Why ModusLink Global Solutions, Inc. Shares Marched Higher

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of ModusLink Global Solutions, Inc. (NASDAQ: MLNK) jumped 25% Tuesday after the company turned in encouraging fiscal second quarter 2014 results.

So what: Though quarterly revenue fell 4.6% year-over-year to $194 million, ModusLink managed to swing to a $0.02 per share profit this time, compared to a $0.29 per share loss in the same year-ago period.


Now what: The company blamed the revenue decline primarily on lower sales from a software client that not only reorganized its supply chain, but also experienced high unit volumes in the same quarter last year after a major product launch. In addition, ModusLink's gross margin crept up from 10% to 11.6% over the same period, driven by cost reduction actions and lower professional fees. In short, this doesn't seem to be a problem underlying ModusLink's broader business. 

Despite ModusLink's restored profitability and the stock trading at just 0.3 times last year's sales, I'm still not quite intrigued enough to dive right in today. For now, as long as ModusLink is still susceptible to significant revenue swings from individual customers -- an often necessary pitfall of investing in small-cap stocks -- I prefer to keep it on my watchlist to keep tabs on its progress over the next few quarters. This in mind, if it can continue making strides toward sustainable long-term profitability, it could easily still reward investors from here.

If ModusLink isn't quite solid enough for you, you're in luck!
One of the dirty secrets that few finance professionals will openly admit is that dividend stocks as a group handily outperform their non-dividend-paying brethren. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

The article Why ModusLink Global Solutions, Inc. Shares Marched Higher originally appeared on Fool.com.

Steve Symington and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

Investing in Real Estate

Learn the basics of investing in real estate.

View Course »

What are Penny Stocks

The lucrative and dangerous world of penny stocks.

View Course »

Add a Comment

*0 / 3000 Character Maximum