December 2, 2015

MSN and JVA Revisited

I quickly went through a net current asset stock screen. There is not much out there to no surprise. There are a few though that have potential. I've been blogging on them some. The SORL, the SPU. I've blogged about these two deep value stocks a lot in the past. First up is Emerson Radio (MSN)and it has always been around net current asset value and profitable. I took a look at Emerson again and this is what I see currently. I see cash on the balance sheet stable the past year. It is actually marginally up from last year. Cash is 28.1 million. There is zero long-term debt. Total liabilities are just 3.9 million. So net cash is roughly $24 million. The market capitalization of the company is $27 million. So it is right around net cash with the stock at 1.01 per share. I don't think it is any coincidence the stock has bottomed out and found support around 1.00 the past couple years. You can see that here in this chart below.










They squeaked out a small profit last quarter though revenue doesn't look good. Who knows what is to come. I am going to put a limit order to buy some shares around 1.11 or lower. If the price drops below .90 the thesis doesn't work anymore and I'll take the loss.

Coffee Holding JVA is very close to being a net current asset stock. It's been a net tangible asset value stock for awhile. The price has just been in free fall this year. It appears technically it could be bottoming. I hope it keeps dropping though. I see this as the best net current asset value if we get there. It almost got there in early October this year in the 3.80s. That was the bottom though and it got picked up on strong buy volume. This one really just needs an activist investor I think. Something like that. I don't know a whole lot about this company but wholesale coffee can be consistently profitable.

October 24, 2015

Is The Tape Manipulated Again?

The US stock market keeps ripping higher with mediocre global economic data at best. Company revenues and earnings locally here in the US aren't stellar either. Take for instance Caterpillar (CAT). The company reported quarterly earnings yesterday that were abysmal. The company is still practically in a death spiral. And they may be one of the best indicators of future growth. The stock has been in a strong downtrend but surged higher on heavy trading volume the day of the earnings announcement. It even followed through more today!

Just looking at the major indices the steady climb higher reminds me of the surge off of the 2009 lows. It looks like the aftermath bottom following the 2010 flash crash and the mini flash crash of last fall. What did all of those have in common? One thing. High frequency trading (HFT) or program trading. Here is a video from the summer of 2009 where an institutional trader talks about HFT. He said it just overwhelmed the tape and no one can fight it.

Many stocks were driven higher with uncanny price action. One that comes to my mind in particular from 2009 is Beazer Homes (BZH). If you are familiar with "truly" manipulated penny stocks aka pump and dumps this chart will ring a bell. This is BZH in 2009. See how it goes up day after day without consolidating? And any red days are met with a continuation of the uptrend. Then it soars at the end and crashes.












Here is the current S&P 500 index in its sharp uptrend














They say officially that 50-60% of the volume on the exchanges are high frequency trading. I've always been skeptical and assume its closer to 70 or 80% or more. I don't personally have any problem with HFT.

I think we are seeing a high frequency trading bottom being put in here on the major indices. When we are going higher everyday don't fight it. I wouldn't be surprised if this keeps up for weeks. It smells like QE is here or is coming.

September 23, 2015

Leading Indicator of Stock Market Is High Yield Bonds

Sometimes there are strong leading indicators in markets. A leading indicator is when one market leads another. One will go up or down and the other will simply follow a little behind. The two are correlated. You can gauge the next movement by seeing what the leading indicator is doing. An example of this is crude oil and the US stock market in late February early March of 2009. Crude oil was a leading indicator for the market. In October of 2007 the Chinese stock market was a leading indicator for US markets. This year corporate bonds specifically high yield corporates are a leading indicator of the stock market. The correlation is continuing even this week. Tickers like JNK, HYG and LQD are leading. Here's JNK the high yield bond ETF beginning it's trading range breakdown in early June.














The S&P 500 didn't really fall significantly until August. You could maybe argue very late June it had a scare but it held in. Still late June is far from early June. So what does this mean? Watch friggin bonds folks! HYG and JNK lead the way again 4 trading days ago when they started breaking down again. The market followed the very next day. We are one or two days behind now. JNK just printed a nasty shooting star yesterday the 22nd. Bearish prints on both of these. I'm writing this early morning here on the 23rd. The downtrend is strong and intact on HYG and JNK. They are coming off of a clear bear flag and it appears the lows will be tested.

