Researching Your Way to Small-Cap Gains

The Penny Sleuth Features: Penny Stocks, Options and High-Growth Opportunities! Researching Your Way to Small-Cap Gains By Jessica Comitto March 11, 2011 Dear Penny Sleuther, Having a general list of small-cap companies will only get you so far… once you have screened down the penny stock universe to a manageable watch list, the next step is to make the big decision: Which of these stocks do I want to invest in? We have been building our Sleuth stock screen to narrow down and find penny stocks to watch. Now that we have our list, it’s time for the next step. Last week, I talked about eliminating stocks that may be undesirable to you and furthering research on the penny stocks you have left. Only you can decide which stocks will automatically not fit your personal investment goals, but today I wanted to dig a little deeper into two of the technology stocks that popped up on our screen: EarthLink, Inc. (NASDAQ: ELNK) and Rudolf Technologies, Inc. (NASDAQ: RTEC). 6 Penny Stocks to Own Right Now… Penny Stock Fortunes is giving away SIX penny stock recommendations to all new subscribers! But you must hurry because these plays could explode at any time. Click here to watch the presentation now. EarthLink, Inc. EarthLink is an Atlanta, Georgia based Internet provider that offers value priced dial up, as well as many other broadband services, to consumers and businesses. They also offer home phone service and Internet based phone (voice over IP or voIP). Most of the company’s revenue comes from customer fees. Currently EarthLink is trading at less than $8.00 per share and has a market cap of 850 million. Fitting in with the ranges we used to set up the metrics on our screen: the P/E ratio is 10.74, the P/B ratio is 1.13, the net profit margin is 13.10%, and the free cash flow 195.5 million. At first glance, EarthLink fits perfectly into what we are looking for… and even adds value back to their shareholders by paying out a 2.5% dividend. But it is important to note that EarthLink’s main competitors are huge names in the industry: Comcast, Verizon, Google, and Yahoo!. Also, EarthLink’s net income has been continuously declining over the last four years. Rudolf Technologies, Inc. Rudolf Technologies is a New Jersey based company that provides performance inspection and metrology systems. They are currently doing research in emerging markets, such as LED and solar technology, and nearly every major device manufacturer uses Rudolf’s services. A large part of Rudolf’s revenue comes from outside the U.S. Rudolf is presently trading below $11.00 per share and has a market cap of 335.33 million. In line with our screen: the P/E ratio is 12.47, the P/B ratio is 1.90, the net profit margin is 13.83%, and the free cash flow 14.4 million. While Rudolf does not pay out dividends to their shareholders, their net income has grown substantially over the last year. It is also important to note that that the company’s business crosses international borders and is actively doing research to grow their already large product line. 49% Gains in 21 Days and 61% Gains in 14 Days — Next Profit Alert Live on Wednesday Watch the presentation that reveals how one unique market strategy recently booked 123 winners in 127 moves! That’s 97% success! Your gains could start rolling in quickly! As soon as Wednesday! Watch this urgent video — right here. Digging Even Deeper Now that you have done the basic research on the two companies, it is time to rank these companies. When diving in even further, it may be safe to say that the value of dial-up Internet is declining and the swiftly growing advances of EarthLink’s competitors could put EarthLink at a disadvantage. But if you are an investor looking for value to be paid back to you, the dividend may be a reason to hang on. But what we are looking for is value and growth. The numbers tell a story here… even though Rudolf may be bringing in less cash annually, their profit margin is slightly higher than EarthLink’s. Also, the company grew its bottom line between 2009 and 2010 where as EarthLink’s has been going straight down. Going even further, EarthLink isn’t really doing anything new. Everything they have been working on over the last few years is already being done by their competitors. Rudolf, on the other hand, is investing in research to further their competitive edge. So if I were to rank these two stocks based the information gathered, I would say the benefits of keeping a closer eye on Rudolf outweigh EarthLink. Sincerely, Jessica Comitto Associate Editor, Penny Sleuth Wealth Revelations: Historic Profit Potential from Just-Released Research The blind will see again. The sick will be healthy again. Four tiny companies could make these miracles a reality. For a chance at the biggest possible profits — you must read this shocking report immediately. There isn’t much time for you to act… Researching Your Way to Small-Cap Gains is featured at Penny Sleuth. The Secret $200 Retirement Blueprint Investing in Penny Stocks What Is Technical Trading Follow the Penny Sleuth on Twitter, here. Become a Facebook Fan of The Penny Sleuth, here. The Penny Sleuth, a free e-letter, offers independent news and commentary on small cap stocks, options and high growth opportunities. We sent this e-mail to KNUMASSCN@gmail.com because you or someone using your e-mail address subscribed to this service. Are you having trouble receiving your Penny Sleuth? You can ensure its arrival in your mailbox by: Whitelisting Penny Sleuth. To end your Penny Sleuth e-mail subscription, click: Unsubscribe. 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