Undervalued Growth Companies model manager Gehman Capital attempts to build a diversified portfolio of undervalued stocks within the model. Their goal is to maximize returns and add undervalued companies that have a unique product, are in a growth industry and that have sufficient financial resources to withstand some economic stress. One of the top holdings in the model is Quicklogic Corp (NASDAQ: QUIK), the designer of semiconductor solutions that work in portable and mobile devices. Over recent years, the company’s sales have been declining. In 2007, QUIK reported $34.4 million in sales, this fell to $31.9 million in 2008, then to $15.1 million in 2009. So far, during the first three quarters of 2010, the company has already beaten 2009’s sales with a reported $19.2 million in sales. Shareholder equity fell from $21.9 million in 2008 to $21.3 million in 2009 while outstanding shares rose from 29.9 million in 2008 to 35 million in 2009. By the third quarter of 2010, QUIK’s total liabilities had been reduced from $6.3 million in the fourth quarter of 2009 to $6 million. On November 26th, the stock had a closing price of $5.56 and the 52-week high was $6.34.
Another top holding in the model is Wave Systems Corp (NASDAQ: WAVX), a company that specializes in software for hardware-based digital security. WAVX develops its core products around the industry-standard security chip. Sales rose from $6.3 million in 2007 to $8.8 million in 2008, then to $18.9 million in 2009 and, based on the $19 million already reported for 2010, will exceed that this year. Shareholder equity fell from $2.5 million in 2007 to -$6 million in 2008, then rose to -$1.9 million in 2009. So far in 2010, total liabilities have fallen $1 million from 2009’s numbers while outstanding shares have grown from 58.9 million to 75.2 million. On November 26th WAVX closed at $2.54 and the 52-week high was $4.75.
*All prices used in this post obtained from Yahoo! Finance.