September 10, 2015

Video Blog #2




This is my second video blog ever. The first one I posted on my other blog . I was looking for a good desktop recording software and ran across this one called HyperCam. I'm still working out some bugs with the audio to video sync. I forgot to mention the rounding top that Under Armor has. In the video I discuss my UA short and look at crude oil and natural gas. Which way will crude go from here? Watch and find out.

September 7, 2015

Under Armour UA Overvalued

We all knew Netflix NFLX was overvalued with a PE multiple of a whopping 200. It's been taking a beating in the recent downturn. I'd like to propose Under Armour UA as overvalued. It's a great company and leader in its industry just like Netflix but the valuation is still to rich. Under Armour currently trades at 88 times earnings. It also trades for 6 times sales. Earnings are expected to grow roughly 24% a year going forward. With a PE of 88 and at 6 times sales perfection is "baked in" to the companies future performance. There is a lot of market cap that could quickly get trimmed on a bad quarter or future guidance. Or how about a market correction! This looks like a correction and an industry leader like Under Armour could get sold off like a Netflix or Apple. I see it happening here in the charts. Let's look at a 6 month chart of Under Armour below.


















See the red line that is forming a round top? A rounding top is a bearish top formation. Some people call it a head and shoulders. Under Armour is a high beta stock and this chart is essentially mimicking the major indices. So yeah we are very close to confirmation of a top in the market. What is does after the pennant bear flag below is key. It looks to me that with the shooting star candles on UA we are going lower next. I am short some Under Armour at 94.52. I successfully shorted Netflix the other day at 116 and covered at 110. I cataloged that trade on my trading blog .










August 25, 2015

Wild Monday

I'd like to start this off by emphasizing the current situation in US equity markets. Putting it in perspective we have been on a historic bull run since the March lows of 2009. Nothing compares historically to the 1982 to 2000 run but this has been up there. Lately the market has been going straight up. These kinds of corrections in bull markets are good because it keeps the pace slow and steady and avoids a bubble crash. Let's face it valuations have been getting a little ahead of themselves on US companies. Netflix NFLX was trading at a price to earnings multiple P/E of 200. Other big tech companies like Amazon AMZN, Apple AAPL were getting expensive to. Geez, not even mentioning Tesla Motors, GoPro, Alibaba etc etc. These are all falling. They are right to fall.

The media gets over-dramatic about other economies. The US economy has been doing pretty well considering the rest of the world. Don't quote me verbatim but roughly a 1% change in GDP in Europe only effects US GDP 1/4%. It is a global economy now but I'm not convinced the US is going to go into a deep recession because of China or any other Region. There may well be a recession. I don't think it would be a bad thing. Recessions are a healthy part of economic growth. Greenspan did everything he could to prevent them and look at the bubble it created. Bernanke to.  Slow and steady is good.

I just did a post on my trading blog Dynamitestocks.com about some of the things that went on early Monday morning during the US session. I don't know if all of the media is reporting it but we did in fact trigger circuit breakers within 30 minutes of the open. Circuit Breakers are "safe-guards" the stock exchanges put in place to stop a crashing market. A drop of 7% on the Dow Jones or S&P 500 index triggers a level one circuit breaker and the market is halted for 15 minutes. We reached that 7% threshold on the S&P just minutes after the open.

August 9, 2015

Energize The Portfolio With Planet Fitness (PLNT)

Get The Portfolio In Shape With Planet Fitness (PLNT)
Greetings investors across the globe! Amidst the latest economic data on jobs and speculation on the FED raising rates I have something different. I have a stock analysis. A couple of days ago Planet Fitness (PLNT) a fitness center went public on the New York Stock Exchange. I know this company well. I am a black card member of Planet Fitness. I've been going to Planet Fitness for about a year now. The thing I like the most about it is I pay $19.99 a month and I can go to any location I want. I go to two different locations that are open 24/7. There is a Planet Fitness a block from my apartment and there is another one near my work! Tomorrow after work I'm going to stop by the one next to work. A couple of days ago I was at the one near my place. The black card is actually the highest tier of membership and it's still only $19.99. The other membership tier is cheaper and is $10. With my membership I get access to the massage chair for free, tanning, 1/2 price cooler drinks and probably a lot of other perks I'm not aware of or won't use. Some clubs have hydromassage, haircuts and 20% off Reebok apparel.

