Two reader ideas worth watching (NICH, HAXS)
People often ask why I blog. One big reason is all the great ideas readers send in. Every month, I receive between 20 and 50 reader ideas (after excluding the pump and dump emails and touts from IR professionals). Here are two of the best reader picks from October:
(1) Nitches, Inc. (NICH): Apparel is hot, and reader C.M. thinks that this apparel company has a bright future. The company licenses and manufactures clothing brands such as
Docker’s swimwear, Bill Blass sleepwear and robes, Vassarette lingerie, and Saguro western clothing, among others. Although last year was not good, it looks like CEO Steve Wyandt has stemmed the bleeding. Last quarter, the company swung from a loss to a profit, and C.M. thinks the momentum should accelerate from here. If he’s right, the company could post solid profits on revenues of over $70 million. With a current market capitalization of $27.87M, and industry peers trading at a price/sales ratio of 0.78, there is a lot of room for NICH stock to grow if the company continues to execute.
(2) HealthAxis (HAXS): HealthAxis is also a turnaround play. HAXS began as an online purveyor of insurance and was a high-flyer during the internet go-go days. Despite hefty investments from AOL, Lehman Bros., etc., HealthAxis never made t
he insurance model work, and has since ditched that business. Now HealthAxis provides business process outsourcing for insurance company’s, self-insurance plans, etc. After a deep and prolonged downturn, the stock appears to have put in a bottom, and reader Kerry M. sees considerable upside. She notes that insiders have been nibbling at shares, and the company just reported its first profitable quarter. With a price/sales ratio of only 0.76 on a trailing twelve months basis (even lower at current run rate), HAXS trades well below the valuation of industry peers.
UPDATE: I set up a “Reader’s Picks” portfolio on Stockpickr.com. Only a few names so far but I plan on adding the two best reader ideas each month.
UPDATE 2: My apologies to Kerry M. for using the masculine pronoun. I should’ve read her email more carefully.
DISCLOSURE: I have no position in NICH or HAXS, but you should assume that these readers do. Not a recommendation to buy ir sell any security. For informational and educational purposes only.
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