Shares of HITK are down by about 10% in the past five days on light volume and no news headlines, providing a nice chance to accumulate some shares. The Company reported record quarterly revenue for its second fiscal quarter and is expected to earn 41 cents per share for FY09 (which ends in April), which results in a P/E of about 11 based on the current price around $4.60 per share.

As illustrated in the accompanying one-month chart, HITK has lagged behind its peer group – including a gain of about 10% for Caraco Pharma (CPD) and over 20% for Mylan Labs (MYL). Also, favorable trends for the generic drug industry include $70B in patent expirations through 2012, a push to increase generic substitution rates to 70% from 65%, and legislation expected this year to clear the way for generic versions of high-cost biotech drugs.

Despite the favorable growth outlook for generic drug makers such as HITK in the coming years, the stock trades at deep value parameters, trading at just two-thirds of its book value and trailing 12-month revenue. HITK holds $12.9M in cash with negligible long-term debt of $0.3M for an enterprise value (EV) of $38M, yielding an EV to revenue ratio of 0.5X. Trailing 12-month revenue is $77M and the current market cap is $52M.

As with HDIX, HITK also believes its stock represents an excellent value, repurchasing a total of 94,000 shares of common stock during its last fiscal quarter ending in October for a total cost of $661,000 for an average price of about $7 per share. Investors today can buy shares of HITK at a steep discount of about 33% with shares hovering around the $4.60 level.

For the 2Q09, HITK posted a 44% increase from the year-ago period for generic drug product sales at $19.5M, boosted by $5.4M in sales of Dorzolamide with Timolol ophthalmic solution as the generic equivalent for Merck's (MRK) Cosopt for the treatment of glaucoma.