Three winners: More big moves from little companies
Today's Financial News - Posted August 19, 2009
The global markets are getting volatile. While Asian markets are dropping, a handful of American small caps are surging ahead. These three are leading the charge.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): The American equities market is not letting some worries in Asia drive down its valuations. Although China’s Hang Seng was deep in the red again overnight, the folks on the Street have managed to pull all three major indices into positive territory today.
The big question we are waiting to get answered is if the 1,000 level will be a spot of resistance or support for the S&P 500.
For a handful of companies, the action on the broad market has no relevance. They are surging today whether their trading brethren come along for the ride or not.
One of the biggest movers so far this week has been American Axle (NYSE:AXL). For the second day in a row, the drivetrain manufacturer has watched its share price soar. On Monday, shares were trading for less $3. Today, it took as much as $7.11 to get your hands on the action.
What’s behind the surge? It comes thanks to good news from General Motors.
Good news… from Detroit?
The recently bankrupt automaker has pledged to give the company $110 million to cover costs realized when GM filed Chapter 11. The Detroit automaker also helped American Axle secure a $100 million loan facility.
Together, the financing action helped prove to investors American Axle has the liquidity it needs to continue its operations well into the future. A boosted sales projection (doubling in the next four years) added even more fuel to the fire.
If you are fan of the micro-cap world, you will want to check out the action at Hallwood Group (AMEX:HWG). The tiny textile maker and natural gas producer (it owns a 22% stake in an E&P firm) has watched as its valuation has more than doubled in the past few days thanks to an earnings report released late last week.
During the past three months, the company managed to record a profit of $3.6 million, compared to a net loss of $1.3 million a year ago. Even though revenues were down by nearly 6% from the year ago quarter, investors are rewarding the company because things could have been a whole lot worse.
A company that specializes in military fabrics and natural gas has a lot of obstacles in its way in the current economic environment.
If you think $23 seems like an odd price for a share of a $35 million company, just remember a year ago they were trading for close $75 each.
Finally, with a Category 4 hurricane churning off America’s coast, it is no wonder we are seeing shares of PGT Inc. (NYSE:PGTI) up by double-digit proportions today. The $100 million window and door company just finalized a deal to purchase Hurricane Window and Door.
The move gives PGT a nice exposure to the hurricane-protection sector with perfect timing.
While PGT has a lot going for it right now (it will surely be a strong recipient of American stimulus money), once the Hurricane story deflates, share price will likely drop. If you are looking to buy shares, do it then.
With market volatility on the rise, expect to see more big swings from the country’s smallest companies. They may be tiny, but they are worth watching.
Next Article: HSC Network: AMDL Inc. (ADL) to release earnings today
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