Airlines in Bankruptcy, GACF in Pilot's Seat

Electronics manufacturing services (EMS) provider Nortech Systems, Inc. (NASDAQ: NSYS) has been chosen for this week's "SPOT Feature" in the Knobias Small-Cap ClipReport. Each week, Knobias scours the small-cap universe to find overlooked companies with sound fundamentals and one or more growth catalyst on the horizon. The weekly "SPOT" feature may be accessed via our daily ClipReport newsletter (free to all subscribers). To receive the Small-Cap ClipReport daily, please visit: http://www.knobias.com/front/product/clipreport/

NSYS, Outrunning the Industry But Trailing the Market

Nortech Systems, Inc. (NASDAQ: NSYS) is a full-service electronics manufacturing services (EMS) provider of wire and cable assemblies, printed circuit board assemblies and diagnostic repair and integration services including, higher-level assemblies and box builds for a wide range of industries including medical, automotive, aerospace, computer, peripheral, commercial, telecom, government and consumer. Nortech has a range of specialized, high-tech facilities used for customized design, manufacture, testing and repair of its solutions.

The BULLS Say...

Outpacing a Growing Industry, Lagging Peers. NSYS is, and expects to continue, outpacing a renewed and growing EMS marketplace. Demand growth is evident in recent NSYS guidance, peer guidance and comments and NSYS capacity and employee expansions. The market is beginning to see growing profits on the horizon. During the last 3 months, 2 peer stocks (KTCC/SIMC) have skyrocketed leaving NSYS well below average valuations and ignoring better than average growth. NSYS has reported 4 consecutive quarters with record sales and the upcoming Q2 is expected to be very "similar." All this sets up a record 2006 with revenues up +11-13% and EPS up +16-25% and a chance that NSYS might even surprise its own guidance.

The BEARS Say...

Thin Volume, Low Float, 2 Weeks until Q2-06. For a Nasdaq stock, NSYS is surprisingly thin with less than 1,000 shares each day. The risk of thinly traded, extremely low float stocks was evident on Friday (07/21/06) when NSYS declined -12% with only 4,600 shares traded. Also, Q2-06 results are expected in 2 weeks. Any misstep or lowered guidance would cause NSYS to quickly fall below critical support levels.

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Most small-cap newsletters just tout stocks. Instead, the ClipReport provides a comprehensive, journalistic view of each day's small-cap action. This nightly, 10-page PDF email consolidates actionable information and analysis covering the world of stocks below a $500 million marketcap threshold. Starting with "Page One," Knobias breaks down one of the week's most interesting topics in the small-cap universe. The remaining 9 pages provide users with each day's top stories, news movers, strong closers, after-hours events, earnings, corporate actions, PIPE deals, Reg SHO stocks and symbol/name changes. The ClipReport is a daily "must-read" for every small- and micro-cap investor.

About the Weekly SPOT

Each week, Knobias scours the small-cap universe to find overlooked companies with sound fundamentals and one or more growth catalyst on the horizon. This search typically features a small-cap stock exhibiting strong growth while undervalued relative to public peers. SPOT selections tend to be "under-priced" due to lack of coverage or a failure for the marketplace to fully understand "the story." SPOT companies must meet the same basic criteria as our Small-Cap ClipReport, i.e. under $500M marketcap...banks, ETFs, funds and utilities are excluded. Furthermore, SPOT selections must be fundamentally sound with growth, profitability (or near) and clear prospects for price appreciation. Knobias is never compensated for SPOT selections, and NO position will be held in SPOT stocks by Knobias, its management or staff while the stock is being highlighted.

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