The Perfect Stock

11/03/11 - RAYS.OB Has a Perfect Chart

2011-11-03T16:21:00.004-04:00

Here's a really quick post at the The Perfect Stock blog. Everyone should be well aware of the stock RAYS.OB by now. It gave up about .40 cents in gains late afternoon yesterday. Many people sold in panic, but look at the recovery in today's action in the picture above. I believe RAYS is once again setting up as a Perfect Chart. Often times people just look at 1-day or 3-month charts in checking out the technicals of a stock. However, 15-minute charts over multiple days can also give you a clear picture of where a stock is headed. In spite of the drop on 11/02/11, you can see that the stock is still in an upward path. Very similar action occurred in its predecessor LEXG.OB. I believe RAYS will still head significantly higher just in a slightly less aggressive path. We'll see.

6/30/11 - Failed Pump Makes Xinde Technology (WTFS. OB) Perfect

2011-06-30T08:03:00.004-04:00

Here's a really quick post today because I don't have a lot of time.

Xinde Technology (WTFS.OB) is my latest perfect stock selection. On 4/14/11, this Chinese company did a 4-1 forward split. It appears they needed to unload some shares, so about two weeks ago, they initiated a $750K promotion in hopes of minimizing the slide in share price. See link below for the promotional literature:

http://www2.smallcapfortunes.com/wtfs/

Well, the pump failed and the share price has cratered from .80 to .08 in the last two weeks. The bullet points below are why I think WTFS.OB is now perfect:

The company still makes well over $100M annually in revenue
As of 6/29/11 the company has a PE of 1, which makes it attractive fundamentally
Many Chinese stocks have been bouncing recently after being hammered by the market the past 3-6 months
Its chart appears to be bottoming
The short interest in the stock is increasing, which fuels bounces as shorters cover

The morning of 6/30/11, WTFS.OB sits at $0.118. There is a chance that the stock retests the .09 area and could possibly go lower. However, I think at these levels, the upside greatly outweighs the risk. I'm putting a target of $0.25 on the stock to be reached at some point in the next 2-3 weeks. Xinde Technology (WTFS.OB) is the next perfect stock.

4/24/11 - The Perfect Pumps Continue with AVVC.OB

2011-04-24T16:25:00.007-04:00

Here's a brief post at The Perfect Stock blog. My last commentary focused on the big money promotion of ALZM and its potential to reach between $2.50 - $3.00. Sure enough, ALZM topped out at $2.60. Not surprisingly, the stock pump game is still white hot. LEXG has followed suit and continues to make 52 week highs daily. The stock next in line appears to be this blog's potential "Perfect Pump" selection. Avatar Ventures Corp. (AVVC.OB) is the next perfect stock.

There's no need to go into an extensive analysis as to why AVVC.OB can make 75% or more gains within the next 30 days. All of these pumps follow the same pattern. Just read my last post regarding ALZM at http://theperfectstock.blogspot.com/2011/03/31811-big-money-promotion-makes-allezoe.html and basically substitute the ticker symbol to AVVC.OB. This particular stock currently sits at $1.27/share and has a $1M promotional budget, which happens to be a little larger than ALZM's. Generally speaking, the bigger the promotional budget, the better the chances are of a successful pump. See the link http://www2.smallcapfortunes.com/avvc2/ for one of the company's promotional materials.

See below for AVVC.OB's chart:

You can see that on Thursday 4/21/11, the stock had a classic pull back after hitting that $1.40-$1.50 area that I've discussed many times on the blog before. The volume has been particularly impressive. What I anticipate is that there will either be another drop on Monday (a gradual one throughout the day or just a quick morning dip) or AVVC.OB will move higher from the start and not look back. Either way, I expect the price to move higher no later than Tuesday 4/26/11. If it doesn't, that would be a huge red flag.

The $2.50 - $3.00 range remains the target. Keep in mind that nothing is guaranteed when it comes to the stock market. All you can do is select stocks where the odds of it going higher are greatly in your favor and hope for the best. In my opinion Avatar Ventures Corp (AVVC.OB) is the next perfect stock.

3/18/11 - Big Money Promotion makes Allezoe Medical Holdings (ALZM.OB) Perfect

2011-03-17T21:25:00.014-04:00

New post here at The Perfect Stock blog. Once again, I'll focus on a stock that I feel can make investors/ traders 75% gains or better in the next 30 days. In the past, I've done posts on companies that have 3 or 4 aspects about them that suggests they'll move much higher in a short period of time. I've also posted about stocks that may just have one powerful thing about it such as a "Perfect Chart". This post fits along the lines of the latter. However, in this instance that one "perfect" aspect centers around promotion. I'll call it the "Perfect Pump". Allezoe Medical Holdings Inc. (ALZM.OB) is the next perfect stock.

First, I won't bore you with the company details of Allezoe Medical Holdings. If you truly are interested, you can easily look up that information yourself. For the sake of this post, it's completely irrelevant. I want to focus on the promotion of ALZM.OB. I frequently hear people say, "Don't buy that stock, it's just being pumped." First of all, most stocks are pump and dumps. If you're looking for quick gains and you are astute about when to lock in profits, pumps can be very profitable. ALZM.OB happens to be following the successful pattern of stocks with high priced promotional budgets. Allezoe Medical Holdings has at least an $800,000 marketing campaign currently under way. Capital Financial Media (CFM) is one of their lead marketers. They worked their magic a few months ago with FCPG.OB for around 600% gains. I'm not an expert in how exactly these promoters do it, but somehow Market Makers (MMs) are able to walk up the share price by controlling the bid/ask price action. The manipulation is clearly revealed in the charts. Check out the spikes below as seen in FCPG.OB, HHWW.OB, and KNKT.OB:

As you can see, the moves usually begin around $1/share with a fairly steady surge in volume. Then, the trading pattern generally follows one of two ways:

- The MMs steadily move the share price to at least $2.50 - $3.00 per share without a pullback (as shown in FCPG.OB and HHWW.OB)
or
- The MMs move the stock to $1.40-$1.50 range, allow a panic shake to occur dropping the price 30-40%, and then continue the climb to that $2.50- $3.00 per share range (as shown in KNKT.OB).

Once the stock peaks, it falls hard. Hopefully, you would have made you money and gotten out by then.

See below for the current chart of ALZM.OB:

See the similarities to the first three charts shown. I'll almost guarantee you that ALZM.OB will either continue to surge until it at least hits that magic price range mentioned earlier or they'll be a pullback for a couple of days before moving higher. We'll know for certain in the next day or two. In my opinion, if the stock does drop and the volume isn't outrageous, that's a super strong buy signal.

Someone with an interest in FCPG.OB, HHWW.OB, and KNKT.OB spent at least $1.2M, $1.5M, and $800K respectively on promotions. ALZM.OB is right on par with those other three moneymakers. Allezoe Medical Holdings looks to have the makings of the next Perfect Stock.

11/16/20 - Perfect Charts: MMOG, REVO, and MONT

2010-11-16T18:11:00.009-05:00

Periodically, I'll do a quick post on stocks that I believe have perfect charts. These are stocks that have a super strong uptrend and should definitely be on every trader or investor's radar. The stocks that I believe have perfect charts are MMOG, REVO, and MONT.

See see the charts for MMOG, REVO, and MONT respectively below:

I'm not going to go into any detail regarding the company make up of these three tickers symbols since this post is all about the charts. However, I will say that of the three, MONT is the most appealing to me. It's moving as a "incher" (meaning consistent 1-3% daily gains) and doing so on steadily increasing volume. That's a very bullish trading pattern. Often times the daily moves "speed up" and get progressively larger. Stocks like these in many instances double or triple from the price at the start of the move. Because MONT first started to move at around $0.85/share, it still potentially has a lot more upside.

MMOG, REVO, and particularly MONT are worth following, further investigating, and maybe even buying. No one knows what the future holds and there are no guarantees, but there's no doubt that right now those three stocks have perfect charts.

10-23-10 - Low Float, Undervalued Silver stock makes Golden Minerals Co. (AUMN) Perfect

2010-10-23T14:26:00.009-04:00

New post here at the Perfect Stock Blog. I've actually been sitting on this one for a couple of weeks, but the setup is just too perfect now to ignore. As I've stated before, the objective of the blog is to pick stocks that I believe can achieve 75% or higher gains at some point during the next 30 days. Generally the stocks with the most potential to obtain such aggressive results are penny stocks located on the OTC marketplace. However, this stock selection will differ quite a bit because it currently holds a stock price above $20.00 and resides on the AMEX exchange. I believe Golden Minerals Company (AUMN) has been and still is a perfect stock.

Golden Minerals is a Delaware corporation based in Golden, Colorado, primarily engaged in the advancement of its pipeline of exploration projects in Mexico and South America. The Company has a portfolio of approximately 30 exploration projects, including the El Quevar project in the Salta Province of northwestern Argentina and advanced stage drilling projects in Mexico and Peru. Back in August of 2010, the company announced an increase in silver reserves at the El Quevar project to 60 million ounces. Silver currently is being priced at more than $23/oz.

Silver is surging

Silver is in a serious bull market. See chart below:

Although silver has been priced lower in recently days, most believe the price will eventually move higher. The Chinese in particular are ultra concerned with inflation and are also hoarding precious metals and rare earth elements to help fuel their domestic growth. As a result, China is expected to reduce there silver exports by 40%. By a major player like China reducing the rest of the world's supply, the price of silver should inherently rise.

Low Float

After a recent private placement, Golden Minerals still only has about 15 million shares outstanding. Over 87% of the shares are owned by institutional holders or insiders. That is the one of the highest among publicly owned precious metal companies. That means only about 2 million shares are left to the retailers for trading purposes. In other words, it won't require much to move the stock higher.

Technicals

See below for AUMN chart:

As you can see, the stock first began its rise in September and has move up about 300% in the last two months. AUMN finally took a short breather during the 2nd week of October when the company announced a secondary offering. During the offering the Bollinger Bands tightened, which generally is a technical precursor for a significant move, at around $22/share. On Friday, Golden Minerals announced that the offering was over and the shares explode to $25 on solid volume signaling another technical breakout.

Huge price target increase

After the initial explosion of AUMN from $8 to $15 due to the surge in silver prices, the stock hit overdrive when a price target of $104 was given by the brokerage firm Dahlman Rose. With silver priced the way it is, the firm believes that AUMN deserves a billion dollar plus market cap to make it comparable to its peers. After the secondary offering, the target was later revised to $85. Even with AUMN currently at $25, the price target allows for plenty of upside. See link for the report. http://www.scribd.com/doc/38536240/DRCO-AUMN-CoNote-2010-10-01

Insiders are still buying

Some people would be hesitant to buy a stock that's already moved 200-300% so quickly. Well, the insiders of AUMN aren't one of them. During the company's secondary offering priced at $18.50 practically every significant insider in the company participated. The CEO, CFO, VP, Chief Geologist and Directors all took advantage of the opportunity to add to their share count. Also, AUMN's largest institutional holder added during the placement as well. If all of those guys feel confident about adding at these levels, I see no reason why a retail investor wouldn't be comfortable doing the same.

Conclusion

This stock maybe has more indicators for upward movement than I've ever seen. You've got a low float company with assets of the surging commodity silver, great technicals, a big price target, and insider buying. I haven't even mentioned the fact that low float big board stocks have been red hot of late (LIVE, RITT, etc.). Golden Minerals could be another one that gets pushed up by traders as well. The only thing that I see that could derail the upward movement of AUMN is if the price of silver does a temporary nosedive. I believe $40-$45 will come quickly. Golden Minerals Company (AUMN) is the perfect stock.

