Another summer, another set of records for the Dow and S&P 500! It’s hard to say if the bulls can maintain their momentum given some dire developments internationally, but with the U.S. economy and job growth steaming along, that may be enough to at least support current enthusiasm for equities. Now it’s time to look back on several of our summer picks — most of which have performed admirably — and all of which look to have bright futures.
Alpha Pro Tec (APT)
My most recent pick from last week, I highlighted Alpha Pro Tech, Ltd. as a “bread and butter” company that is steadily growing its top and bottom line — with several catalysts in play that may provide some nice trading gains in the weeks ahead. The company develops, manufactures and markets innovative disposable and limited-use protective apparel products for the industrial, clean room, medical and dental markets.
Three things attracted me to APT at the time. First, the company is profitable and slowly growing its top and bottom line. Second, with the Ebola crisis growing, and a recent serious viral outbreak across the U.S. primarily afflicting children, the company is one of the few small-cap plays that has a footprint in the medical protective gear industry. Finally, the issue was making some technical price breakouts across multiple timeframes, suggesting more buying interest to come.
Fortunately, all of that has come home to roost, with the issue ripping to a new 52-week top of $3.28 in today’s dealings. With patience, I believe there remains more upside from here, with the stock currently trading at about $3.10 per share. I wouldn’t be surprised to see $3.50 by year’s end — and possibly higher if any high-profile deals are announced that attract fresh buying interest.
InfuSystems, Inc. (INFU)
InfuSystems has a lot in common with Alpha Pro Tec, in that the company is in a “bread and butter” industry and has been steadily growing its sales and revenues. And, like APT, INFU has seen its share price slowly grind higher as well.
InfuSystems provides infusion pumps and related services in the United States and Canada. The company supplies electronic ambulatory infusion pumps and associated disposable kits to a variety of end-users, and sells, rents, and leases new and pre-owned pole mounted and ambulatory infusion pumps and provides biomedical certification, maintenance, and repair services for oncology practices, and others. It also provides several additional product lines and services.
The company’s most recent Q2 report was eye-catching. For the period the company weighed in with sales of $16.4 million, up $1.7 million, or 12%, from $14.7 million in the second quarter of 2013. During the period, net revenues from rentals increased 9% while net revenues from product sales increased 51%. Revenue for the six months ending June 30, 2014 was $33.6 million, a 14% increase over the same prior year period.
In the wake of my INFU recommendation on September 10, the stock cracked resistance at $3 and rushed up to a fresh 52-week top of $3.25. Since then the issue has backed-and-filled its way down to support at $2.90, and is once again poking its head above through the $3 mark in today’s trading. As long as the company’s results continue their uptrend, so too should INFU’s stock price. As with APT, I have a short- term target on this one of $3.50.
Profire Energy, Inc. (PFIE)
This issue qualifies as both good and ugly after I highlighted the shares at the $4.65 level in late August. In case your memory needs refreshing, Profire Energy, Inc. designs, assembles, installs, sells, and services oilfield combustion management technologies and related products for the oil and gas industry both domestically and abroad. Its products and services aid oil and natural gas producers in the production and transportation of their products.
The company’s biggest sellers are burner management systems, which allow the end-user to manage various combustion vessels, and provide fundamental burner management functionality, such as burner re-ignition and temperature management.
Like APT and INFU, PFIE has shown some very nice top and bottom line growth, and management was highly bullish on the company after its most recent solid Q2 earnings report. As hoped, PFIE shares gradually elevated to and through the $5 level after my story, hitting resistance at around $5.40 per share — a move that was made on relatively small volume. From that point on, sellers regained control, recently knocking the issue all the way back to under the $4 mark late last week.
The up and down movement in PFIE shares provided several important trading lessons that remain worthy of noting when playing any issue. First of all, when a stock price goes up as quickly as PFIE’s did, unaccompanied by significant volume, it’s vulnerable to quick pullbacks. Second, if you make a successful trade and some quick bucks, take profits along the way! Finally, when a stock begins to descend in price, be patient for a re-entry point: there are usually lower lows to come before it can regain its upward price mojo.
That said, right now PFIE is sitting at around $4.30 per share, and despite PFIE’s sharp move to the downside I don’t see any reason to not remain bullish on the company. My target remains $5 per share.
As always, good luck with all of your trades, and remember to always trade with caution!
Warren Gates, Senior Analyst, Normandy Research