6-21-09 - Wal-mart and Christianity Make Left Behind Games (LFBG.OB) Potentially Perfect

As the stock market undergoes a bit of a technical correction, http://theperfectstocks.blogspot.com/ is once again finding it difficult to find the next perfect stock. However, after a news release Friday morning which caught my eye and further due diligence over the weekend, I feel strongly that Left Behind Games, Inc. (LFBG.OB) has the goods to potentially be another perfect stock. Before you say to yourself, "Not another pinkie/OTCBB penny stock!", here me out as to why I think this company has a strong possibility of making you some money in the short term and potential long term as well.

Left Behind Games is in the business of developing and publishing video game products based upon the Left Behind series of novels. The Company also derives revenue from in-game advertising consisting primarily of fixed product placement. The Company focuses on developing products that are Christian based and offer a less graphic experience to sexual themes and gratuitous violence.


On Friday 6/19/09 Left Behind Games released some pivotal news that could jump start the company to some big sales. They announced that Wal-Mart, the nations largest retailer, has approved a test market in many of their stores for the company's video games. In addition, LFBG.OB is in the process of hiring new marketing representatives throughout the U.S. to directly market to other retailers, large churches and Christian groups. As a result of that news release Friday morning, the stock exploded over 400% to finish at $0.07/share. With a little over 200 million shares outstanding, the stock could have quite a bit of room to move.


At first glance you might be scratching your head regarding whether this company's concept of Christian themed video games can really make money. I'll offer a few strong points as to why it could do very well:

Profitable - The company has weathered the development phase in establishing its products. According to the one of the company's recent filings, because so much time and money in past years went towards development, it currently only costs LFBG.OB $1.50 to produce each video game unit. The games retail for around $20.00 a piece. So, you can see that the margin is ridiculously high.

Untapped Market - We all know how big the video gaming industry is. Software sales of video games are expected to exceed $21 billion dollars in the next 4 or 5 years. The company is already at the forefront of the Christian theme videos games. So, it is reasonable to project that even a small penetration of this niche could yield huge dollars.

Brand Recognition - As stated earlier, The Left Behind video games are based on the extremely popular Left Behind Book Series. These books have sold around 65 million copies in the last 10 years. Although it may or may not be that familiar to you, the brand itself has an unbelievable following.

Remember "The Passion" - In 2004 Mel Gibson took a leap of faith by personally developing and financing the blockbuster movie, "The Passion of Christ". He basically had to go about it alone, because no one believe that people would be interested in seeing a Christian based movie. He had a limited marketing budget and basically went directly to churches in hopes of gaining viewer support. To make a long story short, the movie went on to be one of the highest grossing movies of all time and it has been estimated that Mel Gibson and his production company grossed nearly $1 billion when factoring in international sales, DVD sales and television rights.

I think it's safe to say that Christians aren't a bad group to market.


The stock has done virtually nothing over the past year. It had a high of about $6 a share about 3 years ago, but with some dilution over the years, it probably equates to around $1.50 - $2.00 a share now. However, the company has never been in a better position to really do some big things until now. So, for the sake of looking at technical indicators to see if the stock can potentially move higher, I'll focus just on the chart from Friday.

As you can see from the chart, the stock surged to $0.14/share around the first hour of trading. After a 50% re-tracement, the stock consolidated by settling between $0.065 - $0.08 per share the last 3 hours of the trading session. You can tell by the two high volume buy spikes in the last hour that the MM's were in share collecting mode after the morning spike. If a 2 million share buy can't even move the stock a penny, you know they were in control. However, MM's are more inclined to run a stock the next trading day if there's been a satisfactory re-tracement (50% is standard because all these MM's are just computer based algorithms anyway) coupled with a push from new buyers. With so many buyers at or above the current share price and such a compelling story, I'll guarantee that they'll be a gap up Monday morning.


With the press release occurring on a Friday, there really was not a lot of time available for investors/traders to do any thorough due diligence for such a relatively obscure company. Of course the fact that Wal-mart is willing to sell their product is the main reason for the quick surge in the stock price. However, I think it is clear that this company has great potential and that others will want to invest come Monday. I've haven't even mentioned the award winning CEO who happens to be one of the founding developers of the popular 3D Madden Football games. I tend to be a bit hesitant of stocks that have already had a big run-ups. A lot of times, it's "even money" if the stock continues to rise or tanks the next trading session. However, although I can't guarantee it, all the signs are pointing to this one having a big follow up day. I can't say that I have a good feel for entry or exit points, but if things go well, we'll see 20 cents or more tomorrow. Personally, I'd be content with that. However, with such strong prospects, it wouldn't at all surprise me if a lot of people put this one in their long term portfolio. LFBG.OB potentially the next perfect stock.