8-15-10 - LOI News Makes South Shore Resources (SSHO.PK) Perfect

2010-08-15T22:32:00.006-04:00

It's been a while since I've had a post here on The Perfect Stock blog. I've been having a difficult time finding stocks truly worthy of perfect status. The last stock that fit the mold was LQMT.PK, which I talked about quite a bit in the comments section of my previous post. However, I never got a chance to do a full post on it. With perfect stocks being so rare, I've also posted in the past about stocks that I felt had just one perfect aspect (ie. a perfect chart). Well, this particular post will fit that mold and will focus on a stock that I believe just has "perfect news". South Shore Resources Inc. (SSHO.PK) is that stock.

South Shore Resources Inc. is a company engaged in the development of products which are committed to the reduction of harmful greenhouse gases and fuel savings with the use of Hydrogen Generating Modules and related accessories to the transportation and automotive industries.

The News

On Friday 8/13/10 after hours, SSHO.PK released major news where they announced that they had received a letter of intent (LOI) pursuant to which a private Ontario company wishes to purchase for $44 million, an exclusive 20 year license for use of SSHO's intellectual (Hydrogen on Demand) property.

The reason that I believe this news is perfect is because the company only has 44.6 million shares outstanding. The current share price of $0.12/share puts the market cap at a little over $5 million. This deal would be for almost 9 times the current current market cap, which could theoretically translate to over a $1.00/share.

Conclusion

Basically, you've got a low float stock that just released news that potentially values the company significantly higher than it currently sits. Bashers will say that it's only a letter of intent, we don't know a lot about the purchaser, and that is sounds too good to be true. I say that that's a perfect combination for speculation, which we all know is great for a stock. Another positive for SSHO.PK is that there doesn't appear to be any significant front loading on the stock, which generally means limited share dumping by paid marketers. Also, dilution shouldn't be much of an issue since shares have basically been maxed out with only 50 million shares authorized per there last quarterly report (see http://www.otcmarkets.com/otciq/ajax/showFinancialReportById.pdf?id=34955 for details). Nothing is a guarantee in the stock market, but with the aftermarket and pre-market trading limitations for pink sheets stocks, along with all the things I've mentioned above, it should run on Monday even with a significant gap up. Who knows where the price eventually ends up, but in my opinion South Shore Resources, Inc. (SSHO.PK) has perfect news.

6/6/10 - Oil Spill Contract from BP Makes MOP Environmental Solutions (MOPN.PK) Perfect

2010-06-06T14:44:00.009-04:00

New post here at the The Perfect Stock blog. My last pick of Goldcorp Holdings (GHDC.OB) hasn't performed at the level that I had expected, but I still like the selection. Panic is beginning to overwhelm the market again. Generally when that happens, there is no better place to park some of your money than gold.

For the sake of this post, I'll go back to a philosophy I've used in the past in picking a "perfect stock". I've stated that certain times in playing the stock market, a story is so powerful that news alone can be enough to make a stock perfect. The past month and a half, the national headlines have been dominated, by the BP's oil spill in the gulf of Mexico. The company that I've selected reported news Friday afternoon that potentially positions it to be a big winner in the market on Monday. MOP Environmental Solutions Inc. (MOPN.PK) is the next perfect stock.

News

MOP Environmental Solutions manufactures and distributes MOP(R) Maximum Oil Pickup. MOP picks up and recovers oil spilled on land and/or water. The company's revolutionary, 100% Recyclable, new absorbent material picks up to 30 times its own weight in oil, without absorbing water, restores traction on slippery surfaces, and safely restores a clean, natural environment. After reaching out to BP on numerous occasions, the company announced that it had finally received a Purchase Order from BP to send its oil spill absorbent booms to the Gulf of Mexico for the ongoing oil spill clean up efforts. Per the purchase order, MOP Environmental will provide BP with three tractor trailerloads of booms to be shipped to the Hope Dale Site staging area in Saint Bernard, Louisiana. The company also mentions that upon fulfillment of this order, additional deliveries are anticipated to continue on a weekly basis and that BP will be looking to accept as much their product as they can provide.

Big Company + Little Company = Big Gains for Little Company

Often times in my posts, I'll reference my other blog http://yourtradingtips.blogspot.com. One of things I mentioned on that site is that when "trading the news", it's generally a good idea to buy stock in a small company that partners or provides services to a large established company. Just last week, you saw Jones Soda Company (JSDA) double on news that their distribution network with Walmart was expanded. This new relationship between MOP and BP certainly meets this criteria and I expect stratospheric gains in MOPN.PK as a result.

The Oil Spill Trade in Pinks and OTCBB's Has Already Been Working

This oil spill has been going on for well over a month now. Many oil services and environmental solution stocks on Pinksheets and OTCBB have already skyrocketed in speculation of providing a potential solution. MOPN.PK is no exception as it has already moved from a low of $0.001 to a high $0.20 a share (currently it's at $0.079/share). However, these stocks have been giving up much of those gains as the SEC has begun cracking down on oil spill solution companies issuing "creative" press releases just to superficially move their share prices higher. For example, the SEC suspended the trading of Act Clean Technology (ACLH.PK) while they investigate the "accuracy"of some of their claims. I'll certainly admit to have taken advantage of the oil spill trade enthusiasm, but I stopped playing them because I too had noticed how "fluffy" and ridiculous many the PR's had become. What makes MOPN.PK so intriguing though is that it is the first non big board stock to have actually received a contract from BP. In my opinion that is a game changer.

Low Float

By now most of you know that low float stocks are key in achieving those quick gains. MOPN. PK definitely fits the bill. According to most recent reports, there are about 216.5 million shares outstanding. However, the float is only about 30-40 million shares. It doesn't take long for a stock currently at 8 cents to chew through so relatively few shares. Based on the interest this stock has garnered this weekend, a sizable move higher does seem probable.

Conclusion

MOP Environmental Solutions' new contract with BP, a favorable "oil spill trade" track record, and a low float is a recipe for a potentially explosive day on Monday. The only things that I think could hinder a big run in MOPN.PK is if the share price opens too high or if management decides to sell or dilute shares early in Monday's trading. I don't think a high opening is that big of a deal (15 cents or less should be okay) because a lot of people will be chasing this one and current holders should want to take advantage of the renewed interest in the company. I also think that kills the "sell the news" theory and slows down any immediate dilution. Why sell at 10-15 cents when you could just as easily wait and sell at 30-40 cents? The public's demand for shares should exist for this type move especially with such a low float and a steady stream of news surrounding the ecological devastation. The market can be unpredictable, but I believe things are set up well for MOP Environmental Solutions, Inc. (MOPN.PK) to be the next perfect stock.

5/13/10 - GoldCorp Holdings Co. (GHDC.OB) is Perfect

2010-05-13T12:33:00.004-04:00

I don't usually do posts in the middle of the day, but this one's too obvious not to mention right now. GoldCorp Holdings Co. (GHDC.OB) is the next perfect stock. I'll be brief since I don't have much time:

- Technicals are at breakout levels
- Gold is on fire
- Company is tightly connected to SFMI which has had a stratospheric rise

Hopefully, I'll have more time later to do a more in depth post, but this one is easy money in my opinion.

--------------------------

I just wanted to mention a few more points as to why I like GHDC.OB:

- Although GHDC.OB has 184 million shares, the float is less than 49 million shares

- SFMI leases property owned by GHDC. GHDC gets $1 million a year for the lease plus 15% of SFMI's revenue (not profit) from the property

- SFMI and GHDC have a similar share structure yet SFMI is at 40 cents and GHDC is at 7 cents

I look for a lot of people who have made a killing in SFMI to start taking profits and move some of that money into GHDC while it's still cheap.

4-12-10 - Hot Oil and Gas Sector makes Blugrass Energy (BLUG.OB) Perfect

2010-04-11T20:42:00.011-04:00

It has been a little over a month since I last posted, but I believe this next perfect stock choice will achieve my standard of 80-100% gains within the next 30 days. It happens to be in a very hot sector and is currently sitting near its 52 week low. These factors along with several others are why I believe Blugrass Energy (BLUG.OB) could be the next perfect stock.

Blugrass Energy, Inc. is engaged in the business of oil and gas exploration and development. The Company is focused on exploration and production of oil and gas properties in North America and has interests in producing oil and gas assets, and has longer term exploration assets in the United States.

News in a Hot Sector

After hours on Friday 4/9/10, Blugrass Energy announced that they had entered into a Memorandum of Understanding with DeepExpro, LLC, a privately held independent oil and gas exploration and production company based in Houston, Texas, to jointly identify, evaluate, acquire, explore, and develop various working interests and net revenue interests in oil and gas prospects.

The oil and gas sectors have been red hot the past few weeks. Stocks such as SSN, PDO, and PDGO, just to name a few, have exploded higher as oil has solidly moved past $80/barrel. In all honesty, it's difficult to gauge how significant this press release is regarding the overall prospects of Blugrass Energy. However, traders and investors are always looking for reasons to move up stocks in hot sectors. Fridays news should get noticed by those looking speculate.

Technicals

See below for a chart of BLUG.OB:

Currently, BLUG.OB is sitting at $0.195/share. As you can see from the chart, it is very close to its 52 week low. Over the last year the stock has traded as high as $1.20/share and has spent the majority of its time over $0.40/share. As a result, the downside appears to be limited at these levels. In charts like this one, a little news can often times trigger a reversal. After reviewing quite a few oil and gas stocks, very few are still hovering near their 52 week lows. Most have surged quite substantially off of those levels. I view a potential investment in BLUG.OB as low risk opportunity to catch a stock at its bottom before a probable rise.

Low Float

According to Blugrass Energy's last 10-Q, there were 50.05M shares of Common Stock outstanding as of 2/22/10. There are 24.05M shares currently owned by 5 individuals and institutions, which means that the float is 26M shares at the most. With a float this low and the share price currently less than 20 cents, BLUG.OB could rocket quickly with a surge in volume.

The Pump is On

I've never been much of a fan of those high profile penny stock pumping websites. However, I'm not too naive to understand that under the right circumstances, they can be effective tools for finding those quick moving stocks. After doing a few checks this weekend, I've discovered that quite a few penny stock sites have spotlighted BLUG.OB as a potential fast riser this week. Despite any negative feelings you may have about these sites, they do have huge followings. When you have a stock being pumped while it hovers near its bottom with the weekend used to create the buzz, chances are high that there will be sudden, strong buying interest.

Conclusion

The last oil and gas stock I spotlighted on this site was Callon Petroleum (CPE) back in May 2009. I was too early with that choice and the stock continued to lag the remainder of that year. However, CPE has been a 4 bagger in 2010 and has really exploded the last month. This is just one more example of the roll this sector has been on as of late. It only makes since for investors and traders to try and look for the next best thing. Blugrass Energy isn't necessarily one of those fundamentally strong stocks that you should fall in love with. However,I believe that the combination of news, a low float and the potential for a technical reversal and sudden buyer interest is a great recipe for quick stock gains. BLUG.OB could double quite easily and could potentially move much more. Bluegrass Energy (BLUG.OB) is the next perfect stock.

2-22-10 - Perfect Chart: Tres Estrellas Enterprises, Inc. / IN Media Corp (TLLA.OB)

2010-02-22T21:44:00.010-05:00

I've got a new Perfect Chart post that briefly highlights a stock that's potentially a nice moneymaker. This stock is currently in an uptrend that is ridiculously strong. It also appears to be pretty unknown since I can't find a single blog or article discussing the company's steady move higher. However, I think it'll be popping up on many people's radar very soon. Tres Estellas Enterprises, Inc. (TLLA.OB) is the next perfect chart.

Tres Estellas Enterprises, Inc. is shell company that entered into a merger agreement with IN Media Corp back in November 2009. IN Media is a developer of Internet Protocol Television (IPTV) appliances and interfaces with implementations of the technology in key provinces of China and planned rollouts in India and the United States. IN Media Corp is the surviving name of the merged companies.

