November 3, 2008

Sonic Innovations a Buy

Zacks is out with a Buy call on Sonic Innovations, a tiny company that manufactures hearing aids. This company is trading around $1.50 a share, but has traded as high as $9.90 a share this year.

An older Zacks article from mid October rated the stock a Buy and gave it a $3.00 price target, before the company reported a third quarter earnings report that beat expectations.

According to statements made in the third quarter earnings report, the company is undergoing a consolidation effort in order to improve earnings, and has also introduced two new products at the "lower end of the price spectrum" in order to drive sales in a soft economy.

This sounds like a small company that has a lot of potential, especially once the consolidation effort is completed. However, this is a small cap play which can be very sensitive to the swings of the market. If you want to pull the trigger, do so with caution.

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