I can’t quite understand why the market is so down on Newmarket Technology, Inc. (NWMT) Despite having a very solid company, the market (and traders) continue to sell the “hell out of the stock”.  As you will see in the accompanying chart, sellers are dominating and have turned a $1.00 into a penny stock over the past year.

A little about the company (from one of their PR’s):

NWMT is a reporting company with audited financial reports filed with the SEC. NewMarket provides systems integration, technology infrastructure services and emerging technology worldwide. NewMarket has a focus on providing technology and support services to rapidly growing economies where technology purchasing is on the rise (Emphasis added). In addition to its base of operations in North America, NewMarket has operations today in the growing economies of China, Southeast Asia, Brazil and Northern Latin America. Last year the Company reported over $40 million in revenue from Asia and over $20 million in revenue from Latin America. Overall, NewMarket reported over $95 million in revenue for 2008.

NWMT has been a victim of their own press release machine.  When we did an alert on NWMT a few months back, I fully expected it to be a good trading stock.  Well, it continued to freefall,  so today you can pick up shares for around 7 1/2 cents.  NWMT has hyped itself so much that traders have turned a deaf ear to their PR’s.  They continue to trumpet the fact that they were on the Deloitte and Touche Fast 500 as one of the fastest growing companies…..that is old news.  Move on, NWMT.  You are no longer a growth company.  Get over it and move on.

Let’s talk about what you are.  NWMT has got a lot of good going for it.  It should book around $100MM in revenues for 2009 in line with 2008.  No longer a growth company but in light of the current economic malaise booking the same revenue year over year is not bad at all.  It has a strong balance sheet with low debt and great debt coverage ratios.  NWMT has 19 cents in cash per share (and the share price is only 7 1/2 cents)!!!! They are a typical IT firm with razor thin margins, but they have shown the ability to turn a profit quarter over quarter and year over year.  Their focus on under-served foreign markets seems to be a good one.

Here is the chart that I mentioned:

This is a chart for a company that has lost the hearts and minds of traders.  And, they need us! They have no institutional ownership and insiders hold less than 2% of the shares.   Stop hyping the hell out of the stock and let traders know what a good, solid company this is.

I don’t know how much farther this stock can fall (my guess is “not much more”), but trying to guess a bottom on a stock has never been one of my talents.  I am looking at the indicators and thinking “bounce”.  Time will tell if I am right.  According to the company, the 4th Q is traditionally the strongest for the company.  Let’s see if NWMT can break the magic $100MM barrier and issue some news that traders actually care about.

Good luck and good trading

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