See below for a 3-month chart of TLLA.OB as of 2/22/10:

This is one of the craziest uptrends that I've seen in some time. There has only been one red trading day since 12/11/09. One red day in over a 2 month time frame is almost unheard of. The volume has been very light, but it is starting to pick up and the chart is starting to turn more parabolic. In digging a little deeper, I've also found that TLLA.OB has really only had 2 MMs on the bid/ask: DOMS and ABLE. These two have a reputation as being two of the more friendly MMs out there. That is a huge positive.

Stocks like TLLA.OB are often low risk / high reward stocks for those that get in before the herd and don't get too greedy. Based on stocks with trends like this in past, you could see either a quick double on heavy volume or a slow grind higher on consistently light volume. If you decide to buy, be careful using stop losses. Stocks like this can violently dip all of a sudden and recover in a matter of hours (look at what happened to NGLF.OB on 2/5/10 as proof http://www.google.com/finance/historical?q=OTC:NGLF). It can be tough to buy a stock on technicals alone, but IN Media's recent trading history is awful hard to ignore. TLLA.OB is the next Perfect Chart.

1-24-10 - Recent Financial News Makes Forterus, Inc. (FTER.PK) Perfect

2010-01-23T23:12:00.015-05:00

New perfect stock post. This choice caught my attention as a stock that was severely undervalued due to news the company released Friday after hours. It's a pinksheet stock, so it potentially could have a meteoric run up. Forterus, Inc. (FTER.PK) is the next perfect stock.

Forterus Inc. is engaged in diverse business activities, including drug and alcohol rehabilitation, and finance. The company maintains an intensive outpatient program in conjunction with sober living facilities. Hythiam, Inc. (HYTM) is a notable publicly traded company that would be considered comparable to Forterus.

News

On 1/22/10 after the market closed, FTER announced their 2009 fiscal year results. See below for the highlights:

- $383,937 in Net Income for Fiscal 2009 compared to a loss of $1,671,525 in Fiscal 2008.

- $5,842,182 in Revenue For Fiscal 2009 compared to revenue of $4,089,139 in Fiscal 2008.

- 435% increase in Net Income from Fiscal 2008 to Fiscal 2009.

- 43% increase in Revenue from Fiscal 2008 to Fiscal 2009.

- 0.43 Revenue Per Share (on share count of 13,513,264).

- $0.03 Earnings Per Share (on share count of 13,513,264).

Undervalued

As shown above the company reported a consolidated net profit of 383,937 or $.03 per share. With FTER.PK closing at $0.065/share on 1/22/10, the trailing PE is a ridiculously low 2. The CEO is quoted as saying, "We will continue to make strategic investments in qualified and experienced staff, the major asset of any quality organization, to complement the investments to grow our bed count as we continue on a sustainable, scalable and profitable growth path in fiscal 2010." He also mentioned that the company was able to weather the economic storm of last year because they had insurance contracts that provided steady revenue. I believe with these results most investors and traders will conclude that this stock deserves to trade at a much higher multiple. Right now, the current market cap for FTER.PK is less than $1 million. Hythiam, Inc. currently has a market cap of approximately $30 million. It is an understatement to say that Forterus is undervalued.

Low Float

On 12/31/09 FTER.PK had a share count of 13,513,264. The float is only about 5 million shares. With a stock this inexpensive and a float this low, there is a very high probability that this stock will move much higher and at a very rapid pace.

Technicals

See below for a chart of FTER.PK:

As you can see the stock has been quietly trading in the 5 cents range the past 4 months. The past couple of days, Forterus has traded higher on increased volume. This action is often a precursor to a significantly higher move. FTER.PK has a 52 week high of about 10 cents. With a surge in volume, which I'd expect after these results, this high should be tested. If it happens to break through that resistance, the stock could potentially run much higher. The 18 month high is $0.52 cents.

Conclusion

Rehabilitation facilities and services will always have a need in today's society. Forterus is one of the few publicly traded companies with expertise in this area and they have benefited from stable contracts in spite of tumultuous economic conditions. The company ended 2009 with stellar financial results, which based on the current share price was clearly a surprise to Wall Street. The stock has a low float and the chart appears to be setting up for a move higher. At a current PE of 2 I believe FTER.PK has the goods to at the very least double. This could happen as early as Monday, but to be frank, I wouldn't be at all surprised if it went well above that. Forterus, Inc. (FTER.PK) is the next perfect stock.

1-4-10 - Explosive Chinese Ad Growth Makes China New Media Corp (CMDI.OB) Perfect

2010-01-01T20:16:00.018-05:00

This will be my first perfect stock post of 2010. Fortunately, I had far more hits than misses in 2009. Last year was a period of recovery for economies throughout the world; as a result, I suspect the perfect stocks will be much more difficult to find this year. My first pick in 2009 was Pier One (PIR) at $0.16/ share. It now sits at over $5.00/share. I don't think I'll be able to match the success of that one, but I'll be equally satisfied if my first choice of 2010 reaches anywhere near my goal of 80%-100% returns in 30 days or less. For this selection, I'll venture back into the Chinese market. Small cap Chinese stocks have been smoking hot of late. As most traders and investors move their attention back to the market after their holiday slumber, I believe the stock I have chosen will catch the eye of those looking for the next big gainer. China New Media Corp (CMDI.OB) is the next perfect stock.

China New Media Corp is a fast growing advertising provider in China. Since their business began in 2000, they have become one of the largest outdoor advertising companies in China with a dominant position in Dalian, the commercial center of Northeastern China. Currently, they are expanding their outdoor media platform into two of the most populous cities in northern China, Tianjin and Shenyang. Each city has approximately 10 million people. CMDI.OB provides comprehensive advertising services such as art design, ad publishing, daily maintenance and technical upgrading. They also have a proprietary, web based advertising platform call City Navigator, which they feel will revolutionize the urban viewing experience. Some of their largest advertising clients in terms of revenue include leading international brand names such as Coca-Cola, Pepsi, UPS, HSBC, Sony, Canon, HP and leading domestic brands such as China Mobile, Ping An Insurance, China Unicom, CITIC Bank, and China Merchant Bank..

CMDI.OB began trading on 12/28/09 at an opening price of around $2.00/share. The stock was the product of a reverse merger between Dalian Vastitude Media Group Co., Ltd. and Golden Key International (formally GKYI.OB).

Fundamentals

China has the second largest outdoor advertising market and is one of the fastest growing in the world. Also, China's overall ad spending has kept a double digit annual growth the last 10 years. The company's expansion into other populous regions and China's consistent high levels of economic growth, should power China New Media's immediate and future growth.

Some of CMDI.OB financial highlights for their fiscal year ending 6/30/09 include the following:

-- Total revenue increased 58% year-over-year to $8.42 million

-- Net income increased 268% year-over-year to $2.84 million

-- Gross profit was $4.9 million, or 59% of sales

The statement that really caught my attention by CEO James Wang was, "We expect to maintain a minimum 35% annual growth rate in the next five years."

Low floater

One general result of a public company that has come about through a reverse merger is heavy insider ownership. CMDI.OB is no exception. China New Media Corp has approximately 27 million shares outstanding fully diluted. However, approximately 22 million shares are held by the following:

Directors and Executive Officers - 9.65 million shares

Chuk Chung Fuk - 7.15 million shares

China Reinv Partner, L.P. - 5.5 million shares

This only leaves around 5 million trading shares to the public. Such a small float can be key in a stock achieving quick, significant gains.

Undervalued

Based on the earnings from the fiscal year ending 6/30/09 and the 2009 year ending share price of $2.35, CMDI.OB was trading at a PE of a little more than 20. However, this trailing PE number doesn't take into account the company's earnings the entire 2nd half of 2009. If you consider the company's growth prospects, the current trailing PE assuming better results the latter part of 2009 is probably closer to 15. Because the stock market places far more emphasis on earnings going forward, a better measurement for determining this stock's value is its Price/ Earnings to Growth ratio (PEG). At a 35% annual growth rate, which the CEO expects at a minimum, CMDI.OB's PEG would be around 0.4. Generally, stocks with a PEG < 1 are considered undervalued. Stocks with a PEG < 0.5 are considered to be extremely undervalued.

Technicals

As I've mentioned before, CMDI.OB just started trading on 12/28/09 . So, there's not much data available from a technical standpoint. See a candlestick chart below of the stock's progress thus far:

As you can see, the stock has traded up the last three days on modest volume. Admittedly, this chart doesn't convey a strong technical argument for CMDI.OB, particularly with so many traders away for the holidays. However, when a stock is brand new like this one, limited data can carry some weight to potential shareholders. I've seen a number of stocks turn public via a reverse merger that trade lower out the gate as holders dump shares looking to cash out as quickly as possible. Although, it is still early, this does not appear to be the motive of China New Media's shareholders based on the trading thus far. Many of the shares are owned by upper level management and per SEC filings company executives have stock purchasing incentives based on achieving certain yearly fiscal targets. Many investors will look at the chart along with the overall make up of the company and conclude that CMDI.OB is justifiably trending up.

Conclusion

China New Media Corp is a fast growing outdoor media company just popping up on the radars of most investors. The biggest concern most typically have with Chinese companies is credibility. I believe the strong international and domestic client list China New Media maintains goes a long way in legitimizing the company and its future prospects. CMDI.OB has great fundamentals, a low float, is extremely undervalued, and appears to have some upward momentum. Also, there should be no opportunities for shorting because the stock is so new. I believe all these factors will result in this stock heading higher at a rapid pace. I'm not going to say that the CMDI.OB will go straight up without there being some dips along the way. However, I do believe the company will reach at least $4.00/share very quickly as long as insiders don't do an about-face and all of a sudden go on a selling spree. Sure, there's a risk in purchasing an OTCBB stock that most people know nothing about, but I think the potential reward of finding a hidden gem is too good to pass up. If you want to read the filing regarding this reverse merger and company's origin, read the 8-K at the following link: http://www.sec.gov/Archives/edgar/data/1080627/000107997309001163/dvmg_8k-112009.htm. China New Media Corp (CMDI.OB) is the next perfect stock.

12-13-09 - Cytori Therapeutics (CYTX): The Perfect Chart

2009-12-13T16:23:00.006-05:00

After doing my daily stock scans, I figured I'd do another "perfect chart" post. My last perfect chart selection, American Lithium Minerals (AMLM.OB) tanked shortly after I posted about it. Remember, these perfect chart stocks aren't necessarily sure fire buys, but represent stocks that you might want to follow due to the strong upward trends.

The Perfect Chart: Cytori Therapeutics (CYTX)

Cytori Therapeutics, Inc. develops, manufactures, and sells medical technologies to enable the practice of regenerative medicine. The Company’s commercial activities are focused on cosmetic and reconstructive surgery in Europe and Asia-Pacific, and stem and regenerative cell banking (cell preservation) worldwide. Its product pipeline includes the development of new treatments for cardiovascular disease, spinal disc degeneration, gastrointestinal disorders, liver and renal disease and pelvic health conditions.

Cytori's initial run about a month ago coincided with a press release announcing that the company had completed its enrollment in a 70-patient, international breast cancer reconstruction study called RESTORE 2. The study is evaluating the use of cell-enriched fat grafting to restore functional and cosmetic deformities in women who have undergone partial mastectomy for early breast cancer. Interim results were scheduled to be released 12/12/09 at the San Antonio Breast Cancer Symposium. In the past month while waiting for the results, CYTX has basically doubled. See the chart below for this phenomenal run:

As one might have expected, the results of the study released this weekend were highly positive. The tests demonstrated that cell-enriched breast reconstruction achieved a high rate of patient and physician satisfaction and improvements in overall breast deformity in lumpectomy patients.

