4-28-09 - Thomas Properties Group Inc. (TPGI): On the Perfect Stock Radar

At the beginning of this week, the main story was the swine flu. Tomorrow, the headlines will probably center around Dendreon and its massive turnaround from the bear raid earlier today. The fact that all cancer stocks should fly tomorrow makes me regret not writing that post about Cell Genesys (CEGE). For those of you that don't read the post comments, I mentioned a little over a week ago that I thought CEGE could ride Dendreon's coattails. Anyway, a lot of these biotechs have massive run ups during the premarket, which often make it difficult for people to buy in at a decent price. This can be very frustrating.

As a result, I decided to change up the post a little bit today. In order to really make money, you need to buy or target a stock before the run starts. So, this post will be about a stock that is not yet perfect, but is setting up to possibly be one. The stock on the perfect stock radar is Thomas Properties Group, Inc. (TPGI).


Thomas Properties Group is a real estate company that owns, acquires, develops and manages offices, as well as mixed-use and residential properties. So why is TPGI on my perfect stock radar? Well, it already has a lot of perfect stock qualities:

1. It's in a beaten down sector that's now on the rise - Real estate operations stocks like REITs and property management companies, which were taken down with the housing bubble, have been steadily climbing the last two months.
2. There's been lots of insider buying - TPGI's CEO has been aggressively accumulating shares. He has purchased approximately 200,000 shares in total the last 4 to 5 months. http://www.gurufocus.com/news.php?id=52396
3. The company has had some positive news - On 4/3/09, it was announced that the company was retained by Korean Air to develop a nearly 1.8 million-square-foot office, retail, condo and hotel project on the southwest corner of Wilshire and Figueroa in Los Angeles' financial district. The new complex is expected to cost $1 billion.

Even more impressive than the things listed above is the fact the company continues to pay a small dividend and per their last earnings report, they do not have any major capitalization issues and have very stable tenants.



With so many great things going for Thomas Properties Group you may be asking why is it just on the radar? Really, it's there for just one reason: Technicals.



See TPGI's chart below:









As you can see from the chart, the stock bottomed 2 months ago and has been trading sideways ever since. Such a pattern is often considered bullish because lengthy consolidations such as this typically yield explosive moves up once a reversal occurs. The stagnation of the trading pattern also shows that the stock has yet to participate in the real estate operations run i mentioned earlier. With the stock currently at $1.27/share it needs to show some upward momentum before it screams "buy".

The Quarter 1 2009 earnings report is scheduled for May 5. There is a very strong chance that a lot of investors are waiting on the sidelines to see if anything overly negative pops up during the report before buying. Also, TGPI has less than 25 million outstanding shares and heavy institutional ownership. If the report is pretty clean and the stock gets some positive momentum, it won't require that much for it to hit $3.00/share quickly.

I feel the downside in this stock is minimal, but the upside is tremendous. The earnings report appears to be the catalyst to get this stock moving. If it's favorable, look out! Right now, the technicals show only a potential breakout. That's not quite enough to make TGPI perfect, but it definitely puts it on the radar.

4-25-09 - Potential Panic makes NVAX "Perfect"

"The Perfect Stock" blog at http://theperfectstock.blogspot.com is back with probably the most no brainer stock selection I've ever made. I hope you guys have plenty of powder ready on Monday, 4-26-09 because this could be the easiest money you've ever made. Typically, in breaking down a perfect stock, I'll show graphs and give multiple reasons as to why I think a stock will obtain monster gains very quickly. For this post I'm not going to do that. There are certain times in playing the stock market when a story is so powerful that it supersedes all analytical thinking. No paralysis by analysis today! The next perfect stock is Novavax (NVAX).

If you haven't been watching the news, one of the world's biggest stories has involved the swine flu epidemic that is sweeping Mexico and now the U.S. The outbreak in Mexico is being blamed for at least 1,000 infections and 81 deaths. There have been 20 reported cases in the United States so far, but fortunately, none have been fatal. It is believed, right now, that the flu only spreads from human-to-human contact and human contact with live pigs. Today, Federal officials have declared this a public health emergency. Also, the quick spread of this new flu strain has caused world-wide alerts for those traveling to Mexico and the U.S.

Public health emergencies often cause an overreaction, which quickly progresses into public panic. In scenarios such as this, the stock market responds equally as violent in those companies that may offer a solution. Novavax (NVAX) is said to be able to produce a vaccine from an emergent strain of flu virus in 12 weeks. The company has contacted the U.S. Centers for Disease Control and Prevention to offer help and is also trying to contact the Ministry of Health in Mexico.

On Friday NVAX spiked 75% to $1.42 with a lot of the action coming late in the day. It was up another 35% during after hours so obviously the run is not done. I see $3.00 as literally a guarantee. However, it has the potential to go much higher and run a couple of days especially if words gets out that US and Mexican agencies are accepting of NVAX's help.

If you're a skeptic and think you've missed too much of the NVAX run, expect strong moves as well from other vaccine stocks like VICL, DVAX, and BCRX. Novavax (NVAX), the next perfect stock!

Don't forget that if your looking for some additional trading ideas, check out my other blog at http://yourtradingtips.blogspot.com .

4/13/09 - SYTO.OB: Almost Perfect, But Not Quite

While CHGY.OB continues to chug along "perfectly", I decided to write a short post on a stock that didn't quite make the cut, but had a perfect aspect worthy of noting. From a technical standpoint this next stock may be the most perfect stock I've ever seen. The stock is Sync2 Entertainment Corp (SYTO.OB).

