Most Micro-cap stocks are scams that steal investors’ money. However, the Singing Machine (SMDM) has moved back to profitability and is growing revenues and profits, but the stock price doesn’t reflect it yet. It has a market cap of only $7MM, but earned $1.4MM in profit last quarter alone. Net sales increased 90% year-over-year to $16.7MM for this quarter thanks to a strong Christmas. The company has over $3MM in cash with no debt, which is more than 7 cents per share. The company trades at 20 cents per share, and its trailing earnings are 5 cents over the last four quarters. Backing out the cash, this company is trading at 2.6 times trailing earnings (20-7)/5=2.6. Over the last 12 months SMDM has had $34.1MM in revenues, meaning the company is trading at 20.5% of revenues( 7/34.1=.205). Over the last 3 years, revenues have grown from $19.1MM in 2010 to $25.4MM in 2011 to $34.1MM for 2012.
Management said that they expect these impressive numbers to continue, as the company has added another big-box retailer to its distributors, as well as a 65% increase in sales off of its website. At 20 cents per share, this company is way undervalued. It is priced for no growth at all, but it is growing revenues, profits, and margins.
But don't take my word for it; do your own fundamental analysis and look at this company's growth and see if you don't agree that this company can continue to grow faster than the market as the economy continues to improve.