The question now is where does the stock go from here? Breast cancer and the reconstructive aspects of it has a massive worldwide market. So, one might initially think that the stock should continue to rise after such great results. However, this scenario also sets up perfectly for a classic "sell the news" outcome. If the stock continues to run Monday on high volume late into the afternoon, it could be poised for new highs. If there's a huge sell-off, consider it the "perfect short".

11-29-09 - Predictable Penny Trading Patterns Makes Advanced Medical Institute, Inc. (AVMD.OB) Perfect

2009-11-28T17:59:00.017-05:00

New post today at the http://theperfectstock.blogspot.com. The market has firmly positioned itself above DOW 10000 and many of the large cap stocks have seen significant gains since the first part of 2009. However, many have recently begun to level off. It kind of makes you wonder if all the opportunities for substantial gains in the market have come and gone. Well, in my opinion there are still quite a few stocks that are cheap, profitable, but have yet to recover with the market. I believe most are hidden in the OTC Markets. Sparked by its recently released 10-Q, Advanced Medical Institute, Inc. (AVMD.OB) is the next perfect stock.

Advanced Medical Institute is a service provider, which arranges for patients with sexual dysfunction and prostate problems in Australia, New Zealand and the United Kingdom to be provided with medical services, pharmaceuticals and associated clinical support services.

Fundamentals

AVMD.OB got beaten down as did most stocks during past year and half. However, on 11-23-09, the company released their 10-Q detailing the results of their most recent quarter. See below for a few highlights (click here for the full 10-Q):

- 53.5 Mil shares outstanding
- $14.5 Mil revenues
- $0.8 Mil net income
- $0.02 EPS
- $20.1 Mil stockholder equity
- $0.38/share book value
- Company is optimistic about business and profits going forward

The market took note of how undervalued the company became and responded by appreciating the share price up to 600%.

Technicals

See below for a 2 month chart of AVMD.OB:

From the chart, you can see the large spike that occurred from the release of the 10-Q. Now, an amateur would take one look at this chart and say to themselves, "Why in the world would anybody want to buy a stock that has just had a 600% percent gain particularly after the stock price has dropped the following two days?" A more experience technician would look at the same chart and believe the current setup is extremely bullish. They would see that the stock has spiked on very high volume and quickly retraced exactly 50% on relatively low volume. Also, the experienced trader would see that each of the trading days following the spike have printed higher intra-day lows. Trading in this manner signals that the selling is being exhausted and that the stock is entering into a consolidation phase. Many traders will recognize this and will begin to take positions in the stock. I don't have an accurate total for the float of AVMD.OB, but it has to be pretty thin if the share price was able to jump from $0.04/share to $0.23/share on 2.6 million shares of trading volume. Eventually, the buying pressure will become too great and share price will jump again. In stocks with tight floats the consolidation phase can be very quick.

Different Movie, Same Ending?

I've stated before that stocks often follow market psychology. As traders see success in one stock, they look for other stocks that are similar that will hopefully mirror the results. Viking Systems (VKNG.OB) is a recent market darling that moved from sub-penny to over $1.00/share in less than 3 weeks. The recipe for Viking's success:

- Significantly beaten down OTC stock
- Positive quarterly report sparked the rise
- 40-50 million shares outstanding
- Low float
- Optimistic about company's prospects going forward

Of course there are differences between AVMD.OB and VKNG.OB, but as you can see, many of the underlying themes are the same. Also, it had the same super spike to the upper 20 cent range and a 50% retrace before moving higher. InstaCare Corp (ISCR.OB) is another stock following a similar path that in my opinion is a stage ahead of AVMD.OB. Again, it has the same recipe as others. It too had the same 50% retrace, has already consolidated in the upper teens, and is in the process of breaking out to even higher levels (click here for chart of ISCR.OB). Advanced Medical Institute looks poise to do the exact same thing.

Conclusion

The stock market is generally unpredictable and penny stocks tend to be the most unstable variety of them all. However, certain setups can yield predictable results. In my opinion AVMD.OB has set itself up perfectly to climb higher than its current share price of $0.18 based upon some proven technical indicators. I'm not going to take a leap and say that the stock will reach the dollar level of VKNG.OB, but I think odds of the share price reaching at least $0.30 - $0.40 before Christmas are pretty favorable. Although penny stocks don't necessarily follow the general market, the annual "Santa Rally" that frequently occurs during the month of December won't hurt the company's immediate prospects either. Advanced Medical Institute (AVMD.OB) is the next perfect stock.

New Feature: The Perfect Chart - AMLM.OB (11-04-09)

2009-11-04T20:25:00.009-05:00

Click here for the A.H. Belo (AHC) post

While my last perfect stock pick A.H. Belo (AHC) continues to do pretty well (up about 40% since I posted about 3 weeks ago), I've decided to add a new feature to the blog called "The Perfect Chart". Finding the perfect stock is an extremely difficult task, due to the strict criteria I place on my selections. So, I figured in the meantime I'd periodically spotlight a company that might not necessarily be a "perfect stock", but had a "perfect chart". A perfect chart in my opinion is one where there is visually a distinct trend upwards. I'll leave it to you and your own due diligence to determine whether or not it is still a buy, but I felt that it would be neat to point out stocks that the market has obviously fallen in love with. Also, we all know that a trend can be "your friend", so at a minimum these should be stocks that you may want to track.

The Perfect Chart: American Lithium Minerals, Inc. (AMLM.OB)

American Lithium Minerals, Inc. is a U.S. resource exploration company with specific interests in acquiring properties containing lithium. Basically, this stock is a play on the probable boom in lithium usage due to the government's push for electric cars. AMLM.OB is said to own 100% of the mineral rights to one of the largest lithium rich properties in the US.

This stock has one of the steadiest up trends I've ever seen. It is particularly impressive due to the fact that it is a penny stock that trades on the OTCBB. The sudden spike and drop that occurred about two weeks ago acted as nothing more than "noise" in what has been one of the best and most consistent stocks in the entire market the last 3 months. Will it continue?

I find a lot of these hidden gem stocks using a lot of the tools conveyed in my latest on post at my other blog http://yourtradingtips.blogspot.com . Check it out when you get a chance.

10-10-09 - Severe Undervalution Makes A.H. Belo (AHC) Perfect

2009-10-10T09:53:00.018-04:00

click here for the the post on Rodman & Renshaw Capital Group (RODM)

Finally, I've got a new post here at http://theperfectstock.blogspot.com. I haven't written anything in about a month because I couldn't really find a stock that I thought was better than my last pick of Rodman & Renshaw Capital Group (RODM). It has done really well and should continue to move higher because of tremendous earnings expected to be released in the next few weeks. My next selection may be the most undervalued stock in the entire market. These gems typically don't stay undervalued for long. For this choice I'll venture back to the newspaper media sector. It is a group that I have had a lot of success with in the past few months and have continued to follow closely. A.H. Belo Corporation (AHC) is the next perfect stock.

A. H. Belo Corporation owns three daily newspapers and 12 associated websites including The Dallas Morning News, The Providence Journal and The Press-Enterprise. They produce local, state, national and international news. In addition to these three daily newspapers, the company publishes various specialty publications targeting Hispanic and other niche audiences. They also own a direct mail and commercial printing business. On February 8, 2008, the Company was spun off from its parent company, Belo Corp (Belo) and became a separate public company.

Undervaluation

After looking at a lot of stocks, I've concluded that AHC may be one of the cheapest stocks on the market. This company's balance sheet is simply phenomenal. One way to gauge if a stock is undervalued is by comparing the book value per share to the current share price. For my readers who don't have a good understanding of a company's book value, it's basically just the shareholder equity (Assets - Liabilities = Shareholder Equity). Another way to look at book value is that it represents a theoretical dollar amount that shareholders would receive if the company was sold or liquidated. AHC's shareholder equity is approximately $300 million. If you consider that AHC has just over 20 million shares outstanding fully diluted, its book value is around $15/share.

Now, let's put this book value figure into perspective. Very few stocks trade at or below book value. This valuation metric typically sets the floor for a stock price under a worse case scenario. As a matter of fact, most stocks trade at hefty multiples to their book value. AHC ended the trading session on 10/9/09 at $3.56/share. Now, compare that to a book value of $15/share. This means the stock is trading at more than 4 times less than its book value. I don't know of any other stock that carries such a valuation discrepancy. Even without great earnings, a shareholder could conservatively discount the book value by 1/3 and feel comfortable knowing that their shares should at least be worth $10/share in a buyout. That amount represents 3 times the current share price.

Also, most newspaper stocks are saddled with mounds of debt due to the economic downturn in the last year. A.H Belo Corp is the exception. They only have $3 million in debt per their last quarterly report, yet they are currently trading at a significant discount to their more notable peers such as The McClatchy Company (MNI) and Lee Enterprises (LEE). I can assure you that this oversight in valuation by the market won't go unnoticed forever.

Technicals

See below for a 6-month chart of A.H. Belo Corp below:

As you can see, AHC made an monster move back in mid-July by nearly tripling off of its bottom in just 3-weeks. Due to the low share count, AHC was extremely volatile the next two months, but pretty much averaged a little over $3/share. However, notice how in the last month the trading range has tightened significantly (a more technical term would be that the "Bollinger Bands" are tightening). A textbook technical result of this form of consolidation is generally an explosive move higher. Right now, the key resistance level for AHC to break is in the $3.75 to $4.00 price range. The last two hours of the trading day on Friday 10/9/09, the stock spiked to $3.75 before selling off the last hour. I believe with another solid run, AHC will break that level of resistance and run significantly higher. The charts of MNI and LEE are similar in that they too traded in a range for about two months; however, within the last week both have broken their points of resistance and have seen new highs. See the 3-month chart of MNI below for what I feel will be a similar pattern for AHC:

Sector Momentum and News

In my post a few months ago on Lee Enterprises (LEE) . I felt I did a pretty good job of detailing why I thought the newspaper stocks would turnaround (click this link to review that post). So far, I've been fairly accurate in my assessment. To be frank, AHC does not achieve the margins of its larger brethren, but its superior balance sheet more than makes up for this shortfall. As a result, all the newspaper stocks have moved strongly off their lows. One reason the sector has moved higher in recent days is because earning reports in the sector begin next week. Clearly, investors feel confident that the reports will be positive.

A lot of that confidence stems from some news released by Gannett Co. (GCI), the bellwether of the newspaper stocks. I believe that this news marked the beginning of the next leg up in the group. A little over a week ago, GCI pre-announced stronger year-over-year expected income growth and noted significant improvements in their publishing division. It has been widely publicized that media advertising picked up significantly during the 3rd quarter and the industry as a whole has gotten leaner and meaner. Despite less sales than in years past, the newspaper stocks have and will return to profitability. AHC should be no exception.

Conclusion

The newspaper stocks are poise to move higher and many of the companies have already made their move. This sector is notorious for only having one or two names move big at a time. Usually, one or two stocks will move hard one day and then a week or two later, a different company would jump 40-60%. You could have made a mint day-trading MNI and LEE had you alternated moving the profits from one to the other after a big move in each had been made. AHC hasn't really moved yet, but I strongly believe it's coming soon. I can see A.H. Belo quickly moving to $5-$6. Based on what we know regarding its book value, it definitely has the potential to move much higher longer term. Severe undervaluation, technicals, and strong sector movement make A.H. Belo Corp (AHC) the next perfect stock.

