In my weekly premium newsletter -- Undiscovered Micro-Cap Gems -- my goal is to introduce readers to a variety of promising micro-cap investing ideas that they may wish to consider for their portfolios. In doing so, I generally look for small, neglected companies that have been overlooked by conventional Wall Street sources. I also look for undervalued firms that are trading at a steep discount to their intrinsic value. Many of these individual investment ideas have the potential to deliver triple-digit percentage gains in the years ahead.

Below you'll find an in-depth look at one such investing idea that I introduced my readers to last weekend.  To gain access to dozens of similar investing ideas each and every week, you'll need to subscribe to my Undiscovered Micro-Cap Gems service. In the meantime, I sincerely hope you enjoy today's sneak peak at one of my most recent micro-cap investing ideas...

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Sand Technology (SNDT, $0.71)
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Sand Technology is undergoing a major transition. Previously, the firm derived most of its revenues from the sale of computer hardware products. The company has switched gears, though, and is now focused on software sales. This transitional period explains the sharp drop in revenues SNDT has seen in recent years.

Going forward, the firm has decided to center its business efforts on the development, marketing and servicing of its SAND Analytic Server. This specialized software allows non-technical users to make database inquiries and analyze data without support from technology professionals. Business users can thereby more effectively manage data with reporting and analysis tools. Customers in a variety of sectors are already using the software to support a broad range of vital business functions, including customer resource management (CRM), e-commerce, quality control, and supply chain management.

We were first attracted to the company based on its potential break-up value. Currently, the stock has $0.65 per share in cash and another $0.22 in receivables. With total liabilities of $0.26 per share, SNDT has $0.61 per share in working capital. This is impressive considering the stock only trades at $0.71. Keep in mind, though, the company has been bleeding about $2.2 million in cash per quarter, or roughly $0.17 per share. In essence, SNDT is in a race to gain market acceptance of its products before its resources are depleted.

On a positive note, although the firm's revenues and earnings declined (on a year-over-year basis) in the second quarter, those measures both improved on a sequential basis, as sales rose +18% over the prior quarter and net losses narrowed by 20%. And going forward, management has a fairly optimistic outlook, indicating that its recent positive sales trends should continue at a steady rate. At this time, we believe the company must double its sales in order to report breakeven bottom-line results. The race is on, and only time will tell if SNDT's business model will work before the company's resources are exhausted. Despite the high risk, the stock has merit at these low prices as a micro-cap value play.

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Important Note: The above article was merely a small excerpt from a recent issue we sent to subscribers of our premium value investing service -- Margin-of-Safety Investing. In each issue of that newsletter, editors Nathan Slaughter and Paul Tracy deliver an in-depth look at a variety of other deeply discounted stocks that should provide investors with a solid margin of safety at current prices. To receive your copy of our most recent issue of Margin-of-Safety Investing, as well as other guidance similar to this twice per month, you'll need to subscribe to this publication. To learn more, please visit:
https://www.streetauthority.com/subscribe-msi.asp

Thanks for reading!

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