02/18/2007
VOLUME 277
Companies featured in the current edition of the newsletter: ADSX, ARGA, CYTR, EMIS, GNBT, HSOA, HYTM, IMMG, ISOND, ITUI, SCLL, SFP, SOG, SWTS, USAT
The bulls seized control of Wall Street last week, as reassuring comments by Federal Reserve Chairman Bernanke last week were all that was needed to send the Dow to another record high, and support further gains in all of the other indexes. Bernanke’s comments support the view that The Fed is not expected to raise rates anytime soon, while still leaving potential for a possible rate cut later in the year. The S&P 500 was up and down over the course of the week, but saw a surge based on Bernanke’s comments. The S&P 500 closed the week up 17 points and increased its year to date gain to 2.6%. The Dow was up 186 points and is up 2.4% this year, while the Nasdaq rose 36 points, increasing its year to date advance to 3.4%. The Russell 2000 closed the week up 11 points and increased its year to date gain to 3.9%.
Investors ignored declines in industrial production, housing and consumer confidence to send the markets higher last week. Industrial production dropped last month as a result of weakness in the auto sector. Housing remains a concern with January housing starts plunging 14.3%, the steepest decline in more than a decade. Many believe the sharp decline, after two consecutive months of gains, was due to unseasonably cold weather. However, the January core PPI was in line with expectations, helping to ease concerns about economic weakness. The Saudi oil minister suggested that no output reductions were necessary and oil prices ended the week at $59.39, trading in a narrow range.
What should investors look for in the upcoming week? Earnings announcements have slowed considerably with only a handful of major names scheduled to report results over the course of the upcoming holiday shortened week, as all of the markets are closed Monday. Investors can expect to see earnings reports from Alltel (NYSE: AT), Home Depot (NYSE: HD), First Energy (NYSE: FE), and Wal-Mart (NYSE:WMT) before the bell Tuesday. Hewlett-Packard (NYSE: HPQ) and Medtronic (NYSE: MDT) will announce earnings after the bell. Abercrombie (NYSE: ANF) and Whole Foods (Nasdaq: WFMI) will announce earnings after the close Wednesday. Thursday will be the busiest day for announcements with earnings reports from CMS Energy (NYSE: CMS), JC Penny (NYSE: JCP), Barrick Gold (NYSE: ABX), OfficeMax (NYSE: OMX), Safeway (NYSE: SW), and TRW Automotive (NYSE: TRW) before the bell. H&R Block (NYSE: HRB), Chiquita Brands (NYSE: CQB) and Chesapeake Energy (NYSE: CHK) will report earnings after the bell Thursday. Friday morning reports from Lowe’s (NYSE: LOW)and Clear Channel (NYSE: CCU) will close out the week for earnings reports.
Next week’s economic news and data will be relatively tame, but some mid-week activity could get some investor attention. The January Core CPI will be announced before the bell Wednesday followed shortly after by mid-morning announcements of the January Leading Indicators and the Weekly Crude Inventories. The FOMC minutes from January 31, 2006 will be released shortly before the market close Wednesday afternoon. The Weekly Initial Unemployment Claims will be announced before the bell Thursday and the January Help-Wanted Index will be announced later that morning. Fed Gov Bies will speak at Duke on Tuesday. Fed Gov Kohn will address financial stability Wednesday while San Francisco Fed president Yellen will speak on the economy.
The conference schedule for next week will once again be active. The four-day ROTH Capital Partners 19th Annual OC Conference at the Ritz Carlton in Laguna Niguel , California will begin Monday. Hythiam, Inc, (NASDAQ: HYTM)is scheduled to present Tuesday at 10:30 a.m. Pacific Time. Emisphere Technologies (NASDAQ: EMIS) presents later that day at 3:30 p.m. Auriga Laboratories, Inc. (OTCBB: ARGA), is scheduled to present at 10:30 Thursday, along with USATechnologies (OTCBB: USAT). CytRx Corporation (NASDAQ: CYTR)is scheduled to present on Thursday at 11:30 am PST. The four-day Consumer Analyst Group of New York 2007 Conference in Scottsdale, Arizona and the three-day Morgan Stanly Basic Materials Conference in New York will begin Tuesday. The Prudential Equity Group Washington Healthcare Conference in Washington, D.C. and the Piper Jaffray Second Annual Solar & Clean Tech Symposium are Wednesday. The three-day RBC Capital Markets Communications, Media and Technology conference in Toronto, Ontario, the two-day Bank of America Technology Conference in New York, and the four-day CIBC World Markets 2007 Whistler Institutional Investor Conference in Whistler, British Columbia will also begin Wednesday. The CIBC 4th Annual Vail Semiconductor Summit in Vail, Colorado and the Credit Suisse Global Forest Products Conference are scheduled to begin Thursday. The JPMorgan Private Homebuilder Conference in New York and the two-day D.A. Davidson 5th Annual Technology Conference in Phoenix, Arizona will also begin Thursday.
