(
NASDAQ: TSTF; Market cap: $16m; Shares Outstanding: 19m; Fully Diluted 20.5m)
Fundamentals:
Whilst we are overridingly bullish on resource stocks, we acknowledge that the constant flood of liquidity will cause other boats to rise. A mega trend we often hear about is the general aging of populations in developed countries. This has obvious bullish implications for both medical and health care industries.
Following along those lines and picking our stocks from the worst performing industries we were encouraged to find Teamstaff Inc in the battered down
Business Training and Employment Sector.
TeamStaff, Inc. is a national provider of payroll and temporary and permanent medical and administrative staffing services. TeamStaff's corporate headquarters are in Atlanta, Georgia with offices located in Clearwater, Florida, Memphis, Tennessee, Monroe, Georgia and Somerset, New Jersey.
As discussed below, the fortunes of Teamstaff have not been favorable mostly due to mismanagement and malinvsement (in our opinion).
We were therefore encouraged to see a recent change in management and large insider buying over the last 6-months ($800k at an average price of $1.05)
On a fundamental basis TSTF is ridiculously cheap with a P/B of 0.8, Price/Sales: 0.2
Technical Analysis:
Chart 1: Teamstaff Inc showing bullish divergences on the weekly chart
Teamstaff really took off in the 90s. From a low of $2.50 in 1992, TSTF promptly caught fire during the NASDAQ frenzy and made a high of $27.50 in 1996. A 10-fold increase!
Thereafter, the fortunes of the company dwindled and the stock price grinded ever lower until reaching the current level of 80c -- where it showed up on our stock screens.
From a technical perspective, the weekly chart is showing signs of bullish divergences – the MACD and RSI did not confirm the late September low (blue lines). And the late September low coincided with massive volume (blue circle) indicating to us that a capitulation low may be in place.
Money Management:
For our money we consider 2 variables when it comes to TSTF:
• Is it in a sector that exhibits long-term bullish market characteristics?
We think it is - the medical recruitment business is in a long-term uptrend.
• Is the risk reward ratio sufficiently weighted in our favor? That is, do we feel it is more likely that TSTF will rise than fall? Once again, based on the above, we feel that is the case.
TSTF is a small cap issue with only $16m market capitalization. Hence liquidity may be an issue if buying larger blocks of stock. The last 3-months average volume is ~20k shares per day so a position could be built over a week or two. Also, best to use limit orders below 87c (50d moving average) so as not to get scalped by the market makers.
Disclaimer: We have direct holdings in this stock. Our holdings may change without notice. Please read disclaimer at bottom of this page.
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Greg Silberman CA(SA), CFA
greg@goldandoilstocks.com
I am an investor and newsletter writer specializing in Junior Mining and Energy Stocks and small caps listed in the US, Canada and Australia.
Please visit my website for a free trial to my newsletter.
Click here:
http://blog.goldandoilstocks.com
This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.
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