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July 7, 2005 Stock Pick: Tag-It Pacific, Inc. (TAG)

Stock Price: $2.40

Tag-It Pacific, Inc. is a full service outsourced trim management department for manufacturers of fashion apparel. Trim items include labels, buttons, rivets, zippers, thread, snaps & printed marketing products. The company works with Abercrombie & Fitch, Kellwood, Azteca Production International, Levi Strauss & Co., Express, and The Limited among others.

TAG reported revenue of $13.1 million and net loss of $1.6 million on May 16th. Revenue increased 28.5% from the year before. The company is attempting cost cutting strategies, yet litigation with Pro-Fit could hinder the benefits as they try to work out a favorable ruling in this matter. Right now, Pro-Fit's waistbands are a major component of Tag-It Pacific's sales.

TAG is at its lowest level since 1999, while the clothing market continues to boom. TAG has a book value of $1.57 and $2.8 million in cash on the balance sheet.

It appears risky, but could have a nice jump on good news involving Pro-Fit or a profitable second quarter.

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