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Research On Deck – Net Medical Xpress Solutions: Will it Pass Our Litmus Test? [GeoWire Weekly No. 32]
Next on the hot seat is Net Medical Xpress Solutions Inc. (OTC:NMXS), a company engaged in providing solutions to the telemedicine industry. As with many other microcap stocks that come into our internal momentum screening system, we more often swipe left than right, as most fail our initial litmus test of adhering to the conditions that allow it to enter the next phase of our analysis. We did manage to execute a tepid swipe right with NMXS, a stock we had never covered, but were intrigued with it, when at $0.09, it popped up on our screener after it reported strong Q1 2022 financial results on May 4, 2022. Since then, it’s risen to $0.41, a 355% move.
GeoWire Monthly, Vol. 2, Issue No. 4, May 2022
The stocks in our microcap Model Portfolios might get caught up in the capitulative mayhem in a macro sense, but we know that their growth outlooks, combined with their cheap valuations, will make for a recovery that we think will blow the pants off of their mega cap counterparts when this new cloud of dust settles. To distill it down just a tad, it’s easier to double a $10 or $20 million revenue base than to double a greater than billion dollar valuation. Furthermore, the potential drop in stock prices of these large companies is steep. They’ve already grown to near their max potential but many still have P/Es in excess of 50x to 100x, or non-applicable P/Es because they’re losing money, which in a literal sense means there is no bottom to the stock’s price until you get to the value of ip, customer base, plants, property and equipment. It won’t take much for the latter to crumble, nor will it take much for the former to excel. Now, we believe the pendulum has swung to where earnings and P/E ratios will matter again. Hopefully, it will be the dominating factor in valuing companies as we transition from this bear market into the next bull trend. That’s how the environment was set up for the first 20 years of my career, where high-quality undervalued microcap companies were in high demand.
We’ll Take Our Bites While We Can Get Them as NASDAQ Tanks [GeoWire Weekly No. 31]
We know it’s not easy to have a mindset to keep performing research when your portfolio might be getting decimated, but there’s always a bull market somewhere. Even though a diversified portfolio still might not go up during these rough patches, we can maintain some level of optimism by finding a few stocks to cherry pick while we are waiting for things to turn to positive. For example, we’d like to point you to three stocks that entered our research funnel this year. We’ve covered them in either Reasons for Tracking articles or a high alert research summaries. They’ve performed nicely, bucking the market trend.
Taking A Portfolio Protection Angle On A Past RFT Consideration [GeoWire Weekly No. 30]
Keep in mind that one of our goals is to provide you with insights into how we identify red flags while we are performing bullish research. This is especially relevant if you are or want to aspire to become a full time investor. Or maybe you just really enjoy the research process and digging into companies before you buy them. If that’s the case, then this case study is for you.
Last Week Was Quiet, But Video Content Coming Your Way This Week [Geo Weekly No. 29]
On the bright side, we were able to follow through with Friday’s live chat with Verde Agritech Plc (OTC:AMHPF) (NPK.TO) of which we are excited to get the replay to you as early as tomorrow. We were pleased to get to know the company’s CEO, Cristiano Veloso, who was very forthcoming with answers to the questions we posed, so we think you’ll enjoy it. We know the event was a bit early in the morning, but we try to be as accommodating as we can when it comes to most executives’ busy schedules.
Laying Out A Plan To Dissect Model Portfolio Stocks at GeoInvesting [GeoWire Weekly No. 28]
While over the past several years, it was possible to achieve great success by investing in lesser quality companies that may have had the potential to become tier one quality companies, the current environment dictates, more than ever, that tier one quality investing is where the majority of the focus needs to be. Revenue and good stories are no longer enough ammo to push stocks higher. It’s back to appreciating companies that can generate cash flow and earnings that are in a good liquidity standing. Like many others before us have stated in times when adaptation was necessary, “when times change, so must you.” So, it’s time to reassess our model portfolios to differentiate between the top quality and lower quality stocks, and which ones lie somewhere in between. We conveyed a #PodClip message by @majgeoinvesting w/ commentary on strategy & focus amid the microcap investing malaise, w/an emphasis on categorizing our Model Portfolio companies based on certain criteria & buckets they might fall into.