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Stocks Under $10 With SU10Team

Back to Doing Business the Way They Know How

By SU10 Team | 2018-03-21 11:45:56.0
Stocks in Focus: BBOX

Black Box (BBOX)

There are 15 securities in the Stocks Under $10 portfolio. Black Box (BBOX:Nasdaq), in terms of weighting, recently ranked eighth largest, and eighth smallest in size, making this position our median holding at 1.89%. The name has struggled mightily since our initiation, and our optimism had been placed largely on the credibility of new CEO Joel Trammel, who was elevated to that position in November.

In February, Black Box reported third-quarter earnings that included data up to and including December. The current quarter is Trammell's first actual quarter running the firm. He has pledged to get the right people into the right positions, and to turn this thing around.

The Mission

As a refresher, Black Box’s mission is to aid its clients in enabling the transformation to a digital environment. More specifically, Black Box designs, deploys, and manages the digital needs of its clientele. This includes adaptation to the Internet of Things, health care, and mission-critical control room infrastructure. These services are available commercially as well as to governmental organizations. In fact, much of the firm's recent business has been with the Department of Defense.

New News

Finally, Tuesday, Black Box was at last, able to tell a positive story. Black Box announced that it has been awarded a new five-year task order contract for the development and implementation of the U.S. Army's requirements for Unified Capability Sets for Outside Plant (OSP), Inside Plant (ISP), and Area Distribution Node modernization, and implementation. The coverage area for the contract is Southwest Asia.

The U.S. Army provided initial funding of $18,996,373.36. The total contract value covering the five-year period of performance is expected to come to $166, 057, 336.00. What the contract entails is for Black Box to upgrade Data Center Infrastructure, as well as the OSP and ISP. This should bring the Army's communications infrastructure in line with Defense Information Systems Network Enterprise Network (DISN-EN) standard. This contract also involves implementation of the Joint Information Environment within U.S. Army sites within the CENTCOM area of operations.

That’s quite a mouthful here, but the point is that Black Box is back to doing business the way they know how.

The Chart

As one can see, the stock bottomed out in response to those third-quarter earnings in late February. Since then, the name has cautiously moved sideways, after seeing positive signals in both Relative Strength and the daily MACD (moving average convergence divergence) where the nine-day exponential moving average (EMA) has returned to positive territory. Money Flow, however has not yet turned for the better.

A Fibonacci model based on the recent moves does suggest probable first-line resistance in the area of $2.70, which would get us close to our basis. We do expect, in the longer term, to see considerably higher prices.

Our price target remains $4.90.


Christopher Versace and Stephen "Sarge" Guilfoyle

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Chart of I:DJI
DOW 24,682.31 -44.96 -0.18%
S&P 500 2,711.93 -5.01 -0.18%
NASDAQ 7,345.2854 -19.0164 -0.26%

Stocks Under $10 Holdings

Holdings 1

Stocks we would buy right now

Symbol % Portfolio
AXTI 0.04652859558621658 Electronic Production Equipment
BBOX 0.02028322686667551 Information Technology Services
GSVC 0.04706790405168274 Investment Managers
LYTS 0.04913949762233254 Building Products
MBII 0.01667731986815542 Chemicals: Agricultural
NOK 0.048385863059641834 Telecommunications Equipment
USAT 0.03279121676779207 Electronic Equipment/Instruments
Holdings 2

Stocks we would buy on a pullback

Symbol % Portfolio
ACRX 0.014309816554439574 Pharmaceuticals: Other
AIRI 0.007076592484595678 Aerospace & Defense
ERII 0.01947189779200849 Electrical Products
IWM 0.18275052185362192
JTPY 0.003380537811112585 Data Processing Services
KSHB 0.004507383748150113
RAD 0.009717919361011644 Drugstore Chains
SN 0.00598580561754335 Oil & Gas Production