Thursday, May 10, 2007

DFNS will Surprise or Disappoint?

4 more trading days before we get news on DFNS and the other stocks I own for that matter. (AYSI and CAGC)

AYSI moved up 11% yesterday on strong volume yesterday. (And is up again today)

CAGC is still a good deal but I think will take the longest to really move. But I think it is also the safest.

We should get earnings reports from each of these stocks on or before May 15th. (Next Tuesday)

On DFNS I think if the company comes out with AN OUTSTANDING report you could see as much as a .40 cent move. By outstanding report I would say $4.5+ million revenue and .02+ EPS.

If it isn't able to produce a profit downside could be to the .45 support area or about a .12 down move. So the risk/reward I think is pretty good. (If it broke .45 then .40 would be next stop. Then .35 and .30 I don't think it will get that low though.)

And quite honestly I would be a bit shocked if the company didn't do at least $4 million in sales for Q1. Based just on the news releases since Jan. They have $8.9 million in order that need to be completed by JULY. (End of June is 2nd quarter) That doesn't include the smaller orders that they wouldn't put in a news release or the $3.5 million backlog they had at the end of the year. Or the Civilian orders which on average were about $1 million per quarter last year. So I would think $10 million in revenue for the first 2 quarters should be doable for the company. (They did $10.6 million in revenue all of last year.)

So unless they put most of the revenue into Q2 or if they can't produce a profit I think it will be ok. The key will be earnings. If they can't show a profit it may fall even if they have a BIG revenue increase.

Have a great day
Steve Hoven

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