One of the reasons the company has been so successful is it is marketed to the broad population. It's marketed as a welcoming, non-intimidating "judgment free zone." It appeals to people who are just getting started. It's not a typical bodybuilding "gym." "This exceptional value proposition is designed to appeal to a broad population, including occasional gym users and the approximately 80% of the U.S. and Canadian populations over age 14 who are not gym members, particularly those who find the traditional fitness club setting intimidating and expensive." There are no free weight barbells. It doesn't attract the steroid using bro's who need huge plates to squat. They do have plenty of free weights but they are dumbbells. There is a squat rack, smith machine, pull-down cables and plenty of weights. There is also every necessary piece of equipment for whatever your fitness goal. They cover it all. The place is big.

Why Is This A Good Stock?
With the economy doing well people are spending money on all sorts of discretionary industries. I recently heard that Americans are spending more on eating out at than ever before. The government jobs report that came out Friday noted that one of the strongest job growth industries is leisure. So the bottom line is people are spending. I believe they are willing to spend $10 to $20 a month on a gym membership. The growth of Planet Fitness proves this. They have grown from 389 stores in 2010 in 39 states to 918 stores in 47 states, Canada and Puerto Rico for the year end 2014. They are one of the largest and fastest growing fitness centers in the country. If there is a trend toward healthy living fitness centers and gyms will reap the rewards of that trend.

The thing I love about this company is they are growing from franchising.  Everyone knows about the Mcdonald's (MCD) growth story. The way they grew so fast and so profitable was from franchising. Same here. Planet Fitness has had same store sales growth since 2010. Planet Fitness franchised locations are growing same store sales twice as fast as corporate locations! For the year of 2010 franchisee owned locations grew same store sales 14% and corporate owned grew 5.7%. In 2011 they both grew 3%, in 2012 franchise were 8.7% corporate 4.8%,  2013 franchise were 9.1% vs 6.1%, 2014 11.5% vs 5.4% and in the last quarter 2015 franchisee sales almost tripled with 11.7% vs corporate 4.6%.

There have been 33 straight quarters of same store sales growth. Here is the companies growth in pictures.















When you invest in a stock you ask, what could go wrong? I don't see the franchising model failing this company. Infact I see it as a major catalyst for serious growth. One thing that could happen is they try to grow to fast which will hurt them. That's a bridge to cross if we get there though. There are roughly 900 locations nationwide and the company sees potential for 4,000 in the US.

Numbers and Valuation
Not only does the company have revenue and earnings growth they generate a lot of free cash flow. Free cash flow in 2013 was $60 million. In 2014 there was $25 million. Free cash flow is great to see in any business. Some have zero! Just how profitable is this company? Net profit margin for the full year 2014 was 13%. This is a good net margin. They are carrying a good bit of debt. They were bought by private equity a couple years ago and I'm not sure if that had something to do with the debt. The balance sheet is fine none the less. The current ratio is .94. I like to see 1.0 or greater for a current ratio but this is close enough.

Now the sexy stuff. Earnings. Earnings from 2013 to 2014 grew 48% from $25 million to $37 million. They can definitely grow. Earnings per share for 2014 was $.24. Off of a stock currently trading at $18 the trailing price to earnings (PE) multiple is 75. This seems expensive, however, if they continue to grow like they have this is a fair price at $18 a share. This is a growth stock. Let's take a more common example of PE valuation. A company grows earnings 10% a year. The PE is 20 and we call that a healthy PE premium for a quality company growing at 10%. The PE for Planet Fitness in that scenario would be close to 100.

 I see the floor for the stock price at $12 a share. At $12 a share it is trading at a multiple equal to its earnings growth. A 50 PE or the growth rate puts us at $12 a share. Growth stocks are great because there is often multiple expansion as more people want to be a part of fast revenue and earnings growth. The downside with them is if the multiple gets to far ahead of real growth the stock is priced for disappointment on any negative news. This stock has a long way to go before it gets to that point. I see a lot of potential for share price growth with Planet Fitness over coming years.

