Charles & Colvard, Ltd. (NASDAQ:CTHR) Improvements Drive the Price

Charles & Colvard, Ltd. (NASDAQ:CTHR) spiked up 39% on Wednesday after the company improved their fundamentals and secured an additional manufacturing contract.

The huge spike up was supported by a corresponding increase in trading volume, depicting traders commitment to make the best out of this announcement. The daily volume was 15 times the average with price bouncing off the $2.69 mark, which is now marked as the new 52-week high.

Quarterly announcement was rather joyful:

• $0.02 EPS turned positive from last year’s $0.07;
• Revenue of $2.85 showed 15% increase since Q1 2009;
• Inventories decreased by $2.03 million.[BANNER]

This was the third consecutive quarter with increasing revenues and the first one to show positive bottom line. 28% reduction of expenditures was one of the keys to profitability, although the $130 thousand in tax benefit aided as well.

On another note, the company has secured a distribution and manufacturing agreement with Frederick Goldman, Inc. This agreement expands CTHR’s customer base by allowing their production to be sold by Frederick.

Considering the ongoing top line improvement, bottom line turning positive and the company securing new distribution contracts, the current $44 million market cap valuation seems outdated. Even their book value of $48 million is higher, the company is nearly debt free and the only hold back was their inability to generate profits, which has just been eliminated.

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