TPS Position Update – June 24, 2015

. . . . Flexible Solutions (NASD: FSI) – Hold 

We recommended Flexible Solutions in February at $1.20. Today, it’s at $2.15.

What’s going on, and what might lie ahead?

The stock spiked after Q1 results were released in May.

By June 2, the stock had more than doubled, hitting $2.65.

Flexible Solutions revenue, income, and cash flow are all growing.  And there are no storm clouds moving in to suggest they will stop growing.

Looking ahead, we’re in for more of the same as far as CEO Daniel B. O’Brien sees it.

“Q1, 2015 shows significant growth in revenue, income and cash flow compared to the year earlier period. This follows the same pattern as the last half of 2014 and is very satisfying. We anticipate that the hard work of our skilled team will allow this pattern to continue.”

There is one arm of Flexible Solutions we want to keep a close eye on.

The NanoChem division is a big source of revenue and cash flow.  It provides special coatings for wood and metal.  When Nanochem does well, FSI does well.

. . . . Finjan Technologies (NASD: FNJN) – Hold 

We recommended Finjan in April at $1.64 and the stock immediately went to sleep.  It’s been trading in a narrow range but has shown some strength, and has held up against support levels, so we’re not panicking.

But we can’t help but remember that last summer Finjan was up over $5.00 and can’t help but wonder when the stock will make a move.

Here’s what we see… courtroom battles, legal fees, and uncertainty.

As you know, the market doesn’t like uncertainty, and there are few things more uncertain than the outcomes of legal proceedings.

Finjan has been taking legal action against companies it believes is stealing its proprietary cybersecurity technology.

The latest legal action is scheduled to start in a few weeks when Finjan goes after a company called Blue Coat.  So far, Finjan has come out on the winning end of legal actions like this. 

The company has patent infringement lawsuits against FireEye, BlueCoat, Proofpoint, Sophos, Symantec, and Palo Alto Networks.  They involve more than 20 patents held by Finjan.

When we get these legal actions out of the way, we’re looking for the stock to rebound.  These are expensive, distracting annoyances that divert attention from what really matters:  Finjan is pretty good when it comes to cybersecurity.

As long as hackers hack, Finjan has a thirsty market.  We’re going to be patient, let the lawyers wrestle, and give this stock a fighting chance.

Action To Take

• Hold Flexible Solutions (AMEX: FSI)
• Hold Finjan Technologies (NASD: FNJN)

Category: TPS Update