Volume Alert:Shares of CytRx Corporation (NASDAQ: CYTR), a biopharmaceutical company focused on developing products primarily in the area of small molecules and ribonucleic acid interference (RNAi), surged to another 52-week high on more than four times average volume last week, as the stock continues its blistering run that has seen shares advance more than double this year as investors have begun to focus on the company’s RNAi technology platform and its scientific advisory board, led by Craig Mello, Ph.D., who was recently awarded the Nobel Prize as the co-discoverer of RNAi. Despite the gains, the stock still trades at a substantial discount to peer company Alnylum Pharmaceuticals, and well below the price that Merck paid to acquire Sirna recently. The stock closed the week up $0.85 at $4.10.
Generex Biotechnology Corporation (NASDAQ: GNBT), a leader in the area of buccal drug delivery, announced its wholly-owned subsidiary, Anitgen Express received a Notice of Allowance in connection with U.S. Patent Application No. 10/197,000. The specific award covers fundamental aspects of the design and use of Ii-Key antigenic epitope hybrids in treating disease. In addition to the initiation of a Phase II clinical trial designed to test the efficacy of one of its immunotherapeutic Ii-Key hybrid vaccines in breast cancer, Antigen Express has also initiated clinical trials on a synthetic avian influenza vaccine based on the same platform. The stock ended the week down $0.11 at $1.73.
Isonics Corporation (NASDAQ: ISOND), developer of innovative solutions for the homeland security and semiconductor markets, announced last week that the company has completed a 1-for-4 reverse split of its common stock as part of a plan to maintain the company’s continued listing status on the Nasdaq. Isonics’ shareholders received one share of Isonics stock for every four shares they held. the company’s stock symbol will trade with a “D” at the end for approximately 20 trading days to reflect the reverse stock split. The company’s common stock will once again trade under the ISON ticker symbol after the expiration of the period. Shares ended the week down $0.32 at $1.76.
Small appliance maker Salton, Inc. (NYSE: SFP), announced last week fiscal results for its second quarter ended December 30, 2006. Salton reported net sales of $190.9 million and a loss of $6.3 million compared with net sales of $230.4 million in the second quarter of fiscal 2006 and a loss of $27.8 million. The net loss reported in fiscal 2006 included a $28.1 million non-cash charge for recording a valuation allowance on a portion of the company’s deferred tax assets. Gross profit for the second quarter declined from $64.4 million in fiscal 2006 to $49.8 million in fiscal 2007, primarily a result of the decreases in net sales in the domestic business coupled with rising prices from suppliers, and increased cost of raw materials. For the six months ended December 30, 2006, Salton had net sales of $329.3 million and a loss of $16.4 million, compared with net sales of $378.8 million and net income of $1.9 million. Fiscal 2006 net income included a $27.8 million gain associated with the sale of the company’s 52.6% ownership interest in Amalgamated Appliances and $21.7 million gain from the early retirement of debt, partially offset by a $28.1 million valuation allowance recorded on a portion of the deferred tax assets. Gross profit for the first half of fiscal 2007 was $84.2 million, compared to $93.9 million, in the corresponding period from the year before. Of course, the results were overshadowed by the company’s recent announcement that it had inked a deal to merge with Applica, in a move that should allow both small appliance companies to reduce operating costs and enhance sales of top brands through the entry into new markets. The stock ended the week down $0.24 at $2.67.
Volume Alert:Shares of i2Telecom International, Inc. (OTCB: ITUI)surged to its highest level in nearly one year on more than three times average volume, as investors have reacted enthusiastically to the company cleaning up its capital structure, allowing it to focus on developing its innovative Voice-over-IP products. Shares doubled for the week, closing at $0.28.
