Revisiting the 4 small cap #stocks to watch in 2015

On January 1st, I outlined four small-cap stocks with the potential to be winners in 2015. You can find the article here. In an effort to track how the four stocks perform in 2015, I will publish the quarterly stock performance at the end of each quarter. I will also provide commentary on any changes with the companies that might affect the investment thesis.

Overall performance of the 4 small cap stocks for Q1 = +11.54% YTD

 Overall performance of the 4 small cap stocks for Q2 = +14.97% YTD

 Overall performance of the 4 small cap stocks for Q3 = -13.23% YTD 

Ambarella (AMBA)

Price at time of article:     $50.72

Price End of Q1:                   $75.71 or +49.27%

Price End of Q2:                  $102.69 or +102.46%

Price End of Q3:                  $57.79 or +13.93%

As you can see, this stock was a double by the end of the 2nd quarter. And had I been smart enough to buy it on January 1, I can guarantee you I would have been taking some profits off, likely before it doubled.

GoPro (GPRO) is Ambarella’s biggest client and the 3rd quarter brought some disappointing sales numbers at GoPro; this caused Ambarella’s stock price to slide right along with  GroPro’s – and it didn’t stop until the shares halved.

As I write this, Ambarella has a forward P/E of 16 with earnings growth of 148% and revenue growth of 79%, these are really nice numbers. In addition, the Christmas season is in full-swing and channel checks are showing that drones are a hot Christmas item (selling out at many stores). Ambarella has some significant penetration in drone technology, so this one will be interesting leading into the 4th quarter.

Methode Electronics (MEI)

Price at time of article:                    $36.51

Price End of Q1:                                 $47.04 or +28.84%

Price End of Q2:                                $27.45 or -24.8%

Price End of Q3:                                $31.90 or -12.6%

The reason why investors were piling into Methode causing the near 30% gain in Q1, was because of the top and bottom line growth. This growth unexpectedly slowed in Q2 and reversed in Q3. The stock was punished accordingly and I sold out.

MiMedx (MDXG)

Price at time of article:                   $9.74

Price End of Q1:                                $10.40 or +6.77%

Price End of Q2:                               $11.59 or +18.9%

Price End of Q3:                               $9.65 or –.92%

MiMedx had a nice first half of the year but ended Q3 nearly flat. This stock has a high short interest (18% of the float), which leads to volatility. That said, the growth story remains in tact here. At the time of this writing, MiMedx has a forward P/E of 32 with 77% earnings growth and 46% revenue growth. Of the 4 stocks mentioned in this article, MiMedx is the only one I currently own.

TubeMogul (TUBE)

Price at time of article:                    $22.55

Price End of Q1:                                 $13.82 or -38.72%

Price End of Q2:                                $14.29 or -36.6%

Price End of Q3:                                $10.52 or -53.3%

What can I say about TubeMogul other than it has been a huge disappointment. The stock has performed so poorly, that I have stopped covering it entirely.

Disclosure: I am long MDXG

 

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s