8-30-09 - "P.I.P.E. Dreams" Makes Rodman & Renshaw Capital Group (RODM) Perfect

2009-08-27T15:51:00.020-04:00

This past week was another banner week for the stock market. Volatility appears to be picking up, but it appears to be occurring in a very positive light. Anytime it looks like the market is about to tank, buyers quickly step in and right the ship. My last pick of CMLS is up in the air, but I still fill confident it will be a winner. In the meantime, http://theperfectstock.blogspot.com will spotlight another stock brought to its attention by an investor affectionately known as Bighoper. I must say that my only regret is that he didn't bring it to my attention sooner. In my opinion I have never seen a stock and a market match up more perfectly. Rodman & Renshaw Capital Group (RODM) has been and still is a perfect stock.

Rodman & Renshaw Capital Group, Inc. (RODM) is a holding company that through its various subsidiaries is engaged in the investment banking business. RODM’s principal operating subsidiary is Rodman & Renshaw, LLC (R&R). R&R is a full service investment bank dedicated to providing investment banking services to companies that have significant capital needs, along with research and sales and trading services to investor clients that focus on such companies. Rodman is a leading investment banking firm with particular emphasis on industries with significant capital needs, including health care, energy, metals/mining as well as a leader in the PIPE (private investment in public equity) and RD (registered direct placements) transaction markets. The division that is currently making Rodman a stock market juggernaut is the one that focuses on PIPE and RD.

Fundamentals

I've mentioned before that my other blog http://yourtradingtips.blogspot.com lists the 4 press release websites that 99% of publicly traded companies use to make official announcements. In my everyday quest for finding game changing news in companies, the headline that I have consistently seen for the past month or two pertains to companies seeking additional capital through private investment and direct placement. If you think about it, it makes a lot of sense. The economy being on the brink of a recession has forced many companies to be in need of cash infusions. Credit markets are still tight so it's tough to get money from the banks. With so many people hoarding cash and the stock market now improving, the next best option for capital is through private investment. This means of raising capital came to a standstill over the last year along with the rest of the stock market and RODM's stock price plummeted to a 52 week low of $0.14/share because of it.

However, things began to turnaround last quarter and the company posted a net income on a non-U.S. GAAP basis of $10.9 million, or $0.29 per diluted share lead predominately by their PIPE and RD transactions. Rodman was ranked the number one investment bank in PIPE transactions by volume for the second quarter and the first half of 2009. It has held this honor every year since 2005, but only until now has the distinction been so financially lucrative. This quarter RODM's PIPE deals have accelerated even more. They've basically been announcing 2 or 3 multi-million dollar deals a week. Right now, they have announced well over $300 million in deals this quarter and there's still over a month to go. They are on pace to destroy last quarter's stellar numbers. If you consider that their cut of each deal is about 6%, you can see how the cash can add up pretty quickly. The true beauty of RODM and it's business model is that we are only in the beginning phases of a resurgence in capital equity.

Technicals/ Momentum

See the image below for a chart 6 month chart of RODM.

As you can see, this stock has been phenomenal the entire month of August and is up about 300% in that time frame. From a technical standpoint, it looks like RODM may be overbought and in sincere need of a pullback. I thought the same thing at $2.00/share a few weeks ago, yet 8-28-09, it closed at $3.54. RODM simply doesn't have many sellers right now due to the strength of the fundamentals. Consequently, I don't believe traditional technical analysis is very useful with this particular stock. I say stick with the old adage, "The trend is your friend." Generally, a stock only moves this way when it is severely undervalued, which I believe RODM still is. Maybe the most telling aspect of the chart is the portion at the bottom that details the volume. It has really picked up the last month and has been consistent. That tells you the market is really behind this stock and that the big money players are starting to take notice.

Insider and Institutional Buying

To further support the notion that big money is beginning to buy RODM, lets look at the insider and institutional buying. According to filings just during the month of August 2009 on http://www.mffais.com/rodm, an insider bought 20,000 shares on the open market and 3 institutions established new holdings of around 1.2 million shares combined. For comparison only about 20,000 shares of RODM were sold by fund managers for the month. Remember, this stock was approximately $1.00/share just over a month ago. I suspect that as the share price solidifies itself well beyond penny status that more funds will want in. With only 35 million shares outstanding and around 15 million in the float, current shareholders are certain to force future buyers to pay a premium to today's price.

Catalysts

It's always good to have catalysts for further price appreciation. Every year RODM puts on the Rodman & Renshaw Annual Global Investment Conference that hundreds of public companies attend. This year's conference is scheduled for September 9-11, 2009. Despite the annual conference, RODM is a fairly obscure stock to most of the investing public. The added attention of the conference has given RODM a short term boost in share price in the past. With the stock's recent success, I see no reason why this year will be any different.

Investors love transparency. It is very easy to determine whether Rodman's business is booming because every offering the company places comes with a press release. Each release has typically rewarded shareholders with a positive trading day.

Also, RODM is slowly, but surely inching to $5/share. This is really a key level, because at that price every fund manager has the green light to take a position. Some are not allowed to buy stocks below that share price. Once it hits this level, the fireworks could really begin.

Conclusion

The stock market is amazing in that the biggest losers one year can be the biggest winners the next. Last year, all the redemptions left most investors overweight in cash and companies cashed strapped with no equity takers. Now, with banks being held to a higher standard, those same investors are putting their cash to work buying into companies at extreme discounts. The biggest beneficiary of this pendulum shift is RODM. The stock is up almost 2500% from its 52 week low, yet strangely enough, I have yet to see a single article on Motley Fool, Seeking Alpha, Minyanville, The Street or any other notable print media individually spotlighting this turnaround story. I think that this is a strong sign that most people are still unaware of RODM and that it still has a lot of room to move up. The market is unpredictable, but I believe that there is a good chance RODM will move very close to $5.00/share by the end of its investor conference in the next two weeks. At that point the stock may finally be met with some selling, but it could be very temporary. If they keep announcing deals as most believe, double digits could be in this company's not so distant future. Rodman & Renshaw Capital Group (RODM) is the next perfect stock.

8-16-09 - Surge in Auto Ads Makes Cumulus Media (CMLS) Perfect

2009-08-15T19:39:00.014-04:00

The blog http://theperfectstock.blogspot.com is back with another perfect stock selection. I've gotten a lot of positive feedback from the post prior to the last one regarding the selection of Lee Enterprises (LEE). This newspaper stock is up 88% since it was posted 3 weeks ago. With the success of the LEE, I've decided to stay with the media sector because the group as a whole is undervalued and red hot. However, this choice focuses on radio media. Cumulus Media (CMLS) is the next perfect stock.

Cumulus Media Inc. (Cumulus) owns and operates FM/AM radio station clusters serving mid-sized markets in the United States. Also, through its investment in Cumulus Media Partners, LLC (CMP), the Company also operates U.S. radio station clusters serving large-sized markets. As of December 31, 2008, Cumulus owned and operated 315 radio stations in 59 mid-sized United States media markets and operated the 32 radio stations in nine markets, including San Francisco, Dallas, Houston and Atlanta that are owned by CMP.

News

I'm a bit of a sports junky, so I listen to a lot of sports radio on my way to and from work. As I was driving, I made a mental note to myself that there sure were a lot of auto ads during the commercial breaks. After doing a little research I realized that this revelation was a critically positive element in the near term success of radio media companies. The Auto sector is the nation's biggest advertiser, but they trimmed there first-quarter spending by 28 percent to $2.31 billion from $3.22 billion in the same period last year, according to TNS Media Intelligence.

Confirmation of my thoughts came last week in the latest quarterly report provided by the large radio conglomerate CBS Radio. They see revenue improvement in the third and fourth quarters of this year, led by a resurgence in automotive advertising. The government's cash for clunkers program has been one of the main catalysts. Often times the market will take information from the major players and apply it to the entire sector. This news has and will continue to push the radio stocks higher.

Technicals

See below for a 5 year chart of CMLS

As you can see, this stock has been in free fall the last 5 years. We're talking about a 90% decline over that time frame. This chart mirrors the results of practically every publicly traded radio company. When you consider the fact that there has been no bankruptcy talk and CMLS reported an eps a week and a half ago of 35 cents, one would have to think the downside at this point is limited. However, the upside is huge.

Let's take a look at a more recent chart of CMLS. See below for its 3 month chart.

.

As you can see, the nice cup handle breakout has resulted in a move significantly higher the last two weeks. However, the past few days, it has given up some gains. In my opinion this is perfectly normal after such a significant run-up. I believe that this is a pullback rather than a start of a trend downward. Friday marked what very well could be the end of that pullback. The stock began the day down over 20%, but reversed intra-day and finished down less than 3% on average volume. Also, several of the other radio stocks continued to move higher. Traders will take note of this reversal and see it as bullish.

Change in Sector Sentiment

I have never known radio stocks or media stocks in general to be "stock market darlings". Typically, these feelings are left to high growth sectors like Technology and Biotechnology. However, media companies have finally made the adjustment of significantly reducing expenses to offset the fallout of a slumping economy. With revenues having already bottomed and things beginning to look positive again, their profit potential is pretty staggering. A lot of these companies are currently trading at annualized forward PE of around 1. These ratios are just too good to be passed up by value investors and far exceeds any growth story that I can think of. Also, I've noticed in several of these stocks that groups like Goldman Sachs are beginning to take positions. The sentiment is definitely changing.

Sector Rotation

I talked in great length about the significance of money rotating into new sectors on the LEE post. So, I won't elaborate further. However, it is clear to me that a similar pattern is taking place with the radio stocks. Every one of these stocks has recently seen significant gains. The newspaper stocks have been consistently moving higher for around a month now. The radio stocks only began to move two weeks ago. I'm expecting the surge to continue.

Conclusion

We are still seeing some investment opportunities of a lifetime in some severely beaten down sectors. The stock market is a forward think tool. Evidence of an uptick in revenue in the radio stocks is already available. The jump in auto advertisements is the most notable reason for the turnaround. If you wait to see proof in the numbers, you'll miss the significant gains sure to come in the meantime. I picked Cumulus mostly because investors/traders have already taken profits from its initial push. To me, it looks the most ready to make its next move higher. However, all the radio stocks are good. I also like ROIAK, ETM, and EMMS. CMLS currently sits at $1.36. I firmly believe $2.50 -$3.00 per share will be reached in the very near future with the potential to go much higher. Cumulus Media (CMLS) is the next perfect stock.

8-5-09 - Government Backing Makes ECOtality, Inc. (ETLY.OB) Perfect

2009-08-05T19:47:00.010-04:00

The stock market certainly has been holding up quite strong in spite of the large jump it's made the past couple of weeks. As a result, the perfect stocks have been a little easier to find. The next selection of http://theperfectstock.blogspot.com is along the lines of a post made a few months ago regarding NVAX. Certain stocks can have a story so powerful that it supersedes a long drawn out analysis. This is another one of those stocks. The next perfect stock is ECOtality, Inc. (ETLY.OB).

ECOtality, Inc. is engaged in providing electric vehicle infrastructure products and solutions that are used in on-road grid-connected vehicles, including plug-in hybrid electric vehicles (PHEV) and battery electric vehicles (BEV), material handling and airport electric ground support applications. Through its main operating subsidiary Electric Transportation Engineering Corporation (eTec), the primary product offering of the Company is the Minit-Charger line of advanced battery fast-charge systems that are designed for various motive applications.

ETLY.OB began the day at $0.12/share, but released some huge news around lunch time that almost caused the stock to triple. Now, the critics of this blog will be quick to question why I would point out a stock that has already had such a huge runup. Based on the share price alone, the naysayers would just lump this stock in with all the rest of the "penny pump and dumps". I say this stock requires a much deeper look.