Sources

http://investor.planetfitness.com/investors/about-planet-fitness/default.aspx

http://www.sec.gov/Archives/edgar/data/1637207/000119312515230459/d888681ds1.htm#rom888681_9

August 6, 2015

Lands End (LE) Fashion at Clearance Prices

Lands End ticker symbol (LE) has been selling clothes for decades. I remember distinctly the catalogs they mailed out in the 90s. I may have even had a jacket or shirt I got from Lands End back then. Not long ago the company was spun off from Sears. The apparel industry is a highly competitive industry. They have been around in one form or another since the 1960s no less. The company was founded in 1963 by Gary Comer in Chicago. They started out selling sailboat equipment. I imagine they will be around in another decade.

The first thing I noticed about Lands End currently is the price to earnings multiple is pretty low. The PE is 15. The very next thing I did is look at the yearly cash flow statement. There was $211 million in cash flow from operating activities. There was $16 million in capital expenditures.  I take 211 minus 16 and we get $195 million in free cash flow. Free cash flow is the money the company has left over after it pays bills. They can either re-invest it in the business or return money to shareholders.  It is always good to see robust free cash flow numbers. I'm about to run one more calculation and we are about to discover just how cheap Lands End really is.

The market cap of the company currently is $762 million. That number divided by the $195 in free cash flow give us a price to free cash flow multiple of 3.9. So the price to free cash flow of Lands End is about 4. Wow! Just wow. That is a super low multiple for a company like this. A lot of investors will actually put a lot more weight on cash flow figures. Some people run extensive spreadsheets that do discount free cash flow projections. With these kind of low valuations I wouldn't be surprised if a Lands End file isn't being emailed around the office of some private equity or one of Lands Ends competitors. I'm not saying there is or will be I just could imagine it.

So I saw this valuation and kept looking around the financials expecting to see a company on the brink of destruction. Earnings are down recently and earnings guidance is down from $2.00 to $1.46 per share. Pretty bad but how bad? I looked at the income statement again. I looked at sales over the past couple years. The past couple of years had flat sales growth. Sales were almost exactly the same as last year. Net income is flat too. This isn't great but they are holding in there. It's almost a billion dollar company too. It's harder to grow sales fast at giant companies.

I read about their customer base. "We believe our customer base consists primarily of affluent, college-educated, professional and style-conscious women and men. In fiscal 2014 our customers had average household income of $105,000 and approximately 42% of our customers were within the 35-54 age group. "

Looking at more valuations and ratios we have a price to sales ratio of .48. Obsurd. We have return on equity of 17%. A return on equity over 10% is very good. Pushing 20% we have a one of a kind golden business. If they can do 17% ROE in a mediocre year they can do 19-20%. A solid return on equity is meaningless, however, if low debt levels are not maintained. You will see high ROE numbers in a lot of industries like auto's and manufacturing but they blow up huge debt bubbles. Lands End's liabilities are stable. Long-term debt is actually down some even this quarter. Long-term debt is down $4 million since Aug 2014. They do carry a lot of debt with debt to equity around 1 but this debt is manageable. Lands End also has $181 million in cash on the balance sheet.

Trying to do a relative valuation is a little pointless. Some companies in this industry do well and have high valuations. Some do poorly and have low valuations. The industry is so competitive I'm not sure looking at other companies helps. I looked at a few though. Companies doing well like Under Armour (UA) has a PE ratio of 90! It has a price to sales ratio of 6. I think Columbia Sportswear (COLM) is pretty apples to apples with Lands End. Columbia has a price to sales ratio of 2 and PE ratio of 30.

The bottom line is will these bad results Lands End has been experiencing lately with sales continue? I don't think the valuation makes since. If sales improve just marginally the valuation could be 20,25 times earnings easily. This is the kind of company that can fetch a 20 PE in a bull market easily. So the way I look at it is over the next few years if things are going well for the company earnings could be $2.00 a share. The stock could be $40 to $50 a share and the compounded yearly return from the current stock price of $23 to $40 or $50 is worth it. There is a brand "moat" in this one and I see them defending the castle through this battle.

August 4, 2015

Net Net SORL Is Cheap

I've made a couple posts on SORL Auto Parts over the past couple of years. Nothing has changed much with the companies long-term fundamentals. The only thing that has changed significantly is the stock price. It's net current asset value has actually increased from 2013 when it was $124 million and 2014's of $129 million. Right now $141.7 is the net current asset value of SORL. It still sells brakes and auto parts in China. It's a major player in commercial brakes. What I didn't realize about SORL before is how diversified it is internationally. 73% of its business is in China but 27% is international in 104 countries including the United States, UAE and Europe. I'm always skeptical of Chinese companies so I looked around to see if I could find info on where they are sold in the US. I didn't see anything which likely is because they are sold directly wholesale to big companies with commercial trucks. I did find some parts on Alibaba.

