Stock Gumshoe

Today I’m looking at a teaser ad from Andrew Gordon of Investors Daily Edge — I’ve looked at a couple of Gordon’s teaser picks over the past year or so, one good (SunPower) and one very bad (Microvision). Apparently now his focus has moved a bit, he’s not talking about breakout high tech companies these days, but about stable dividend payers — so he at least knows how to change his spots when the leaf he’s sitting on withers and dies.

With the current panics in the market, I expect we’ll continue to see more of this kind of focus from the teasermeisters — stability, safety, and dividends. Of course, they’ll probably largely still stay away from the best dividend payers, the big banks, but I imagine I’ll be seeing many more income oriented ads in the months to come. Greed works better than fear as an advertising ploy most of the time, but sometimes investors are so afraid already that they can’t quite bring themselves to reach for the real, over-the-top greed impulse that is demanded for a stock that’s promised to provide 1,000% gains.

So we have here a company that has been raising its dividend consistently for 37 years, and that is likely to be issuing a big special dividend of some kind this fall, according to Gordon. That might start some little bells of recognition a-tingling in your cranium, but we do get a bit more. Read the rest of this entry »

This teaser comes to us from Andrew Gordon of Investor’s Daily Edge and The Wealth Advantage, which says it “reveals undervalued opportunities for large gains in very safe investments.”

The service looks pretty good in the ad, as they all do — Andrew says he looks for good management (especially new management brought in to fix things), good hidden assets owned by companies the Street thinks are in crisis, and good entry timing (avoiding “falling knives”). I’m sure we would all make money if we could find such companies with consistency.

The last one of his stocks that we sleuthed out a little while back was SunPower, which doesn’t seem to have that “crisis” flavor to it, though he did think they had a hidden asset in their top-of-the-line PVs … but perhaps he has other investing ideas as well.

And the examples he gives, a cherry-picked list of the best “crisis recovery” companies of the past several years, also sound like great ideas (at the time of their bottoming):

aQuantive (which the Fool also likened to the “next Google”, as we’ve sleuthed before), Hewlett Packard, Apple, Flir, Elan, American Airlines … etc., etc. I didn’t notice anywhere that he said he had actually recommended these stocks at the bottom, or profited from their comebacks, but he does use lots of fancy looking charts to make it seem as though he is in some way responsible for the money investors made on these names (and not for the money they precipitously lost before their turnarounds).

So the argument is, once we know which companies actually did recover from their crises, wouldn’t it be great to use your time machine to go back and invest in them?

Of course, that’s not what he says — he says he has a system for picking the companies that will recover out of the rabble. Maybe it even works, I guess time will tell.

So what’s the tease for the best “crisis” stock he’s found for us to invest in?

“Without a doubt, this is a multi-billion dollar technology firm in the making… and yet its market cap is less than $185 million. One analyst has said that ‘this company has a better pipeline than Hewlett-Packard.’ Others have compared this firm to a young Microsoft or an up-and-coming Intel. And today, you can buy it for around $4.00 a share.”

Well, hard to argue with that, eh? He notes also that the company has fallen by about 95%, but has “more than 100 patents that cover several billion dollar applications.”

The cool stuff that this company is reportedly working on includes:

A tiny projector for cell phones.

High quality, disposable surgical endoscopes.

A “device that could make plasma screens obsolete.”

And so on … lots of pie in the sky sounding stuff that sounds pretty awesome.

So … would you like to, in Andrew’s words, turn “$10,000 into $100,000 in one stock…”?

I have no idea if it’s really worth the money … but thanks to the sleuthing work of an anonymous Gumshoe reader (didn’t even have to take out the craniotronic for this one), I can tell you that this company is …

Microvision (MVIS)

It is indeed still trading right around $4 — $4.20 this morning, and the market cap is right around $180 million. It does indeed have a lot of patents, though I don’t know if they’re worth any money, let around “multi-billions”. And they are developing all those cool things they teased in the ad and more, as well as continuing to develop next generation barcode scanners.

As far as “crisis” goes, they are certainly way down from their 2000 peak of about $80 … and also well recovered from their trough of just over a dollar last fall. Don’t know why they fell or why they recovered.

I also have no idea how this company’s products compete in the marketplace, but they certainly do have some revenue — including government contracts, ongoing sales of scanners, and some smaller stuff based on their MEMS imaging technology. Perhaps they’ll be a world-beater, perhaps not — that’s for you to decide.

