MCO Portfolio Update For End Of July 2025
We have a couple of golden crosses!
What size position is ideal? When do you sell? How many positions is the correct number? No worries. The answer is that you need to figure out what works for you. We share here what we are up to and what works for us: fundamentals and technical analyses. We are not qualified to provide anything more than what we are doing, and we urge that you do your due diligence.
Ascend Industries (ACNT)
Our investment theme centers on the new management team's transition of the company to focus on higher-margin specialty chemicals and the divestiture of its tubular operations. The May 12 Q1 report illustrated management's progress in orchestrating a turnaround. The reported loss was $0.10 per share, compared to a $0.41 per share loss for the prior year, along with a significant improvement in gross margin. The company has completed its transition to a fully specialty chemical company, with the sale of the American Stainless Tubing asset completed for $16 million in cash, resulting in a profitable business with a robust balance sheet currently priced by the market at a multiple below 1X sales. Ascent is also a play on the tariff climate, as almost all sourcing and manufacturing is completed in the U.S. The Q2 report is expected on August 6.
The chart is smooth jazz.
Aurora Spine (ASG.V) (ASAPF)
Aurora Spine specializes in minimally invasive spine devices. Its sales are almost 100% organic, and its products are FDA-cleared. As the minimally invasive spine surgery industry is still in its early stages, there is considerable market share to be gained.
The company has evolved from a third-party reseller to a developer of novel products and is now in the early innings of the all-out commercial stage. It is taking longer than we imagined for the hockey stick formation we envisioned. We remain optimistic as the company is producing year-over-year growth and hovers near profitability while trading at just 1x sales and without diluting shareholders to fund growth.
Once again, we are looking beyond the upcoming report and look forward to DEXA-L and the new Aero product introductions to scale the company to the heights we have been waiting for, in the second half of this year.
Axil Brands (AXIL)
Axil Brands' (AXIL) secret sauce formula for success has been offering a wide variety of products in a wide price range to fill a market void in combining hearing protection with ambient sound enhancement and supporting that effort with branding and distribution partnerships. Branding partners include NASCAR, the U.S. Olympic team, and Monster Jam.
The company is transitioning from a sales model that was primarily online and U.S.-based to now featuring brick-and-mortar sales at over 1200 locations and international sales through a distribution agreement with Terrang-MP in Europe. Terrang is a leader in sales to European military and government agencies, a market that Axil has not penetrated in the U.S. Notably, the company's products have been featured in several military publications.
The stock price has been rising in anticipation of the upcoming quarterly report reflecting the company's expanding sales network.
Cardiol Therapeutics (CRDL)
Cardiol Therapeutics is a clinical-stage life sciences company focused on anti-inflammatory therapies for heart disease. The company's lead drug, CardiolRx™ for treating Pericarditis and Myocarditis, is a THC-free (<10 ppm) pharmaceutically produced ultra-pure, high-concentration cannabidiol oral formulation manufactured under Good Manufacturing Practices.
The company has released critical information regarding progress in its clinical trials, and the stock price has reversed its downtrend.
The database lock for the Phase II ARCHER trial in acute myocarditis patients has been completed, with topline results expected next week. The company also enrolled the first patient in its pivotal Phase III MAVERIC trial for recurrent pericarditis. Additionally, research supporting the development of their subcutaneous drug candidate CRD-38 for heart failure was published in the Journal of the American College of Cardiology.
The chart has a golden crossover supporting the fundamentals.
Coya Therapeutics (COYA)
Coya is a clinical-stage company developing treatments for neurodegenerative diseases, including Amyotrophic Lateral Sclerosis ("ALS"), Alzheimer's disease ("AD"), Parkinson's disease ("PD"), and Frontotemporal Dementia ("FD"). Neurodegenerative diseases destroy brain cells, and the process is irreversible. Currently, available treatments slow the disease's progression, but there is no FDA-approved cure for neurodegenerative diseases. Coya is targeting filling that void.
Coya has partnered with Dr. Reddy Labs to develop and commercialize COYA 302 for ALS, a deal that could be worth up to $700 million if all goals are met. Coya 302 combines Coya 301 and a drug from Dr. Reddy's. The company will receive $8.2 million from Dr. Reddy upon initiating the Phase 2 ALS study, which is expected this quarter. Also expected this year is a partnership for the development and commercialization of Coya 303, a combination of Coya 301 and GLP-1, for the treatment of ALS.
Other potential catalysts for near-term share price appreciation include the following:
Topline results from the FTD study.
