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J Sim

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J Sim

Re: None

Friday, 01/12/2007 3:28:54 PM

Friday, January 12, 2007 3:28:54 PM

Post# of 585
My stock of the year: NCNC.OB

This is an entirely speculative choice. It has recently shown a nice increase from a low of $0.18 due to tax-loss selling to a recent high of $0.37. This is a stock that has retreated from a 52 week high of $1.25. While I don’t expect it to reach its 52-week high I do expect it to reach the trading levels it was at previous to its run in the mid $0.60’s.

NCNC is one of those companies that gets ahead of itself. It had a nice business but tried to expand too fast. As orders piled up it was showing nice quarterly increases in revenue and income. Then it tried to add a new product line and increase its capacity.

The new product line, Quilite, was a complete disaster in that once the acquisition failed it resulted in additional charges to NCNC. The cost of capital went up and training costs for labor expansions were incurred. The end result was that profits turned to losses and the stock price collapsed.

Now that the Quilite disaster is behind it, I think that there is a real opportunity for profits to return. The workforce should show increased productivity and there seems to be a bit of backlog in orders. Revenues in 2006 increased 74% from 2005 and Qtr 4 was a double from Qtr 3.

The only remaining question is to what level of profitability it can reach. If it returns to anything close to previous profitability levels this stock can easily hit $0.80 in the coming year for a nice double.

http://www.investorshub.com/boards/board.asp?board_id=4075
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