Undervalued: Precision Optics Corporation, Inc. (PEYE)

PEYE Stock, Precision Optics Corp.One thing penny stock traders hate most is a Company that’s a leader in their industry, but can’t seem to get enough trading activity on their ticker to make it worth buying. Such is the case for Precision Optics Corporation, Inc. (PEYE) who, for over 30 years, has been putting out high-quality medical devices that are so reputable that the Medical Systems Division of Sony Corporation (NYSE: SNE) ordered their new surgical microscope video adapter. If ever there was a stock that should be bought, PEYE stock ranks up there with some of the best.

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PEYE Stock Quote
Close 0.41 Change (% Chg) +0.0600 (+17.14%)
High 0.89 Low 0.41
Open 0.65 Prev Close 0.35
Volume 14,200 Avg Volume 7,330
14-Day Rel Strength 0.00% Market Cap $2.57M
52Wk High 1.30 52Wk Low 0.35

When you have to under the knife for a medical procedure, rarely does a patient ever ask, research or appreciate the equipment that the surgeon(s) use to get the job done. Precision Optics Corp. is unique in to the extent that the Company designs, prototypes, and manufactures under one roof optical systems and components for imaging of the body’s smallest compartments and tissues.

From endoscopes to arthroscopes, the scope of Precision Optics’ ability is endless thanks to them being experts at providing lenses to sizes as small as 0.2mm in diameter using their proprietary micro-precision™ technology with the quality of ground lenses approaching the cost of gradient index lenses. Proof of their ability is provided in their 10-K for the fiscal year ended June 30, 2014 whereby the Company reported revenues of $3,651,181 for the 12 month period versus $2,519,743 for fiscal 2013, both of which provided gross profit from sales of $800,795 and $654,428, respectively.

Net income is still lacking for the Company after reporting a net operating loss of ($1,159,726) and ($1,232,509) for the fiscal years ended June 30, 2014 and 2013, respectively. Having since completed their initial order to Sony Electronics’ Medical Systems Division for the adapter, called ‘3D Simplicity,’ an integrated video adapter system that facilitates integration of Sony 3D camera technology into a range of ophthalmic surgical microscopes, the reviews on Sony’s website by the experts that use the existing devices proves they have gotten in bed with the right people.

Here’s where it gets interesting regarding PEYE:

In November, the Company filed a prospectus with the SEC for the sale or other disposition of up to 1,717,152 shares of PEYE common stock by selling stockholders. On July 1 through July 7, 2014, the Company closed on agreements with institutional and accredited investors for the sale and purchase of 1,717,152 shares of the Company’s common stock, $0.01 par value at a purchase price of $0.60 per share.

The selling stockholders who participated in the July 2014 offering are as follows:

 

Arnold Schumsky 83,334 $50,000
Bird Asset Management, LP 83,334 $50,000
Stuart L. Sternberg 166,667 $100,000
MHW Partners, LP 125,000 $75,000
Garret Herman 12,035 $7,221
Pamela O’Connor 40,115 $24,069
F & M18 Investment Partnership 40,000 $24,000
Hershey Strategic Capital, LP 1,166,667 $700,000
TOTAL 1,717,152 $1,030,291

Now, as of September 23, 2014, there were 6,262,584 shares issued and outstanding of which officers, directors and other 5% or better beneficial owners like Hershey Strategic Capital, LP collectively owned 6,197,264 as of the close of business on September 23, 2014. Hence, the public float for PEYE stock essentially doesn’t exist (approximately 65,320).

This explains why volume has been lacking on PEYE stock, but not why it swings so dramatically from just a couple of hundred shares traded. Seeing as how the Company has efficiently been able to control costs of goods sold to the extent that gross profit has sufficient enough to cover their net R&D expenses, a chance to go long on PEYE could be worth trying to get in at the level the accredited investors did back in July, 2013.

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About PEYE Stock

Precision Optics Corporation, Inc., since 1982, is a developer and manufacturer of advanced optical instruments with the vast majority of the Company’s business dedicated to the design and manufacture of high-quality medical devices of which approximately 10% of their business is from the design and manufacture of military and industrial products.

Click here to view the SEC filings for PEYE.
Click here to view the website for Precision Optics Corporation

Authorized: 50,000,000
Issued and Outstanding: 6,262,584

Last 5 Trading Sessions:

Date Open High Low Last Change % Chg Volume
01/12/15 0.6500 0.6500 0.3500 0.3500 -0.3000 -46.15% 1,500
01/09/15 0.6500 0.6500 0.6500 0.6500 +0.1400 +27.45% 500
01/02/15 0.5100 0.5100 0.5100 0.5100 -0.0900 -15.00% 100
12/31/14 0.6000 0.6000 0.6000 0.6000 -0.0400 -6.25% 5,100
12/30/14 0.6000 0.6400 0.6000 0.6400 unch unch 114,300

 

Bottom Line:

Penny stock traders hate illiquid tickers like PEYE. For the investor who has a long approach to one of the few “real companies” on the OTC, a microscopic look into PEYE stock would be worth the effort.

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