Tensions flared in the Middle East when Israel’s army fired tank
shells into Syria on Monday after a stray mortar shell flew into
Israel-held territory. The conflict fuelled new fears the Syrian civil
war could drag Israel into the violence.
The fighting has already
spilled into Lebanon, Jordan, and Turkey. Turkey warned on Monday of the
risk of Syria using missiles with chemical weapons.
Versar, Inc. (NYSE/VSR) is an environmental engineering company. This penny stock’s
infrastructure and management services business, which accounts for
most of Versar’s sales, helps clients with six main tasks: compliance
with environmental regulations, conservation of natural resources,
construction oversight, engineering and design, pollution prevention,
and restoration of contaminated sites. The penny stock’s major customers
include the U.S. Department of Defense, and the United States
Environmental Protection Agency.
Subsidiary GEOMET Technologies,
which constitutes Versar’s national defense business segment, makes
biohazard suits for agencies involved in emergency response and
counterterrorism efforts.
The penny stock has a market cap of
$33.0 million, a forward price-to-earnings ratio of 8.92, $5.1 million
in cash, no long-term debt, and a book value of $3.72.
On November
8, Versar announced that revenue for the first quarter of fiscal 2013,
ended September 28, 2012, slipped 29% year-over-year to $23.6 million.
Net income for the period was up three percent at $845,000, or $0.09 per
share. (Source: Versar press release, “Versar, Inc. Announces First
Quarter Fiscal 2013 Results,” PRNewswire, November 8, 2012.)
As of
September 28, 2012, the penny stock recorded funded backlog of
approximately $106.0 million, an increase of 24% compared to
approximately $84.0 million as of September 30, 2011, and an 11.8%
increase when compared to the $93.0 million in backlog at the end of
fiscal year 2012.
Tony Otten, CEO of Versar said, “Our ninth
consecutive quarter of improved margins is characterized by solid
profitability coupled with one of the highest funded backlog totals in
our 43-year history. We are also pleased to report that our integration
of Charron Consulting, a strategically attractive U.S.-focused project
and construction management company that we acquired in May 2012, is now
complete and meeting our pro-forma financial expectations.”
In this two-year trading chart, you can see that Versar’s share price has rebounded off of earlier year lows, and recently broke through a two-year resistance level near $3.60. Even though the company reported weaker first-quarter revenue, its share price continues to hold up based on its strong backlog and solid outlook. The penny stock continues to trade above its 200-day moving average and remains bullish, sitting at its 50-day moving average.
At the end of the first quarter, the company’s backlog was up 24% year-over-year at $106.0 million. Subsequent to the end of Versar’s first quarter, additional awards were received prior to the end of the U.S. government’s fiscal year, and, as of October 1, 2012, the penny stock’s backlog reached $122.0 million. The increase was driven by task orders under a new contract with the U.S. Army Corps of Engineers for up to $170.0 million for personal services in Afghanistan.
Going forward, the penny stock’s CEO Tony Otten observed: “Due to the financial successes achieved in fiscal year 2012, and prior fiscal years, our balance sheet is strong. We generate strong free cash flow, and our cash position now stands at $10.6 million, with working capital of $23 million. We remain well-positioned to drive organic growth, and to pursue our acquisition strategy.”
Versar continues to be a great long-term play with strong fundamentals, an encouraging outlook, massive backlog, and an active acquisition policy. While the company’s share price remains bullish, a turn to the downside could see its share price find support near $3.00.
We Told You So…
Back on July 9, financial expert Sasha Cekerevac noted that. while many penny stocks are in the more speculative areas, such as precious metals, there is one company that has strong corporate earnings growth and is quite unique: The Female Health Company (NASDAQ/FHCO).
The company’s “FC2” is the only female condom approved by the U.S. Food and Drug Administration (FDA). It protects women from unwanted pregnancy and sexually transmitted diseases, such as HIV/AIDS. This unique firm has developed an investment strategy that has allowed it to start generating strong corporate earnings by building a niche product.
The firm reported great results for its second quarter, which ended March 31, 2012, and third quarter, ended June 30, 2012. When Cekerevac first brought The Female Health Company to your attention on July 9, it was trading at $6.42; on October 12, it hit a 52-week high of $8.32, for a three-month gain of 32.06%.
Source: http://www.pennystockdetectives.com/
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