Submission of additional nonclinical data to support the start of the COYA-302 Phase 2 trial in patients with ALS
Upon IND acceptance and first patient dosing of COYA-302 in ALS, the company is eligible to receive milestone payments of $8.4 million from its strategic partner, Dr. Reddy’s Laboratories (DRL)
Publication of COYA-303 combination mechanistic data
Publication of data documenting the role of inflammation in Parkinson’s Disease
ALS Biomarker data. Publication of longitudinal data on Neurofilament Light Chain and oxidative stress markers in patients with ALS
Additional single-cell proteomics data from the completed investigator-initiated, 21-week, double-blind, placebo-controlled, exploratory Phase 2 study of low-dose interleukin-2 (LD IL-2) in patients with Alzheimer’s disease (AD)
Analysts remain bullish on the stock:
Jason Kolbert from D. Boral Capital set a target price of $18.0 on 07/24/2025
Chad Messer from Lake Street set a target price of $16.0 on 07/09/2025
Keay Nakae from Chardan Capital set a target price of $14.0 on 07/01/2025
Raghuram Selvaraju from HC Wainwright & Co. set a target price of $18.0 on 06/09/2025
Delcath (DCTH)
Delcath is a hybrid medical device company that treats primary and metastatic liver cancer. It is very common for primary cancer from other body organs to metastasize in the liver, as the liver filters out harmful substances from the blood.
The FDA cleared the company's Hepzato Kit in August 2023 for treating metastatic ocular melanoma ("mOM"), an eye cancer that spreads to the liver. This is the first FDA-approved device for treating the entire liver. Delcath intends to develop Hepzato into a platform for treating all types of liver cancer and currently has two Phase II clinical trials in progress.
Delcath reported positive free cash flow for Q1 and a strong balance sheet with $59 million in cash and no debt. The company is on target to have 30 active medical centers by the end of the year. The average treatment rate per center is two per month, which is expected to increase as each center maximizes its potential. Management guided revenue growth for 2025 of over 150% over the prior year, reaching at least $94 million. The Q2 report is expected on August 6.
The chart reads an oversold price searching for support to resume the uptrend.
Journey Medical (DERM)
Journey Medical was added to our portfolio this past week.
B. Riley has raised its price target from $9 per share to $12 per share on July 30th.
The company is expected to report quarterly earnings on August 11th.
How nice is this chart?
Kneat (KSIOF) ( KSI.V )
Kneat is a first mover in digitalizing validation and quality management compliance. The company continues to add new customers and is pushing toward profitability. Contracts start small and grow into values exceeding $1 million annually within two years. Since contracts with smaller companies won't significantly impact overall earnings for two years, these deals are typically announced on social media platforms, such as X. Contracts with larger companies are disclosed through press releases. Kneat is signing major deals almost monthly.
Q1 was another record revenue quarter as the company continues to scale. The stock trades at expensive multiples relative to its peer group, but these multiples do not account for the land-and-expand nature of Kneat's business model. The stock is becoming more attractive as profitability is now within reach. The stock price recently hit a new high, but if the company establishes profitability as expected, we should see an accelerated price appreciation rate.
We are just letting this stock run as it tests support, ready to resume uprend.
Kraken Robotics (KRKNF) ( PNG.V )
Kraken Robotics is an underwater technology company that provides imaging sensors, batteries, and subsea robots primarily for the defense and offshore energy industries. Kraken is a first mover in unmanned underwater vehicles ("UUVs") equipped with synthetic aperture sonar ("SAS")and is the only pure-play related to UUVs that I could find.
The stock trades at rich multiples but is widely considered a likely acquisition. Kraken was the top performer on the TSX Venture exchange for 2024, the fourth time the stock has been included in the annual TSX Venture Top 50 list.
Kraken recently announced its most significant battery order and opened a new production facility in Nova Scotia. Besides the monetary size of the order, the company has developed a new LG battery cell pouch that is smaller and can fit into vehicles that its legacy batteries can not. These new batteries are cheaper and more powerful. The company recently announced the acquisition of 3D At Depth, allowing it to expand its product offerings and establish a U.S.-based footprint.
Q1 was a weak quarter as expected, but the future remains bright. Management is guiding a 40% growth rate for 2025, unchanged from prior guidance. The company just announced a $100 million cap raise. We will see what is in the works while we let this stock run. Analysts have opposing viewpoints on the stock, with Desjardins upgrading the stock to a moderate buy. At the same time, Canaccord Genuity downgraded it from a buy to a hold last month.
OK, the stock price is a bit ahead, but ok.