6-6-09 - News in a Hot Sector Could Make Metabasis Therapeutics (MBRX) Perfect

The blog http://theperfectstock.blogspot.com/ is back with another stock that I believe could be perfect come Monday 6-8-09. With this selection, I'm not going to try and convince you that this is a great company with strong fundamentals. This is strictly a momentum play which displays much of the characteristics of stocks that have performed very well over the past two or three weeks. I've mentioned in the comments section of one of the other posts that occasionally the stock market will set itself up to where it yields very generous gains with stocks in certain sectors during certain periods of time. Once you've figured out the sector and when this is occurring, your odds of making a lot of money very quickly is pretty high. I believe that Metabasis Therapeutics (MBRX) fits the bill and has a good chance to be the next perfect stock.

Per business filings, Metabasis Therapeutics is a biopharmaceutical company that has established a broad pipeline of product candidates and advanced discovery programs targeting large markets with significant unmet needs. The company’s product pipeline includes clinical-stage product candidates and advanced discovery programs for the treatment of metabolic diseases such as diabetes and hyperlipidemia, as well as product candidates and advanced discovery programs for the treatment of liver diseases such as hepatitis and primary liver cancer.

Although the description of the company sounds pretty dynamic, they have recently fell upon some very difficult times financially. Currently, they are facing a severe cash crunch and are bordering on bankruptcy. A couple of weeks ago, they instituted a corporate restructuring that reduced their staff by 85% as a means of conserving cash. Also, they are seeking all strategic options to somehow increase their capital. Things don't look bright.


On Friday 6-5-09 after hours, Metabasis Therapeutics announced receipt of a $2 million payment from Roche in recognition of advances made on their research collaboration, which is focused on applying Metabasis’ HepDirect® liver-targeting technology to Roche’s proprietary lead nucleosides in order to develop new treatments for hepatitis C viral (HCV) infection. In addition, Metabasis announced that Roche has formally accepted MB11362 as a clinical candidate for development. Although $2 million is not nearly enough to rid MBRX if all their financial woes, the infusion of cash does afford them a little more time to seek other resolutions. However, I think the most critical news is Roche's formal acceptance of MB11362. This news implies that there is indeed value with the company (at least more than the $12 million market cap they are currently sporting) and should aid them in their quest to be acquired or obtain additional financial backing. The market seemed to like it as shares practically doubled during after hours.


Check out the chart of MBRX below:

The stock reached an all time low several days ago at $0.21/share and has responded well with a "V" shaped bounce on increased volume. Because of the volume, particularly on Friday, it looks like the news may have leaked. The intra-day volume for a stock this cheap still hasn't been over a million shares so despite the runup of the past three or four days, there still appears to be plenty of upside. There's only 35 million shares outstanding with the float being about half that (Google Finance says 60% institutional ownership but I deducted some more due to the recent activity I've seen on http://www.mffais.com/mbrx). Such a tight share structure is perfect for a quick runup.


Other small cap biotech/pharma stocks like MBRX's have been on fire as of late. Individual names have bounced off their 52 weeks lows and surpassed their 52 week highs in less than a week. HEB, AGEN, and SOMX are just a few names that have seen unprecedented leaps in the their share price in a very short time frame. However, the best example of the craziness in this sector was what happened with Xtent (XTNT) just this past Thursday. Ironically, the makeup of XTNT is very similar to MBRX. Both are biotechs on the brink of a collapse with similar floats. XTNT too was struggling around its 52 lows when it released in my opinion a relatively unimpressive press release by industry standards. It stated that the company had conditional approval from the FDA for an Investigational Device Exemption (IDE) authorizing it to begin its clinical program. On this news alone, the share of XTNT jumped from $0.30 to $2.69 in two days. When investors/traders see this kind of action in a sector, they definitely take note and stay on the lookout for the next best thing.

Insider Trading:

Part of the reason why this stock has taken a beating is because mutual funds and institutions have recently been dumping the stock at a high rate. However, in spite of the company's slide over the last year, there has been no insider within the organization that has sold. As a matter of fact, the CEO began accumulating shares back during Nov. 08 between $0.49 and $0.75.


Moves in this sector have been explosive and I expect MBRX to follow a similar pattern. I believe the after hours trading Friday was just a precursor for things to come Monday. Usually, a massive move in the premarket is a bad sign for someone trying to chase as stock; however, XTNT also doubled in the premarket before its run. Had you bought during the open after the aggressive premarket buying, you still could have made 4 times your investment. Right now, MBRX sits at $0.36/share. As far as a trading strategy, I would think that anything under $0.70/share would be a decent entry point. Be on the look out for a quick spike during the first 10 minutes of trading followed by a possible drop as some take quick profits. If this happens, an ideal place to buy would be after that first big dip. This was an $8 stock less than two year ago and has a 52 week high of over $2.00 share. So, the upside is huge. It could hit at least $1.50/share Monday if things go well, but nothing is a guarantee. All you can do as an investor/trader is put yourself in the best position to let the market work for you. I wouldn't hold this long term due to fears of dilution, but I'd take what I could get on Monday. Because of news, sector precedence, and a favorable share structure, Metabasis Therapeutics (MBRX) has the goods to be the next perfect stock.