Shares ofHome Solutions of America, Inc. (NASDAQ: HSOA), a provider of rebuilding, remodeling and construction services, came under pressure last week after the lone analyst covering the company reduced his estimates for the fourth quarter citing delays in funding for the Road Home Program. In the report, the analyst reduced his Q4 EPS estimate from $0.25 to $0.16 and cut the 2007 forecast from $0.79 to $0.70. The news should come as little surprise to investors in the stock, as the company cited funding delays in a previous press release and Centex, a 10% customer of the company, previously said that the housing market was the worst it had experienced in the last 25 years. Still, if the company were to earn $0.49 for the full year as the analyst forecast, it would be nearly double what it earned in fiscal 2005. At the lower earnings level, the stock trades for just 12 times trailing 12-month EPS. Shares ended the week at $6.29, down 14 cents.
Stem Cell Innovations, Inc., (OTCBB: SCLL)presented data last week at the Stem Cells World Congress in San Diego describing further characterization and extension of its PluriCell™stem cell system. The Congress attracted experts from academia and industry to discuss progress in the stem cell arena. The companyt described how its PluriCells™ have the ability to become endothelial cells, the cells that line the arteries and which are central players in cardiovascular disease. Normal adults have few circulating endothelial precursors in their blood but increased levels have been shown in conditions associated with myocardial infarction and stroke. PluriCells™ can provide both a drug discovery platform and also a potential cell therapy for use in these conditions.
IMPART Media Group, Inc. (OTCBB: IMMG), an innovator in the creation of out-of-home digital advertising content and information network management, announced last week that RediClinic LLC has selected the company as their digital signage provider. RediClinics are staffed by certified nurse practitioners who work with local physicians to diagnose, treat, and prescribe medications for common medical conditions. The company also administers a wide range of preventive services, including health screening tests, vaccinations, and back-to-school & sports physicals. Impart’s functionally unique and innovative Impart IQ™ platform was the selected solution for use by RediClinic. For each RediClinic installation, Impart will provide two Impart IQ Box™ players, as well as web-hosting, content management, and network monitoring monthly services for the RediClinic digital television system. The two companies are also in the process of creating an interactive solution that will ultimately be expanded into customer learning experiences throughout RediClinic’s national network. Shares ended the week up $0.13 at $0.85.
Sweet Success Enterprises, Inc. (OTCBB: SWTS), which has re-launched a product line made popular by Nestlé’s to tap into the rapidly growing demand for convenient and nutritious beverages, announced last week that it has established e-distribution of it products through Amazon.com. The company has added Amazon.com to its growing list of distributors and has already begun shipping products to fill Amazon’s purchase order for the complete Fuel for Health™ line of beverages. Unlike other distribution vehicles, the relationship with Amazon is expected to result in immediate revenue. Shares ended the week down $0.05 at $0.58.
USA Technologies, Inc. (OTCBB: USAT), a developer of cashless vending and energy management products, announced results for the fiscal second quarter ended December 31, 2006. The company reported record quarterly revenue of $2 million, helped by the largest e-Port contract in the company’s history. Revenue for the six months ended December 31, 2006 was $4 million compared with $3.3 million for the same six month period ended December 31, 2005. Gross profit declined during the periods as a result of lower margins on the sale of hardware to MasterCard International, which is expected to result in ongoing recurring revenue. The company reported cash and cash equivalents of $8.5 million on December 31, 2006, compared with cash and cash equivalents of $2.9 million on June 30, 2006. The company’s balance sheet should allow it to meet the listing requirements for a national exchange. The stock ended the week down $0.38 at $6.34.
On The Wires: Verichip Corporation, a subsidiary of Applied Digital (NASDAQ:ADSX),announced that Michael Barbe has joined the company under the newly created position of Vice President of Sales and Distribution for the VeriMed Patient Identification System. Mr. Barbe has over 20 years of experience in the medical device industry and will be responsible for development of a distribution network for the VeriMed Patient Identification System. Auriga Laboratories, Inc. (OTCBB: ARGA), announced that effective March 1, 2007, Trevor K. Pokorney will be appointed to the company’s board of directors. In addition to extensive business and financing experience in regards to high-tech startup companies, Mr. Pokoney holds a Master of Science degree from Carnegie Mellon University Graduate School of Industrial Administration, Manufacturing and Operations Management and Bachelor of Science in Mechanical Engineering from the University of Texas at Austin . Junior oil and gas producer Strategic Oil & Gas, Ltd. (TSX Venture: SOG), announced last week that the company has begun drilling its first well in 2007. Strategic holds an initial working interest of approximately 30% in this Alberta gas test and the drilling is time is scheduled for two weeks.
