partners and the Commonwealth of Australia. VWP’s Board of Directors concluded in July 2014 that the wave power demonstration project contemplated by the Funding Deed was no longer commercially viable. As a result, the A66.5 million grant that was awarded to VWP by the Commonwealth of Australia in 2010 needs to be returned back to the Australian government.”

The Seeking Alpha article from 04/03/2014 had shed more light on the story.

Metalico Inc (AMEX:MEA) ($1.21) – MEA is engaged in scrap metal recycling and lead metal product fabricating businesses. The company offered strong guidance for the coming second quarter 2014:

“For the Second Quarter, Metalico anticipates total sales of $142 million, an increase of approximately 9% from $130 million in the same period last year.  Operating income improved and is anticipated to be between $2 million and $2.5 million, compared to a loss of $2 million in the same period last year.  The Company benefitted from increased non-ferrous volumes and improvement in related margins.  Metalico estimates that reported EBITDA for the quarter will more than double and be in a range of $6.8 million to $7.2 million, compared to $2.6 million for the same quarter in 2013.”

The company is trading well below if book value of $3.0 per share.

Health Insurance Innovations (NASDAQ:HIIQ) ($12.4) –  HIIQ operates as a developer and administrator of Web-based individual health insurance plans and ancillary products in the United States. The company announced today that it has acquired the Silicon Valley based HealthPocket, Inc. for approximately $32 million in cash and stock. Quotes from management:

“The incorporation of HealthPocket into Health Insurance Innovations fits with our growth strategy of continued innovation of unrivaled products and technology solutions within the insurance industry to further enhance our competitive advantage,” said Mike Kosloske, CEO of Health Insurance Innovations. “HII has achieved a track record of rapid year-over-year growth since 2009. This transaction will significantly increase leads, drive sales and enable us to more swiftly expand into lucrative market adjacencies such as the $402B Medicare marketplace, the $35B ACA segment of individual major medical and the $220B employer-sponsored market, positioning the combined company for long-term leadership in our dynamic industry.”

“Most Americans overpay for health insurance and the plans they choose often don’t meet their unique needs. We founded HealthPocket to solve this national problem using new and highly scalable technology,” stated Bruce Telkamp, CEO of HealthPocket. “Having the resources of HII behind us will allow us to further accelerate our technology investment and rapid growth in consumer utilization.” Telkamp continued, “Both Sheldon Wang and I have known Mike Kosloske for over a decade, and we share Mike’s deep passion for bringing much needed innovation to the health insurance industry.”

For more timely information, particularly during the daily trading session, we urge our members to read our message board posts daily.

Sincerely,

The GeoTeam