Buying the DYNT Chart

Sometimes you need little more than a chart.


A friend mentioned DYNT to me a few months ago.  First thing I did was open up a 1 year chart.

Stock had dropped from $3 to less than a dollar.  Volume way up.  Looking great.  People hate it and are giving up, selling as much as they can as fast as possible.  It was November and this is what I was looking for: tax loss selling.  What we do at the end of the year is buy what others are throwing away.  Next step a 5 year chart.  

And now I'm really interested.  Look at that beauty.  Stock was near $3 for years and that tells me the world was pretty sure this is a $3 stock not too long ago.  How can the global consensus be so steady then drop by 75%?  What has changed?  Next a quick look at the latest 10Q (as of Nov 2019):

• preferred stock 4.9M out, same as last year
• paid out 126k shares of common to cover the preferred dividend vs 66k last year
• common 8.7M vs 8.4M the prior year
• BV 21M vs 20.8
• rev 16.4M vs 17
• net income -68k vs +129k
• Dynatronics Corporation (“Company,” “Dynatronics”) is a leading medical device company committed to providing high-quality restorative products designed to accelerate optimal health. The Company designs, manufactures, and sells a broad range of restorative products for clinical use in physical therapy, rehabilitation, orthopedics, pain management, and athletic training. Through its distribution channels, Dynatronics markets and sells to orthopedists, physical therapists, chiropractors, athletic trainers, sports medicine practitioners, clinics, hospitals, and consumers.

At this point I'm buying stock.  Only a few minutes decision time to put in an order.  I don't see why it's down.  With a share price of ~$0.75 and market cap of $6.5M the stock is trading at 30% of book and 10% of sales (annualizing this Q).  Cheap stock and nothing has changed yet it's down 75%.  That's a buy.  

Next in my process is a long range chart.  

One look at that and I'm buying big time.  What a story told by that chart!  That chart goes back 37 years and we're sitting at the lowest low.  Imagine all that has happened in that time.  Management come and gone, divisions sold or died out, acquisitions in, acquisitions out.  Wars.  Democratic leaders, republican leaders.  The personal computer, cells phones, robotics. Stock market crashes with economic booms and busts.  Fads come and gone, new patents granted and old patents expired.  Yet with all that the stock is telling you right now is the worst time ever.  Do you believe it?  

The main thing I see is potential.  Try this one:

That was all my thinking.  I did a pretty good amount of buying in Nov, Dec, Jan with that.  It's now Feb and the stock is at $0.90.  Here are some updated 1 year, 5 year, and max length charts.  It has come up and leveled a bit.  We've had two spikes in the past couple months but I didn't sell as it wasn't high enough.  

You have to ask yourself what the future holds.  I lump this into my pile of survival stocks.  As long as the company survives I think the stock will be materially higher than it is now at some point in the future.  A lot of my investing is based on this one idea.  Buy at the bottom and wait.  I think they'll keep moving along.  Likely they will not turn a profit but they pull in revenue and come out with new products.  There may be acquisitions or division sales.  The lights will stay on and one day something will catch on and then BOOM.  

Sure they might die.  Dilution will continue.  Profit is nothing.  Looks to me like it'll be good for a spike.

--Dan

disclosure: long DYNT