As a quick thumbnail from my glance at their info: They have more debt than cash, but look to me to be pretty far from being profitable (and their revenues aren’t growing, at least not in the latest quarter). They do have outstanding warrants, traded at MVISW if you’re interested, so take those into account when you make your valuation calculations, if you’re interested. And there is a substantial short interest of close to 10% of the float. So caveat emptor, and let us know if you think anyone will be making money from this one.

And just FYI: You haven’t missed anything in the time it took to get to this one — it closed at $4.23 yesterday, the same as the closing price on the day I originally got this email last week.

And if you bought it around $80 seven years ago, feel free to share your sob story. Thanks again to my anonymous reader for bringing this teaser and it’s solution to our attention.

So I’ve now covered teasers for many of the big solar companies, including SunTech Power and Trina Solar from China … but here’s yet another solar company tease.

This one comes from Andrew Gordon of The Wealth Advantage, which will run you about $1,000 a year (though they’ve got a “free trial” period like most of these guys). In exchange for your subscription, you get a copy of the special report, “Solar Windfall: Get Rich With The Best PV Maker.”

And Andrew Gordon is also actively recommending SunTech, by the way — he gives that one up for free in his email ad. But he reserves this second PV idea for paying customers. Don’t worry, the Gumshoe reserves it for anyone who wants to read the rest of this writeup, for free.

This one is not an argument — as we saw with the Chinese companies — that they’ve got the lowest cost PV cell or that they can produce the highest volume most quickly. They’re arguing that this company instead has the best, most efficient cell, which is going to be key to making solar power competitive with dead, rotten dinosaurs in the absence of government subsidies.

This company’s claim to fame is that they’ve developed a more efficient cell that converts energy at 22% efficiency, better than the standard 15% or so that current cells get, and they have a panel that can generate 315 watts, which I guess must be particularly impressive or they wouldn’t brag about it.

So, the other details:

Revenues have gone up by 2,200% in three years ($10 million to $230 million).

“They’ve stated publicly that they want to push down their operating expenses to only 10%”

They should have 200MW of capacity by the end of this year, and double that within three years.

They IPO’d last year (just like Suntech and Trina and some others)

So what is this “best PV maker”, according to The Wealth Advantage? Well, you can find out by subscribing if that’s your thing, and you’ll probably get an interesting report and some follow-up information.

But if you just want the name of the company, and you don’t want to pay for that — since you’re a competent adult and you can do your own due diligence, thank you very much — well for that, you can just come to your friendly Gumshoe. Let me just tighten up the straps on my cogitationizer for a moment …

OK … this photovoltaic maker is …

SunPower (SPWR)

And actually, “last year” is slightly wrong for their IPO — the initial spinoff from Cypress Semiconductor, which still owns the lion’s share of this company and has slowly been selling off wee chunks to the public markets, was at the end of 2005. So it’s possible they’ve been flogging this email for a few months, or that I was forwarded a slightly stale one.

And for full disclosure, this is a company that I have a loose connection with — I own some call options on Cypress Semi, primarily because of their Sunpower ownership. Cypress bought Sunpower a while back, when it was a tiny unprofitable pv maker with a good idea, and plowed some cash in to build them into a major player. They’ve done that, and now Sunpower is really the only thing valuable that people see in Cypress — Cypress owns roughly 2/3 of Sunpower, and is trading for about 3/4 of Sunpower’s price, so you can see the other parts of Cypress don’t get much love.

(If you want to do the math more precisely, Sunpower’s market cap is about $4.6 billion, Cypress’ market cap is about $3.5 billion, and I think the last reported ownership percentage by Cypress was 65% of SunPower).

So if you think SunPower is a good investment, it might also be worth looking at Cypress — the theory goes that if SunPower is fully spun out it will be worth more as an independent company, and therefore Cypress would get more than the current value for their shares, which would mean that you essentially get Cypress’ semiconductor business — which no one likes very much, to be sure, but which must be worth more than “nothing” … for free. Phew.

So there’s some meat for you to chew, but don’t let the fact that I own some shares color your understanding of the situation — I’ve owned these LEAP options for a long time, and haven’t spent any time with the financials lately to understand whether it’s still a reasonable investment (aside from the fact that you don’t know me from Adam, so why would you care what I think?)

So let us know what you think, eh? Maybe we’ll all get smarter together.

And just as an aside, I think it’s time we all felt a little sad for Evergreen Solar and First Solar — they’re not getting any teaser love from the newsletters during this latest solar boom, at least not the ones I’m seeing. Poor guys.