Our first idea is expected to grow at double-digit rates this year, and our second recommendation is profit-taking.
Buy: Hudson Technologies (HDSN)
From BI Research
Hudson Technologies (HDSN) provides and recycles refrigerants including CFCs, HCFCs and HFCs used primarily in air conditioning and refrigeration, but also in certain manufacturing processes.
Reclamation provides an immediate opportunity to achieve dramatic reductions in greenhouse gas emissions by reducing the need to produce new molecules of refrigerant gas and helps avoid having to make investments in new equipment that can operate on next generation refrigerants.
The over-allotment option of .9 million shares was exercised so the final offering tally was 7.3 million new shares netting $48.4 million to Hudson. Amazingly this offering did not harm the stock price at all. Indeed, it never traded as low as the $7 offering price afterwards. In fact, the shares have continued to churn in the $7.50 range.
While there has been nothing on the acquisition front to deploy these funds, in the short term paying off its credit line which at 9/30 had about $15 million drawn, could save $1.2 million in interest expense which blunts a little of the dilution and the balance of the funds can be used for working capital to grow the business especially once the DOD contract kicks in in the second half of 2017.
For the seasonally slowest quarter of the year, Q4, the current EPS estimate calls for a loss of $.05, but for more than a doubling in 2016 full year EPS from $.14 in 2015 to $.32. Looking ahead, analysts see a 33% advance in Q1 EPS to $.12 and an equally healthy 34% advance on tap for EPS in 2017 to $.43. So, that’s pretty good growth for a stock trading at 17 times 2017 EPS. These shares, which have a 9.7 BI Rank, remain a Buy for new buyers.
Tom Bishop, BI Research, www.biresearch.com, February 1, 2017