ActionPoint (ACTP) is a real micro-cap, with a capitalization of just $25.5 million. The stock trades at 6 1/8, even though the company has yet to make a penny. Moreover, its principal software product is still being tested by select customers. Yet some savvy investors, including Fidelity, Vanguard, and Bessemer, have taken big stakes. What's so enticing about ActionPoint? "The company has a new product with huge potential that could generate big profits," says money manager Patrick Farley of Kopp Investment Advisors, which owns 386,000 ActionPoint shares that it acquired at around 11 3/4 apiece. In the month before the stock market's April fall, ActionPoint was trading as high as 34.
Its new DynamicInput software is designed to simplify complex e-commerce and make it easier to complete online transactions. It enables online mortgage applicants, for example, to fill in forms easily. "The product is critical to e-commerce Web sites and business-to-business marketplaces that offer complex goods and services," says ActionPoint President and CEO Kimra Hawley. The product is being tested at Merrill Lynch, Bank of America, and John Hancock Financial Services.
Kopp's Farley says that rival Selectica (SLTC) has similar software to simplify Web sales. It trades at 42 5/8 a share, with a market cap of $1.5 billion. Selectica has yet to make money either, posting sales of $19 million in 1999. ActionPoint, on the other hand, reported sales of $22 million in 1999. So Farley argues that ActionPoint is cheap and deserves a higher valuation. Once its own product takes off, he adds, the stock should soar to an even higher price-earnings ratio.