Last Wednesday we announced a trade alert on TRxADE HEALTH, Inc. (MEDS) when it was trading at $11.50 after it announced an $8 dividend. The stock has risen to over $33 as it nears the dividend payout date. We expect the same thing to happen on ClearOne, Inc. (CLRO) which announced a $0.50 dividend yesterday. The dividend is payable to record holders on April 2, so we expect the stock price to steadily rise for the next 2-3 weeks heading into that date just like it has done for MEDS.
At the time we sent out the trade alert on MEDS, it was trading below its book value and net cash. Now at over $33, it is trading at over a $40 million market cap, significantly above its book value. At yesterday's $2.06 closing price, CLRO is currently trading at a $49 million market cap. This is slightly above its book value of $42 million while its working capital sits at $35 million. However, the difference between MEDS and CLRO is that while MEDS is near shell status, CLRO's operations continue onwards. The CEO stated in the press release that the company has an achievable plan to return to revenue growth and profitability. As the company has a net loss of about $1 million per quarter for the first nine months of last year, we think that this statement is achievable.
Last May CLRO announced a $1.00 special dividend. The stock rose to a little over $2.50 on that run before it obviously tanked after the dividend was paid. However, that announcement occurred when the market was a lot more shaky. Based on how MEDS has traded in the past week and how it went from trading at a discount to its net cash to nearly a 100% premium, we think that CLRO can have a similar run to $5.00.
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