News

Electric Transportation Engineering Corporation (eTec), a subsidiary of ECOtality, Inc. announced that it has been selected by U.S. Department of Energy for a grant of approximately $99.8 million to undertake the largest deployment of electric vehicles (EVs) and charging infrastructure in U.S. history. eTec will partner with Nissan North America to deploy EVs and the charging infrastructure to support them. ECOtality's President and CEO is quoted as saying, “ECOtality is committed to enhancing America’s energy independence, accelerating the market acceptance of electric transportation and supporting President Obama’s goals for job creation and advanced electric drive vehicle deployment.”

The basis for this post is conveyed in three key elements mentioned in snippets of the press release above:

1.) "... U.S. Department of Energy for a grant of approximately $99.8 million to undertake the largest deployment of electric vehicles (EVs) and charging infrastructure in U.S. history"

All the key elements are in bold print. When you've got the support of the government for $100 million to do something that's the largest in U.S. history, that is a game changing announcement.

2.) "eTec will partner with Nissan North America.."

ETLY.OB was able to partner with one of the leading automobile manufacturers in the world. Whatever credibility ECOtality may have lacked being a penny OTCBB stock, it was instantly upgraded with the inclusion of Nissan. This is the type of name recognition that attracts both quick flippers, long term retail holders, and institutional buyers (despite what you may have thought or read, institutions do occasionally buy stocks not on major exchanges if a stock has a powerful enough story). It's always best to have all three to maintain a share price that is quickly moving higher.

3.) "...supporting President Obama’s goals for job creation and advanced electric drive vehicle deployment"

The market is always seeking "Obama Trades" and this certainly qualifies as one. Obama has made it very clear that he wants to reduce the U.S.'s dependence on oil. Have you noticed how well a lot of the algae base bio-fuel companies have done recently. The announcement a few weeks back involving Exxon's investment in this form of bio-fuel is a classic example of an "Obama Trade". Many stocks in that arena such Biocentric Energy Holdings (BEHL.PK) have recently seen stratospheric rises in their share price. This push for the deployment of electric drive vehicles correlates conceptually with the algae bio-fuel and I'd expect the market to react in much the same way.

Conclusion

ETLY.OB finished today at $0.31/share on 70 times the normal trading volume. A lot of people will point to the $100 million and do market cap calculations, but I don't think that makes a lot of sense at this point. Nissan will probably get a cut of the money and keep in mind that this is a government matching program. I think what is important is the overall story. ECOtality has approximately, 160-170 million shares outstanding, but the float is about half that due to heavy insider ownership. Most of you know that I like low float stocks, but at the current share price, I think this share structure is perfect. In my opinion, ETLY.OB is poised to quickly double. The short term prospects for this stock is still solid because it ran with a mid-day press release. A lot of investors/ traders are still discovering it and they will want to buy in. Thursday, 8-6-09, I'd look to buy early and ride the momentum. Government backing, a strong partner, and Obama's blessing makes ECOtality, Inc. (ETLY.OB) the next perfect stock.

7-25-09 - Hot Sector Makes Lee Enterprises(LEE) Perfect

2009-07-25T14:31:00.017-04:00

It now looks like http://theperfectstock.blogspot.com has plenty of quality stocks to choose from. The stock market was hitting on all cylinders last week lead by strong and/or improving earnings in several sectors. Just as I had predicted on one of my other blogs, the DOW blew past 9000. Technology has been one of the leaders in pushing the market higher, but the hottest sector right now is the Newspaper/Media stocks. Several of these companies have more than double in share price over the last week, but I feel that there is still a great opportunity for significantly more gains in select names. The newspaper stock that I feel has the most potential to move higher is Lee Enterprises, Inc. (LEE). It is my selection for the next perfect stock.

Lee Enterprises is a provider of local news, information, and advertising in primarily midsize markets with 49 newspapers and a joint interest in 5 others, growing online sites and more than 300 weekly newspapers and specialty publications in 23 states.

Momentum

As stated early, newspaper stocks have been on fire. Gannett Company, one of the larger publicly traded newspaper stocks got the ball rolling last week with a surprising profit for the quarter despite significantly reduced advertising revenue. However, the most important nugget from their conference call was that they were beginning to see a turnaround from the advertising decline and that they believed the worst was over. All of the other newspaper stocks reporting earnings that have followed Gannett also exceeded expectations. As a result, all the stocks in the sector have benefited.

News

LEE reports earnings 6/30/09. Most of the these newspaper stocks were able to achieve profitability last quarter because of significant cost reductions. Basically, they cut a lot of "the fat". LEE has done pretty much the same thing; consequently, it's a very good chance they'll have similar results. One bit of news that came out a several weeks ago that bodes well for the company was that its board voted not to increase the share price via a reverse split. This decision implies that LEE is confident that it will be able to increase its share price on its own merit. With the NYSE threatening delistment and an earnings report right around the corner, investors/traders have to be fairly confident that the report will be pretty good with so much on the line.

Technicals

See the chart below for LEE.

You can see the stock had quite a run last week on increasing volume. Notice the trend line of the chart in purple. This week's close marks the first time LEE has finished above that trend line. This is a possible sign of a reversal.

For my true technicians, the chart above shows a strong crossing of the MACD (Moving Average Convergence / Divergence) line through zero. This is a more traditional sign of a bullish reversal. Whether you're just a trend follower like me or a die hard technician, all indications are that this stock will continue to move much higher.

Short Squeeze Potential

From those charts you can see that LEE's share price doubled last week. Much of that quick movement was due to short covering. What's interesting is that LEE began last week with about 7 million shares sold short. At the end of the week there were still 5 million shares short according to www.shortsqueeze.com . Therefore, the stock doubled after only 2 million shares were covered. With just 44 million shares outstanding and the float shrinking daily, what will the share price be if the other 5 million shares are covered? I'm not going to assume a linear ratio, but you can reasonably expect a continued fast and significant increase in share price from the $1.21/share it is currently with any upward pressure.

Hedge and Mutual Fund Sector Rotation

I've recently read a bunch of articles claiming that people shouldn't get so excited about the recent earnings and movement of the newspaper stocks because ad revenues are still much lower than they use to be and cost cutting is only a temporary fix. Some have even claimed that those share prices will quickly go back to their historic lows once the euphoria dies down. It's as if every article is written by a short seller trying to protect their short position. What those pessimists failed to write was that the market cares about guidance and improvement. You cannot minimize the improvement and return to profitability of the other newspaper stocks that have reported by simply focusing on ad revenues. The fact of the matter is that all of these companies needed to get leaner and are now light years better than where they were 3 to 5 months ago. The big money guys like Hedge funds and Mutual Funds recognize this and are smart enough to realize the bottom is in and it's now time to buy. Many of these funds have mandatory diversified allocations. You can bet that much of the money that left the sector will eventually be put back in, particularly when there are technical signs of a reversal. After looking up several stocks in the sector that have already reported earnings on www.thebuylist.com , you can see that money is being slowly rotated back into this group. Again, bullish for LEE.

Conclusion

The morning shake and late afternoon pullback that occurred Friday was a great opportunity to start a position in LEE. The late day sell off was pretty predictable because many people wanted to lock in profits from the significant gains of the week. There's a chance Monday that LEE may get off to a sluggish start, but it should only be temporary. A. H. Belo Corp. (AHC), another publicly traded newspaper stock, reports earnings Monday morning. If they follow the same trend as the others, LEE will be off to the races again. Either way, I'm expecting a sizable runup prior to the earnings report on Thursday. If you want to be conservative, you could sell prior to the report, but you may miss out on the chance for significantly higher gains. Keep in mind that Gannett has traded higher 9 of the last 10 sessions. LEE has only done it 4 of the last 5 so don't assume it's overbought. Based on momentum, the high probability of a good earnings report, strong technicals, potential short covering and fund sector rotation, a sea of green could be in LEE's future as well as yours. Lee Enterprises, Inc. (LEE) the next perfect stock.

7-21-09 - FDA Approval In Waiting Makes Nuvo Research, Inc. (NRIFF.PK) Perfect

2009-07-21T21:12:00.013-04:00

I've got a new post here at http://theperfectstock.blogspot.com/ . The last selection of CIT was not necessarily a terrible one. I just didn't time it correctly. This next stock, I believe, is timed perfectly though. It's "technically" perfect and has one of the best setups I've seen in a while for an explosive two week run. The next perfect stock is Nuvo Research, Inc. (NRIFF.PK or NRI.TO). Since many people don't readily have access to the Canadian exchanges, we'll focus on NRIFF.PK.

First of all, I cannot take all the credit for this one if it does do well. One of the readers of the blog named Aroramax, "bought" it to my attention last week. Now, I think is great time to pull the trigger.

Nuvo Research is a Canadian drug development company focused on the research and development of drug products that are delivered to and through the skin. The Company’s lead product Pennsaid, is used to treat the pain and symptoms associated with knee osteoarthritis (OA). Pennsaid has been approved for marketing and sales in the countries, including Canada, the United Kingdom, as well as certain European countries.

Pending News

Currently, the Pennsaid is up before the FDA for US approval. If approved, Nuvo will receive an up-front, payment of US$10 million and is also eligible to receive a US$15 million milestone payment on Pennsaid's approval by the FDA, which will increase to US$20 million if certain labeling criteria are agreed to by the FDA. Also, the submission to the FDA was after the company had already received an "approvable letter" for Pennsaid. In other words, they were told by the FDA that if they just did a couple more things, they would get approved if they resubmitted. Consequently, NRIFF is almost assured of approval. It is scheduled to be announced on 8/5/09.

Technicals

See below for the chart of NRIFF.

The stock did nothing for months, then it finally began to move beginning in May. After settling in the 30 cent area for a month and a half, this week marks the beginning of a breakout as the stock surges to new highs. Most people believe the stock briefly stalled in the low 30's due to warrant pricing. Those warrants finally expired earlier this week and seemed to correspond with the breakout. Looking at the volume chart, you can also see that the volume is beginning to pick up again as well. All signs point to a substantially higher move.

Momentum

NRIFF seems to be following the same pattern as some other successful biotech stocks that were awaiting FDA approval. HEB and NEPH are just a couple of many names that more than doubled under similar circumstances. Investors/traders always keep in their memory banks what has recently worked. This should strongly work in NRIFF's favor.

Insider Trading

Because Nuvo is a Canadian company, you can easily keep up with Canadian insider transactions at http://www.canadianinsider.com/ . No insider has sold the stock this year, but several members acquired shares through a pre-approved ownership plan at just under 11 cents a share. The fact that we are now near 40 cents and still none of them have sold, has got to be considered bullish.

Conclusion

Everything is pointing to NRIFF really being a big winner in the next 2 weeks. Nuvo has quite a few shares outstanding (over 300 million), but because the share price is so low and interest in the stock is beginning to mount, the float is slowly, but surely thinning. Don't be alarmed by the number of shares traded on NRIFF.PK. NRI.TO gives you a much better indication of the true volume. The price of NRIFF.PK adjusts as the value of the dollar vs the canadian dollar changes. Currently the stock sits at 38 cents. I'm expecting a steady rise until the 5th and see 60 cents as an eventual trading level. Nuvo Research Inc. (NRIFF.PK) is the next perfect stock.

7/13/09 - Possible Government Bailout makes CIT Group (CIT) Perfect

2009-07-13T20:45:00.012-04:00

It's been a while since I've posted at http://theperfectstock.blogspot.com/ . The opportunities for quick, big gains have been drying up as the market settles down from a tremendous start to 2009. As I've stated before, this blog aims to achieve 75% - 100% gains in a short period of time. I specifically put dates on all my posts so readers can look back and see how successful each pick has been. See below for the blog's scorecard:

Remember, these are short term holds. In most instances the gains won't hold so always take your profits when the opportunity presents itself. My next perfect stock choice is one that hit its 52 week low today, but bounced hard off of it. Several factors could propel this stock to fast gains for investors/traders in the next couple of days. CIT Group , Inc (CIT) is the next perfect stock.