The stock is cheaper relative to NCAV than in 2013 with the market cap back at $50 million, NCAV at $141 million and the stock at 2.72. It is priced at 36% of net current asset value. I do believe this would even meet Benjamin Graham's margin of safety requirement! Sales have grown steadily every year since atleast as far back as 2012. Yet the current price to sales multiple is .23. Below 1 is low for about any decent company. The company is profitable yet the PE ratio is 3. On the balance sheet the current ratio is 3.6. Healthy. A cool $18 million in free cash flow in 2014.

I'm very bullish on China over the long-term and I would expect this correction currently going on in the overall China market to end sooner than later. The current PE multiple on the stocks in FXI is around 10-11. If you can get major Chinese companies for single digit PE's that is cheap. Not to mention some dividend yield too. SORL has a lot of support until 2.50. I think the fundamentals make it a compelling buy here.


July 21, 2015

The Economy and a Look At Major Indices

The dust is settling around the technology giants like Amazon and Google runs. So let's see what we have going on in the major indices. Let's take a peek at the Baltic Dry Index too.

I was listening to a radio program the other day and the guest was a perma-doom and gloomer. The only bad thing he could come up with on the economy was that commodity prices are falling. He said the recent weakness in oil and copper are leading indicators of growth. He failed to comprehend that oil is traded in US Dollars globally and pretty much all of any particular commodities movement is directly inverse of the dollar. Yes, the dollar is rebounding lately. So there you have the reason commodities are falling off. I suspect the strength of the dollar is on the back of the FED's latest news on rates.

The recent gains put up on the Nasdaq Index are looking like the index is in need of a cooling off. Looking pretty overbought. Especially in RSI 2. Biotech IBB is overbought as well. On the other indices like the S&P we are at resistance levels. Small-caps (Russell 2000) are not even running much nor bullish looking. Something has got to give on these indices because they will mimic each other eventually. This is because they are mostly determined by futures contracts. Yes futures contracts control the market.

Let's look at some charts. First is the Nasdaq itself. Looking very overbought. Vertical actually!! Needs to settle down. Doji candle printed today. Another trend reversal indicator. I circled the RSI and doji.
















Biotech IBB is pretty much an identical chart except it has broken out a little more and is hanging even more overextended. It's such a bullish chart breakout though I don't know how much of a pull-back it will see. Same goes for the Nasdaq. I very well could be wrong and everything rips higher. Technically everything looks due for a pause atleast.



















The Baltic Dry Index is running lately. I'm not convinced it is going to continue as it has had similar runs and corrections on trend. The trend is down. This could be the top of the downtrend as I drew on the chart below. We shall see shortly.

July 14, 2015

Two Veterinary Stocks, WOOF and PETS

Vet Stocks are Must for a Portfolio

I grew up with cats in the house. When I was five or six years old I got a cat. I was going to name the cat Garfield but it turned out not to be a male. Ms. Garfield was debated. Name plans blown we called her Princess. My sister got a cat named Midnight later as well. I had a roommate who had a Jack Russell Terrier too. I never really thought much about veterinary hospitals and practices as a big business until I started paying my recently rescued cats bills.

Last Fall I rescued a kitten from behind a shopping center. She was just walking around all by herself meowing at me. She was only about 2 months old so I took her in. I took her to a veterinary practice just a half mile from my place. It's called a vet hospital but they do routine appointments. My little kitten Precious was healthy. She had some eye and nose crusting we figured were just allergies. Maybe a couple months later she exhibited some symptoms of a urinary tract infection. My ex-girlfriend took her to the vet and yep she had a UTI. She had an eye infection too. Twelve or fourteen days of Amoxicillin later she was cured. A few weeks ago she got another infection and thankfully after yet another round of antibiotics she is fine again. Her allergy symptoms are almost all gone as well after I gave her antibiotic drops in her nose.

After all of those appointments and treatments I realized having a pet can almost be as expensive as having a kid at times. I knew this before I got the cat of course but it finally hit home. We love our pets almost like children. I did some research on pet spending and not surprisingly Americans spend steadily on their pets. About three-quarters of Americans have pets. This is a huge business. Americans spent $61 billion on their pets in 2011. The BLS government statistics on this are pretty astounding. Take a look at the full article here. Some of the interesting points are as follows.