NTG Clarity (NYWKF) ( NCI.V )
NTG was founded in 1992 by Egyptian-born Canadian electronics engineer Ashraf Zaghloul. The company has led the way in providing digital transformation services in the Middle East. It is leveraging its long history of conducting business in the region to gain market share in the trillions of dollars earmarked by the Saudi Arabian government for its Vision 2030 program. The Saudis are transitioning from an economic dependence on oil to developing infrastructure, expanding banking, technology, and manufacturing activities.
The company enjoys a competitive advantage over larger competitors in the Middle East by offering Arabic language IT professionals. NTG offers educational programs in Saudi Arabia and Egypt to train individuals for IT careers, ensuring the company has qualified staffing to meet demand.
NTG is profitable, sells at a modest valuation, and is experiencing explosive growth. Revenues and gross profits for fiscal 2024 were over 100% higher than the previous year. The company is benefiting from an expansion of services utilized by its customers. Q1 2025 revenue rose 68%. Management guidance of $78 million for this fiscal year results in a 45% increase over the prior year, but also indicates that the three remaining quarters will be flat in comparison to Q1.
The company has embarked on a hiring spree, which suggests that it is preparing for new contracts, likely to push revenue growth higher this year. We don't believe that the company will undertake a capital raise; however, its cash position is insufficient to fund operations for the year without an improvement in accounts receivable.
The stock is an excellent play on avoiding tariff-related pressure.
NeurAxis (NRXS)
The company continues to expand its insurance coverage for the FDA-cleared IB-Stim treatment for irritable bowel syndrome. The IB-Stim received FDA clearance on May 20th for expanded pediatric nausea treatment, doubling the device's total addressable market (TAM). Day traders promoted the news, and the stock price surged over 200%.
Management seized the opportunity to raise $5 million, and another $1 million was added to the company's cash position from the exercise of warrants. There are 9.5 million shares outstanding. Fully diluted, adding in warrants, options, and preferred shares, there are 17.3 million shares. The company is well-funded as it prepares for increased demand for the IB-Stim in January when the Category 1 reimbursement code takes effect.
The company continues to add insurance carriers for IB-Stim coverage and expects to double the number of lives covered by the end of this year. At the same time, it has begun a soft commercial rollout for its second FDA-cleared medical device.
We featured an update article on this stock this month.
Golden cross:
Tat Technology (TATT)
TAT provides thermal, auxiliary power units (APUs), and landing gear solutions to the original equipment manufacturers (OEMs) of commercial and military aviation, as well as to the maintenance, repair, and overhaul (MRO) industries. The company is based in Israel, but most of its work is performed in the United States.
2025 Q1 revenues of $42 million were a 24% improvement over the prior year, while EPS of $0.34 exceeded expectations by $0.04. The company reported a strong and growing backlog of $439 million as well as expansion of its Auxiliary Power Unit to serve additional Boeing and Airbus models. The share price declined following the announcement of a capital raise through the issuance of shares at $26 to fund the expansion. The stock price is back on track, resuming the uptrend.
Our investment thesis is that TAT benefits from the strong demand for its products, which is driven by supply chain disruptions. Aviation supply chain issues have led to shortages of airplanes. As the fulfillment of new airplane orders takes at least six years, it will take years for supply to catch up with demand. The lack of new airplanes to meet demand results in the extended service of existing aircraft and increased demand for airplane components, such as those manufactured by TAT, for at least the next five years. The company is boosting its commercial sales with defense contracts, announcing a new $10 million defense award, bringing defense contracts to $22 million year to date.
WidePoint (WYY)
WidePoint offers SaaS services, including identity, mobility, and access management. Its revenue is 80% derived from the U.S. government and 20% from commercial, state, and local customers. Almost all of its revenue is predictable and recurring.
The stock trades at a steep discount to its peer group due to lower margins, as a significant portion of its revenue is pass-through with zero margins. This masks double-digit revenue growth, positive adjusted EBITDA over the last seven years, and four consecutive quarters of free cash flow.
Investors feared that the uncertainties surrounding U.S. government agencies would hurt WYY. The company benefits from aligning with DOGE's objective, as we discussed in a recent article. The stock price doubled after the article, but investor fear returned when the company reported a minor adjustment to align the time frame for previously reported numbers on its 2025 Q1 report. Missing the top and bottom numbers also refueled the Doge impact fear.
The company's largest customer is the Department of Homeland Security, with a contract renewal due in November. The new DHS contract is expected to be much larger in value and term than the present contract. WYY will likely win this renewal.
The market is uncertain as to where WYY goes.
