Friday, June 27, 2008


I wanted to update for the weekend on the 2 stocks I own.

Both stocks are based in Israel. So unless Israel is destroyed by IRAN or something I think what I am about to say is valid.

DFNS which is the stock for the StockDoubling project has a bid and ask as of this writing of .26 bid (what you sell it for) and .27 ask (what you buy it for) Actually a few minutes ago the ask was at .26 as well.

Back in Dec 2007 DFNS hit a low of .24. And prior to that it hit a low of .22 back in June 2006. So over the last 2 years .22 is the low for the stock and it isn't like it stayed down that low it usually was a quick stop in the low .20's before moving to the higher .20's and .30's.

So are we going to bounce off the bottom again? I don't know that for sure but looking at the charts and fundmentals of the stock I can't see it fall much further and the risk/reward is tremendous at these levels.

Why these levels are attractive for DFNS....

1. You have good support here in the .20's
2. 29 million shares of DFNS x .27 makes a $7.5 million marketcap they have $5 million in cash! Means you are buying the company for basically $2.5 million for a company that will do $15+ million in revenue for the year!
3. If their is additional fighting with IRAN or other countries. The military spending should increase and DFNS would benefit from that.
4. It has a book value of .43
5. I think at these levels even if it gets back to .35 that is a 29% return so it is a good TRADING stock now as well.
6. They will have twice as much revenue this year as they are currently worth in market cap.

I just think its a SCREAMING BUY at these levels.

Unless the company makes MAJOR blunders on how to spend their cash or Israel goes to full out war with IRAN and is bombed heavily or something I just don't see much other downside to the stock at these point.

I had talked previously when it was in the mid .30's that I see a trading range for the stock from the high .20's to the low .40's. Well we are at the lows so that is the time to buy some I think.

The downside is limited I think for those purchasing in the mid/upper .20's.

The second stock I own is TATTF which is also an ISRAEL stock.
THIS IS NOT A STOCKDOUBLING PICK! Just another stock that I feel can move and is undervalued.

I actually purchased this stock a few different times but my average price is $7.13. As of today it is trading at $5.60. So I am down on this one as well. However the value I think is there for a $10 stock. I will touch on some of the highlights but do your own research.

TATTF has 6.6 million shares outstanding x $5.60 that is $37 million market cap.
TATTF owns 8.1 MILLION shares of LIMC (62% of that company) LIMC is currently trading for $4.31 per share. Lets assume its only worth $4 per share to make it easy. $4 x 8.1 million shares = $32 million is what TATTF investment in LIMC is worth.

So that means taking out LIMC investment out of TATTF. TATTF is valued at only $5 million or so.

TATTF also has recently purchased another company (private) for some cash and owns a big chunk in that.
TATTF I believe has roughly $5-$10 million in cash. (hard to tell with an Israel company and their reporting)
let's assume its just $5 million. That means from the cash in the bank and LIMC investment TATTF by itself is worth $0!
So their investment into this new company is worth $0. The $20 million or so in revenue they do by themselves each year is worth $0!

Which is of course CRAZY!

TATTF earned .23 EPS for the Q1 of this year. If they do that each quarter that would be .92 EPS for the year. At 12x P/E ratio that is $11 stock

TATTF is near 3 year lows on the stock price.

I think it offers good risk/reward for investors. The company even authorized $5 million to buy back stock which needs to be done by the end of July. Doesn't mean they will buy it all back but its a good plus.

Have a great weekend

Steve Hoven

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