In 2011, households spent more on their pets annually than they spent on alcohol ($456), residential landline phone bills ($381), or men and boys clothing ($404).

Despite the recession, families continued to spend consistently on their pets between 2007 and 2011. Spending on pets stayed close to 1 percent of total expenditures per household, despite the recession that occurred during this time.

Spending on pet food stayed constant or increased during the recession, even while spending at restaurants fell. Married couples without children living at home spent the most on their pets out of any household configuration in 2011.


So not only were pet companies a recession beater they are a baby boomer play also. In my quest for public pet companies I have fallen for two stocks I'd like to take home. The first one is VCA Inc.(WOOF). WOOF has 643 animal hospitals in the US and Canada. It is a $4 billion company. It has a solid balance sheet, good profit margins and growing free cash flow. Return on equity is 11%. Forward PE is 21. The stock has been on a run and just broke out to a new high yesterday.

The second stock is Petmed Express (PETS). PETS is a much smaller company with a market cap of just $370 million. They sell prescription drugs and pet supplies. PETS has similar healthy margins like WOOF. Net profit margin is 7.6%. Much better than WOOF PETS sports a whopping 23% return on equity and 22% return on assets! These are return on equity numbers that would make even Warren Buffet do a double take. This company has an incredible balance sheet with zero long-term debt. Solid free cash flow is there and to boot the company pays a big dividend. The dividend yield is 4%. The stock is also hitting fresh highs over $18 a share now. As I've made the case pet stocks are a must for a portfolio.

full disclosure: no current position in WOOF or PETS but am looking to buy both.

July 7, 2015

Chinese Stocks Are Not Crashing

I keep hearing on CNBC that China is crashing. Every day there is talk about how urgent the situation is. Let's refute this idea with some facts. First of all the current price to earnings ratio (PE ratio) of the I-Shares China 25 Index is a whopping 12. Yes, a PE of 12. A PE in the teens is not high for the largest companies in China let alone any stock of index. Around the high this year it was closer to 20. Still no bubble territory. In the 2007 Chinese crash the PE of FXI was closer to 40 than the teens.

In the 2007 crash there was a double top formation. There isn't a bearish chart formation here. The current chart of the China 25 FXI is actually bullish. The first chart below is the most recent trend line. It is being tested right now. The second chart is a long-term chart of FXI which shows the long trading range it was stuck in for years. It finally broke out of this range which is bullish. It just broke out this year. This is not a parabolic move to the upside. We finally just hit some highs! The red line on the top is the top of the trading range. The red line on the bottom shows the uptrend. If the index falls to the low 30s we are closer to a crash. A crash would be if the upper 20s get taken out.









July 3, 2015

Coffee Holding Company (JVA) Analysis

I posted on Coffee Holding Company JVA before because the company was trading for around net tangible asset value. It had some decent flashes of operating ok. I still see potential in the business. They just recently released results of the second quarter. Sales were up 19% year over year. Sales growth came in all the businesses which include green coffee, private label, and branded products. Gross profit was blown however because of hedging with futures contracts. Selling and admin expenses were down but because of the blown gross margin the loss on the quarter was -.33 a share.

This company could make a lot of money if a decent gross margin could be had. I crunched a couple years numbers. In 2014 they had a 14% gross margin, 2013 was 4% and 2012 was 6%. The entire industries gross margin is around 29%. Still looking for good in 2012 the company was free cash flow positive. They just launched a new product line that has had good feedback and We have also commenced sales of our Café Caribe label into Stop & Shop, a large retail grocery chain with more than 275 locations throughout New England, New York and New Jersey. So it looks like sales are probably going to do well. If they just watch margins there is potential to be unlocked.

Technically the stock at around $5 is testing some support and possibly could be beginning an uptrend. My first reaction to this possible trend is to take a 1/4 or so of a full position right here on this support. Looking at the lack of strong buy volume recently makes me think waiting for more of a confirmation of the uptrend is more prudent. Let's see what it does first. If it hits over $5.50 the uptrend is pretty clear.