I cannot consider SYTO.OB as a true "perfect stock" because fundamentally, it's just not that strong. The company really has no current income and is in the process of transitioning to an entertainment company. Also, there has been no news to really justify a significant increase in share price. However, about 2 or 3 weeks ago the stock did something very strange. SYTO.OB was a $2.20 stock that all of a sudden dropped around 60% in one day on only 10,000 shares of volume. It continued to plummet to about $0.25 on just another 20,000 shares of volume. Keep in mind that this stock has over 85 million shares outstanding. Over the next few days the stock fell to $0.01 on higher, but still relatively low volume. The stock then consolidated between $0.01-$0.02 for several days and then finally popped today for a 147% gain. Reversals like this typically last for multiple days. The exact same thing happen to the stock QNTV.OB a week or so earlier. It ended up moving from $0.02 to $0.45 in 4 or 5 days. Technically, this was a classic "bounce" and many people see the same similarities in SYTO.OB.

Despite this stock being a little less than perfect, the technical perfection of SYTO.OB should yield at least another double from its current $0.047 share price.

China Energy Corp (CHGY.OB) 4/5/09: The Next Perfect Stock

Once gain, I've searched the stock market and think I may have found another perfect stock. My selection of Pier One (PIR) on http://theperfectstock.blogspot.com/ worked out pretty well to say the least. Although Hayes Lemmerz (HAYZ) has yet to reach its full potential (in my opinion), the stock went from $0.16/share to $0.29/share less than a week after that article was posted. That's an 81% gain! I continue to get a lot of positive feedback, so the pressure stays on to select only the best and brightest stocks. My next choice is slightly riskier because it is an international stock and it isn't listed on a major exchange. However, I implore you to keep and open mind and let the facts guide your opinion. My choice for the next perfect stock is China Energy Corp (CHGY.OB).

China Energy Corp is a company that produces and processes raw coal for heating and power generation in Inner Mongolia. Without boring you with details of their total operation, the main revenue driver is their coal production. Before the nay sayers begin their criticism of this stock, let me be upfront with some perceived negatives of this company:

• A lot of people just don't trust Chinese microcaps for whatever reason


• The company's website is currently being redone, so it's not active


• The balance sheet's not that great due to recently upgrades in their coal mine

Okay, now that I've got that out of the way, let me tell you why I think this stock could double or better in the next 2 to 3 weeks.

Fundamentals:

We all know that no country has been immune from the recent economic challenges. Even China, which has fared better than most, has seen a sharp decline in growth. Despite this negative trend, the country continues to be starved for energy. The most sought after energy source happens to be coal. China depends on coal for about 75 percent of its annual energy production and consumes about half the world's coal. Finding a buyer is never an issue. Customers are willing to buy how ever much a company is willing to sell.

Momentum:

Energy stocks in general have begun to trend up after a massive drop. Oil is now solidly over $50/barrel and coal stocks have clearly been participating in the rally. Most of these stocks have seen at least 30% gains since the beginning of March 09. This uptrend is clearly seen in the 1 month chart of the Market Vector Coal ETF (KOL) below:

News:

In December 2008, CHGY.OB finished the production expansion of one of its coal mines. The annual coal production is scheduled to increase 80% from 500,000 tons to 900,000 tons per year. Also, after a precipitous fall, the price of thermal coal finally leveled out and has recently shown signs of an upward trend.

China Energy had a dismal 3rd quarter in 2008 caused by mine preparations, production halts due to the 2008 Summer Olympics, and the overall sentiment of a slumping economy. However, the company responded in quarter 4 with much better production numbers and an EPS of .09/share. On word of that news, the stock's price jumped significantly off its all time low of $0.04/share 3/16/09. Keep in mind that 2008 quarter 4 numbers still did not include production from the mine expansion. Quarter 1 2009 will be the first results actually including the new production. Due to ramp up adjustments, the true production results of the expanded mine won't be revealed until quarter 2 2009. Using a conservative coal price estimate of $60-$65, the earnings in quarter 1 2009 should far exceed those from quarter 4 2008. The balance sheet should quickly improve and for the next year or two, this company will be a true cash cow.

Technicals:

Look at the chart below for CHGY.OB.




You can see the stock bottomed in mid-March and followed with a parabolic spike after the release of quarter 4 2008 earnings. What occurred next is a classic "cup handle". The stock dips as the day traders and quick flipper exit. Then, it slowly ramps back up on lower volume as investors begin to evaluate how much of a steal this stock really is. The sellers dry up and then the stock is consistently hit with accumulating buyers.

According to China Energy's latest SEC filings, it has 45 million outstanding shares. Approximately, 41.5 million shares are held by insiders who have yet to sell. That only leaves about 3.5 million shares for the trading public. Look at how heavily weighted the "blue bars" (which represents buys) are on the volume portion of the chart above in the last week. Based on the amount of buys, how cheap the shares are, and the number of shares traded the past two weeks, the float is incredibly thin. With Quarter 1 2009 earnings due out in less than 2 weeks, CHGY.OB has the makings of a rocket waiting to blast off.

Conclusion:

A conservative EPS estimate for CHGY.OB in 2009 is $0.40 - $0.45. With its stock price currently sitting at $0.23/share, you're looking at the current year PE being a ridiculously low 0.5. An EPS of around $0.11 is expected by those of us who follow this stock closely for the upcoming quarter. However, very few people know anything about this stock, so these huge earning growth estimations are flying completely under the radar. I do suspect that some eye brows will be raised when China Energy's 10Q is filed some time around April 15 and people see 300% - 400% year over year gains in earnings. Sure, you could find some faults with this company, but I say the technicals and earnings make this the next perfect stock.

I had mentioned in a previous post that I might at some point include some stock market trading tips on this site. After contemplating that idea, I decided that it would be best to put those things on a separate blog. This blog is at http://yourtradingtips.blogspot.com/ and the first post deals with finding trading or investment relevant news. Check it out when you get a chance.

Happy investing!