CIT Group operates as the holding company for CIT bank that provides commercial financing and leasing products, and management advisory services to the small and middle market companies worldwide. Right now the company is struggling and bordering on bankruptcy. I know. You're trying to figure out how in the world a stock that hit it's 52 week low today and is bordering on bankruptcy could be a perfect stock?

Rumor/News:

This afternoon, a report was released that CIT was involved in talks with the federal government regarding the receipt of aid, which would allow the company not to fail. Despite, what the general public would have you to believe, small business is the backbone of this country. Because CIT services so many of these companies, the government is afraid of the economic consequences if it is allowed the fail. It has been reported that the talks are quite far along. This kind of news can cause a "V-shape" reversal in a stock.

Also, the financial sector has been taking a beating the last month or two after a sizable runup off their lows. People are now finally beginning to believe that this recent drop has been a bit overdone. Meridith Whitney, who has probably been the financial sector's biggest bear, came out today with something actual positive on a least one giant member of the group-- Goldman Sachs. That change in sentiment spearheaded a strong reversal in most all financials. The rally is likely to continue for the group particularly if Goldman's numbers are as strong as most people believe.

Technicals:

Let's take a look at couple of charts from CIT. First is the 3 month chart.

As you can see the stock has pretty much dropped from $4/share to $1/share in a little over a month. You can also see that the volume has increased significantly and the selling has accelerated the last couple of days. The action looks an awful lot like shorting to me. Now look at the 7/13/09 intra-day chart:

After hitting the low early in the morning the stock rose 20%-30% throughout the day. This type of action is typical of a stock reversing from its lows. With news accompanying the reversal, it is highly probable that the rise will continue.

Short Squeeze:

According to shortsqueeze.com, there are over 50 million shares of CIT being shorted. With heavy institutional ownership, that represents a large portion of the float. As the stock gains in price, particularly with news of a government bailout, the shorts will cover. The squeeze will cause a huge pop in the share price and a lot of money could be made the next couple of days because of it.

Institutional Buys:

Based on the massive selling the last couple of days, there will probably be news released of some institutional selling in the next couple of days. However, there are still some mutual funds that have invested large sums of money in belief that CIT will recover. RiverSource Investments LLC, bought 12.7 million shares between March 31 and June 30, bringing its stake to 44.3 million, according to a July 10 regulatory filing. Other buyers in recent months include Fidelity Investments, Brandes Investment Partners LP, Vanguard Group and Wellington Management. Also hedge-fund manager Edward S. Lampert of ESL Investments (better known for his controlling stake in Sears Holding Corp) bought shares in the struggling company. All the big money buyers does lead one to believe that a recovery could be on the horizon.

Conclusion:

CIT ended today's session at $1.35/share and ended after hours trading up another 25% at $1.70/share. In my opinion, this is just the beginning. Ideally, you'd like for news of progressing talks to leak throughout the week without any significant details released. That would allow the stock to achieve a snowball effect thus crippling the shorts. Personally, I'd like to get out before a formal deal is announced and then re-evaluate afterwards. To often, government aid is dilutive or non-beneficial to the shareholder. It may not be the case in this instance, but I'd prefer not to take any chances. I can't quite predict where the stock will go, but I feel confident that there is still a huge opportunity to make some good money. Just be sure to take your profits. News, technicals, short squeeze potential and institutional buying makes CIT the next perfect stock.

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

2009-06-21T15:24:00.011-04:00

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.

News:

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.

Fundamentals:

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.

Technicals:

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.

Conclusion:

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

2009-06-06T12:19:00.018-04:00

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.

News:

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.

Technicals:

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.

Momentum:

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.

Conclusion:

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.

5/25/09 - Titan Pharmaceuticals (TTNP.PK): Was Perfect and Still Potentially Is

2009-05-24T22:47:00.014-04:00

Man, the perfect stocks have been hard to come by recently. I've mentioned to several people that I think a lot of it has to do with the market cooling a bit from its 30% bounce off the March 09 lows. Until further ammunition is disclosed to move the market higher, it looks like the theme of this blog will revolve around potentially perfect stocks. The stock that I believe has a strong potential to move higher in the near future is a stock that I considered posting about two weeks ago. I was hesitant to do so because it had already had a massive jump in price. After anticipating a sizable pull back, I've come to the conclusion that it's just not going to happen. In spite of an 85% move up since initially being on my radar, Titan Pharmaceuticals (TTNP.PK) is still potentially a perfect stock.

Titan Pharmaceuticals, Inc. is a bio pharmaceutical company developing proprietary therapeutics primarily for the treatment of central nervous system (CNS) disorders. The Company is focused on the clinical development of the following products: Probuphine for the treatment of opioid addiction and Iloperidone (also called Fanapt): for the treatment of schizophrenia and related psychotic disorders. Titan directly develops its products and utilizes corporate partnerships for marketing and distribution such as the one with Vanda Pharmaceuticals, Inc. for iloperidone.

News

Titan Pharmaceuticals was bordering on bankruptcy, had laid off the bulk of their employees, and shutdown much of their operations. However, the company's fortunes all changed on 5/7/09 when FDA granted approval to market Fanapt. Vanda plans to make Fanapt available in pharmacies later this year. Titan is entitled to receive royalties on global net sales of Fanapt equal to 8 percent on annual net sales up to $200 million, and 10 percent on annual net sales above $200 million. Titan incurs no ongoing expenses associated with this potential future income. Global sales from this class of drug exceeded $20 billion in 2007. In other words Titan will be getting paid millions and possibly billions of dollars over the next 5 to 10 years to do absolutely nothing. Talk about a cash cow!

Technicals

See chart for TTNP.PK:

As you can see from the chart above, Titan spiked after the FDA announcement. Then, for about a week and half it appears that the market was trying to weigh if the company's new valuation was justified. Over the past week the stock has begun to explode upward. So, it appears obvious that the market still believes the stock us undervalued.

Catalysts

There are several things that can take place to continue to push TTNP.PK's price higher:

- Vanda doesn't currently have enough money to move forward with the launch of Fanapt. As a result, anything that they can do to improve their position in making this happen will push TTNP.PK's stock up (ie. partnership with big pharma, buyout from big pharma, secondary offering to raise money, etc.).

- Titan could now be a buyout target. Companies with lots of cash should be willing to buy Titan at a premium for the strong possibility of huge future earnings at absolutely no expense.

- Probuphine is a bit of a wildcard. It appears that there are some patent issues keeping it from getting off the ground. If somehow this is resolved favorably, the stock could again see a sharp move higher.

- With Titan currently being on pink sheets, they could consider re-listing on one of the major exchanges. Several months ago, they were delisted from the American Stock Exchange. However, it is not likely they will do so because management still seems to be in cost cutting mode. I think Titan believes that they can achieve a significant increase in share price without it.

Conclusion

At Titan's closing price Friday 5/22/09 of $1.30/share, the company has a market cap of a little more than $75 million. When considering the potential revenue from Fanapt over the next 5 to 10 years, many believe the current valuation is still far too cheap. I believe the current momentum of the stock will push the share price to at least $1.70 in the next week or two. I highlight $1.70 as a price point because that is where TTNP.PK peaked the first day after the FDA approval was announced. Many investors blindly bought in around this price and it should act as a temporary level of support for the stock. I wouldn't expect the stock to move much beyond this point until one of the catalyst listed above take place. Only with these occurrences would I be confident in saying the stock will comfortably move beyond $2.00 a share. Because the stock has already had a nice run, you could gamble and hope for a pullback closer to a $1.00, but don't count on it. If such action does take place, expect it to be met with ferocious buying. Word continues to spread about this gem of a stock. I've failed you by not posting about it at $0.70/share when I had a chance. However, now is better late than never because I feel there is still excellent profit potential for investors. Titan Pharmaceuticals, potentially the next perfect stock.

5/12/09 - Combination of Oil and Natural Gas Makes Callon Petroleum (CPE) Perfect

2009-05-12T19:49:00.015-04:00

It's now time for another perfect stock post. Most of you follow the market closely so I'm sure that over the past month or two you have noticed the strong move being made by oil. More recently, natural gas has begun to follow the same path. I've been looking for a perfect stock in this sector for weeks, but something has always made me shy away from making a selection. However, after an earning release by a particular company last night, I can no longer make that claim. Typically, my perfect stocks are fast risers with a "perfect" stock shelf-life of no more than a month. This stock is a little different though. I am fairly certain it will at least double from here, but it may be more of a slow grinder. Unlike most of the other stock's I've recommended, it could be good for a 3 month hold if things don't change fundamentally. Today's perfect stock is Callon Petroleum Company (CPE).

Callon Petroleum is engaged in the exploration, development, acquisition and production of oil and gas properties. The Company’s properties are geographically concentrated primarily offshore in the Gulf Coast Region both onshore and offshore.

Fundamentals:

As I've mentioned in the introduction, oil and natural gas have been on fire recently. Nothing tells the story better than a chart so see below for visuals of the impressive turnaround in the two commodities:

Oil began it's reversal a few months ago, but natural gas has turned the corner only a few weeks ago. Most of the credit for the turnaround goes to China because of their stimulus and massive energy needs. As natural gas continues it's reversal, you can be assured that more and more money will flow into the sector. The main beneficiaries from the standpoint of share price appreciation will be the low float stocks furthest from there 52 week highs. CPE has a float of less than 10 million shares and currently sits at $2.93/share with a 52 week high of over $28/share.

News:

On 5/12/09 the company reported Qtr. 1 2009 net income of $2.4 million, or $0.11 per share, significantly exceeding analysts consensus, which was a net loss of $0.07 per share. The biggest reason for the upside surprise was due to Callon's successful hedging strategies. For example, in spite of depressed oil prices averaging around $43/barrel for the quarter, their realized oil price was over $60/barrel. The stock moved 30% today in response to the report. Because the price of oil and natural gas continues to find higher trading ranges, it is reasonable to believe that next quarter's earnings will be even better.

Technicals:

See the chart of Callon Petroleum below:

As you can see, this stock bottomed in March and has been on a steady climb ever since forming a (very bullish) cup handle. After a stock has a major run, the earnings report often determines if the momentum is stopped or if the trend continues. I believe the favorable report catapults CPE further along its current path.

Catalyst to move CPE higher:

I've already mentioned the significance of the earnings report, but I see several other factors that will move the stock up:

- Expect analyst upgrades and institutional buying. They'll wait for a nice pullback and then they will "back up the truck". Look for both to happen in the next couple of weeks.

- Expect Insider buying. There has been no insider buying or selling since the end 2008. Now that the insider "quiet period" is over and it is fairly clear that prices are on the rise, look for management to begin accumulating shares again.

Conclusion

In conclusion, oil and natural gas stocks are highly dependant upon commodity prices. As the economy recovers and more money is printed, it is no surprise that the depressed prices of 4 or 5 months ago would be a distant memory. I believe oil may level out at this level, but natural gas has a ways to go. This should keep the sector moving in a positive direction and reward those companies with strong management and results. Be patient with CPE. After an already large move, you may or may not hit your target right away, but slow and steady can also make you a lot of money. Callon Petroleum Company(CPE) is the next perfect stock.

5-4-09 - Combining Two Hot Sectors Makes Gold Horse Intl (GHII.OB) Perfect

2009-05-04T20:44:00.009-04:00

Today was an explosive day in the stock market. Most every stock was up and certain sectors have been on quite a run. With so many stocks significantly coming off of their bottoms, it will be tougher and tougher to find perfection, but I really feel that this next stock is an easy double from here. This stock is definitely in the right space as it happens to combine in my opinion the two hottest sectors in the market right now: China and Real Estate. It had a big day today, but I think there's still a lot left in it. In this post I'll float back into pennyland and show that the next perfect stock is Gold Horse International (GHII.OB).

Gold Horse International is engaged in three business sectors in China: construction, residential and commercial real estate development, and hotel management. The stock was taken down steadily and is just beginning to see the light of day despite great earnings.

Fundamentals

In the wake of the economic downturn, the Chinese government has vowed to do everything possible to stimulate its economy. Part of that stimulus plan is to foster construction and real estate. 4 trillion RMB is being released to encourage affordable housing, rural development and infrastructure projects. GHII.OB is set up perfectly to capitalize on these measures.

Earnings

GHII.OB's 2008 revenue was around $67 million, which yielded an eps of $0.10. The company has already completed 2 quarters in 2009 and has provided guidance of $90 million for the year. Book value is $0.43/share. These financial indicators are impressive for a stock currently sitting at $0.13/share.

Technicals

Check out GHII.OB's 1-year chart below:

As you can see, GHII.OB traded over $1.00/share less than a year ago. After consolidating for months, today's 44% move looks to be the start of a breakout.

Catalysts

I've already mentioned that Chinese stocks are hot right now. With the promising China manufacturing numbers that were release today regarding expansion for the first time in 9 months, I predict that you could see some crazy stock run-ups the next few weeks in Chinese stocks that could rival what we saw in late 2007.

Also, 5/18/09 is a major investment conference focusing on Chinese companies in New York. With all the money that's still waiting on the sidelines, this could be a great opportunity for Gold Horse to lock in some big money ownership, which will inevitably push up the stock price.

Conclusion

Stocks have made a tremendous run and we look to be primed for DOW 9000. As we inch closer to that number, look for many stocks to give up some gains soon as profit taking occurs. However, GHII.OB is nowhere close to being overbought and appears to still have room for at least a double based on this blog's strict criteria. Gold Horse International (GHII.OB) the next perfect stock.

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

2009-04-28T19:43:00.008-04:00

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:

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.
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
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"

2009-04-26T14:48:00.005-04:00

"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

2009-04-13T20:33:00.000-04:00

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

2009-04-03T21:12:00.000-04:00

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!

HAYZ 3/25/09 - Can a Stock Be Perfect Twice?

2009-03-24T21:18:00.000-04:00

Wow, my previous perfect stock choice Pier One Inc. (PIR) performed unbelievably well. I think I may have set a standard that I can't maintain, but I'm certainly going to do my best to try and keep it going. I didn't think another opportunity would arise so quickly for another perfect stock, but I can't help but make this next call.

For those of you who read my first post, I said that my first perfect stock was actually going to be Hayes Lemmerz (HAYZ) about a 2 weeks ago. During that time, it was floundering around $0.04/share and peaked at $0.18/share a couple of days later. After increasing 300% - 400% so quickly, most people wouldn't expect a stock to have the potential to do it again less than 4 weeks later. Despite the the slim odds, I really think Hayes Lemmerz has that potential and is my next "Perfect Stock" choice.

Fundamentals:

Hayes Lemmerz is a producer of aluminum and steel wheels for passenger cars and trucks. You already know about the aid being made available to auto suppliers in the U.S. by the federal government. There's even a good chance that more is coming down the pipe. What you may not know is that 80% of HAYZ's business is overseas with the majority being in Europe. Earnings are scheduled to be announced on 4/6/09. In all honesty, the numbers should be horrible based upon what has happened in the auto industry the past 6 to 9 months. The situation overseas is supposedly as bad as it is here. The bright side though is that the market is no longer punishing companies for poor past performance as long as the future is brighter. There are some real positive things currently happening that directly point to a HAYZ turnaround:

1. European government has recently launch several car buying incentive programs, which appear to be working. Auto sales have increased significantly from January to February of this year. Germany's February car sales rose 22% year-on-year. More European government aid is said to be in the works.

2. Earlier this week, Goldman Sachs upgraded the entire European automotive industry citing government assistance and improved signs of recovery.

3. Raw material prices have been slashed significantly. The spot price of aluminum alone is 60% less per ton now than it was last year.

4. A conscious effort over the last 6 to 9 months has been made to cut costs and lean operations to ensure no dollars are wasted.

Whether or not incentives, reduced raw material expenses, and cost cutting actually result in improved numbers is irrelevant at this point. What's important is the perception that things are getting better. That should be more than enough ammunition to move a stock with a $16 million market cap that averages around $2 billion in sales.

Technicals:

See the chart for HAYZ below.

You can see the initial push HAYZ made, but instead of the usual re-tracement caused by day traders exiting, the stock has been remarkably strong. The way the stock has level out is a sure sign of consolidation, which is typically a precursor to the next leg up. In watching the intra-day movements of HAYZ the past few days, each and every time the price is driven down below $0.15/share, buyers are quickly swooping in. Many longs are accumulating and holding. If this thing moves past $0.18/share, it is off to the races.

Institutional/ Insider Buying:

HAYZ is also beginning to attract some institutional buyers. Mffais.com shows that J.P. Morgan recently added to their already hefty position http://www.mffais.com/hayz.html . Also, http://www.thebuylist.com/default.aspx?Stock=hayz shows within the last week a mutual fund bought almost 850,000 shares of HAYZ. In other words, the stock has definitely gotten noticed. There haven't been any insider purchases, but that may be due to SEC guidelines. The turnaround has just recently occured and I am not sure if any insider purchases can be made so close to the earnings report. If I were a Hayes Lemmerz executive, I wouldn't want to catch a falling knife either the way things looked a month or two ago.

Momentum:

I'm no Nostradamus, but the past couple of weeks have been particular easy to read when it comes to the stock market. Have you guys picked up on the pattern? It is very clear that the market is in "bottom feeder" mode. When you combine the fact that the market is moving higher, the end of quarter rallies are in full swing, and so many stocks are oversold, the action should really be to no one's surprise. Hedge funds are finding the cheapest stocks (from a share price standpoint only) on the NASDAQ or NYSE and are pushing them up with or without news. The criteria appear to be a follows:

No warrant stocks
Around $0.30/share or less
Have an average volume of at least 200,000 shares
No heavy talk of bankruptcy
In new hot sectors: Technology, Biotechnology, Financials, Housing, or Automotive

Despite the fact that HAYZ has recently made a big move, it could be on hedge funds' radar because it is so insanely cheap at $0.16/share.

News:

Most of the news regarding Hayes Lemmerz won't be disclosed until their earning announcement on 4/6/09. However, one thing we do know is that they recently announced that their losses per share have been overstated in previous years due to an accounting error. The implication is that the share price should have and should be be higher because of it.

Conclusion:

Unless management comes out and says that there is no hope for the future and that they are closing the doors for good, this stock should move sharply upward after the earnings report in two weeks. However, HAYZ could move sooner with a pre-earnings run-up, further automotive friendly govenment policy, or hedge fund bottom feeding. These catalyst potentially make Hayes Lemmerz the perfect stock for the second time.

The Perfect Stock 3/21/09 - Pier One (PIR)

2009-03-21T14:45:00.000-04:00

This blog called "The Perfect Stock" is pretty self-explanatory in that it is about what we as stock investors and/or traders always seek: a scenario where catalysts, fundamentals, and technicals all align causing a stock to explode with 100% plus gains in a very short period of time. Over the past 6 months, shareholders have been punished by the stock market's unrelenting downward spiral. However, those of us who see the glass half full, view today as a once in a lifetime opportunity to recoup much of the money we have lost. The stock market has had over a 50% re-tracement from its highs and most experts believe that it has finally bottomed. Big money has been sitting on the sidelines and many stocks are at 5 to 10 year lows. Some are at all time lows. Fortunately for us, these occurrences can potentially give rise to what may be the best opportunity in years to make a significant amount of money in the stock market.

In finding the perfect stock, http://theperfectstock.blogspot.com will focus on quality and not quantity. So, do not expect a post daily. However, if and when a clear choice is apparent, I'll do my best to point it out. Periodically, there may be posts offering suggestions regarding tools that you may or may not know that more experienced traders use to get the jump on certain stocks.

My idea of "The Perfect Stock" has a combination of at least 4 of the 7 components listed below:

Fundamentals
Technicals
Momentum
Short Squeeze Potential
News
Institutional Buying
Insider Buying

These things will be universal themes in the selection of the perfect stock. Please, take note of the date of each blog post. Because the market changes so quickly, a stock can only be considered perfect for a finite period of time. These picks are not meant to be long term holds, although many will have the potential for substantial gains over an extended period of time. If you decide to invest, pick your exit points wisely.

I had planned to start this blog last week and the stock I was going to focus on was Hayes Lemmerz Intl (HAYZ). However, I had some prior engagements and was unable to put my ideas together. It happens to be up about 400% since then and doesn't appear to be looking back. Although I still think no one should even consider selling HAYZ until it reaches about $0.40 - $0.45 a share (it's currently at $0.16/share), it's probably due for a bit of a pull back. Since it is no longer "perfect", I'll provide you with my next choice: Pier One Inc. (PIR).

Many of you may be thinking why in the world would I think PIR, which is a retail stock, is the perfect stock.

Fundamentals:

The last couple of weeks, the market's turnaround has largely been fueled by the actions of the federal government. Rumors of mark to market accounting modifications, a possible re-institution of the uptick rule, capital assistance for auto suppliers, and the Federal Reserve's promise to buy US Treasury Bonds and mortgage securities have sparked fierce buying in certain sectors. The most notable buying has occurred with auto suppliers, financials, and home builders. The buying has been so feverish the past 10-12 days that these sectors can't help, but to take a bit of a breather. So, what would be the next logical play? I would say that the best choice would be in areas that tend to move in tandem with either of the three sectors listed above. If we focus on the results of the Fed's action with mortgages, loans will now be available at record low interest rates. This should significantly stimulate home buying (the main reason the home builders have spike). The stock market is a forward looking indicator, so if home buying is expected to increase, it is reasonable to believe that home furnishings and decorum purchases will also increase. Who happens to be an industry leader in this area? Pier One Inc.

Technicals:

See below for a 3 month chart of Pier One:

I don't profess to be a die hard stock technician so I'm not going to try and wow you with concepts like moving averages and bollinger bands. However, the chart does pretty clearly show that this stock may have bottomed last week at $0.10/share and is in the process of a textbook reversal. Also, the corresponding volume (the bar chart portion below the line graph) shows that real interest is beginning to form. Pier One currently sits at $0.16/share and it's 52 week high is over $8.00/share. With the next big move, PIR will easily hit $0.40/share and will probably go as high as $0.70/share before encountering significant resistance.

Short Squeeze Potential:

With less than 90 million shares outstanding and 71% institutional ownership (per Google Finance), the float is tiny. Shortsqueeze.com says that there are approximately 5.9 million shares short. In other words, when it moves, it will move fast.

Supporting News:

News on Pier One was released after hours Friday, 3/20/09. They announced their earnings a little earlier than usual and of course they were horrible. However, what was important was that they have reduced their inventory significantly, are closing less stores than they had originally anticipated, and have reduced a large portion of their debt. The debt reduction was the key news. One of PIR's Hong Kong subsidiaries purchased $79 million of the debt.

Also, the company seems intent to quickly increase their share price so they aren't forced to be de-listed from the NYSE. The exchange requires that they maintain at least $1.00/share. I suspect more good news will come in the coming weeks in an attempt to keep the positive momentum.

Conclusion

Pier One sets up perfectly both fundamentally and technically by my standards of the perfect stock. However, I'm not the only person who thinks it is poised to fly. PIR was up 88% during after hours Friday, 3/20/09. I don't expect it to open Monday quite at that level, but if it drops anywhere between $0.20 - $0.25, I'd be all over it.