June 13, 2015

Rising Interest Rates Play: Short Treasury Bonds

I think it is time to short US T-Bonds. I'm going to give you the fundamental reason and show what the market itself is doing. I'm basing this thesis on the theory that when interest rates go up bonds fall. Maybe it really is that simple. The tricky part has been figuring out when the FED will start tinkering with rates. I think they might do it this year. I don't see anything in the latest BLS employment report to make me think otherwise. You could say headline unemployment of 5% is to high to the FED. Of course the real unemployment rate is higher because they bake the numbers these days. But still real, unreal, semi-real unemployment rates are falling. I say 3% unemployment is unrealistic given the situation we have been in the last 8 years. I think anybody who is intelligent realizes the old days of conceptual thinking about target unemployment rates aren't possible now. Yeah, we could have 3% unemployment in a bubble economy. Let's just get 40% of the economy devoted to financial services(engineering) and see what happens! Any way you look at it unemployment is falling. Maybe I'm smoking dope on this report but this says wages are rising.

In May, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $24.96. Over the year, average hourly earnings have risen by 2.3 percent. Average hourly earnings of private- sector production and nonsupervisory employees rose by 6 cents to $20.97 in May.

For the next exhibit we have job openings. There are more job openings out there than there have been in fifteen years. There were over 5 million job openings in April.
















Let's think about the gravity of the FED raising rates. Will a slight rise really matter that much? I think the banks can handle it. They will still be in a situation to prosper.

Finally, I believe the market itself is saying the top is in for bonds. Below is a five year chart of TLT 20 Year Bonds. The red arrow points to the spike top. A spike top or bottom is one of the strongest reversal chart signals. The top was tested in March and April. It was confirmed in May. The drop for bonds continued and we are in free-fall now. The stock TBT is a vehicle to short TLT. So the way I want to short is with TBT Proshares Ultrashort Treasuries. Any spike upward on TLT is opportunity to get longer TBT.

May 15, 2015

Bojangles BOJA IPO

Bojangles a southern style fast food restaurant went public this week. Bojangles BOJA is headquartered in my hometown and I'm very familiar with eating there. I've been eating at Bojangles since I was a kid and the food quality is always great. Fried chicken and biscuits aren't my favorite food but I like them and eat them occasionally. Bojangles does have some spicy fried chicken that I do like. In my opinion Boajangle's sweet tea might be the best fast food sweet tea. They do a big breakfast with biscuits. They do lunch and dinner of course with the chicken entrée. For side dishes they have typical southern things like macaroni and cheese, mashed potatoes etc. They have a very large marketing presence in Charlotte. They always work the the NFL Carolina Panthers and their players. They sponsor the Hornets too. That's my quick company profile. Here is the more in-depth Yahoo Finance profile.

Bojangles', Inc. owns, operates, and franchises a chain of quick-service restaurants. The company offers boneless chicken, buttermilk biscuits, sandwiches, iced tea, biscuit sandwiches and snacks, salads, combos, boxes, dinners, family meals, drinks, sweets, fixin’s, and kids’ meals. It also sells apparel, drink ware, and lifestyle and writing products online. The company was founded in 1977 and is based in Charlotte, North Carolina. It has locations in Alabama, Florida, Georgia, Kentucky, Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and Washington, D.C., as well as Honduras.

I think Bojangles might be one of the better Food IPO's to come out recently. I'd like to do some comparative analysis of BOJA vs the rest of the industry but I didn't find any financial statements. I tried unsuccessfully on the SEC's site too. It's a good market for food companies lately and the Street has been eating them up. Bojangles looks like a good speculation as far as this industry goes as the stock printed a new high of 28.45 today.

April 14, 2015

Deep Value Stock Blonder Tongue BDR

You guys remember the value stock Blonder Tongue (BDR) ? It's usually been around net tangible asset value over the years. It will run up a bit one year then come back to around net tangibles. Well the stock has recently just crashed. It plummeted from over $2.00 a share to just $.77 a share. I went through the press releases on Yahoo! from the 30th and 31st on the day it crashed and couldn't find a good cause of the crash. They released quarterly results which were not to bad, not to good. I don't get it. There may be no good reason though of course and the stock is just crazy cheap for no reason. Here are the old posts on BDR. Looking back at all my notes on the stock $1.00 has been the floor for many years. At the last print it traded at $.90 Monday. This puts it at a market cap of roughly $5 million. Net current asset value is just above $5 million also. We are near net current asset value territory. I really like the stock here below $1 and might take a small position in it.

April 7, 2015

I'm Putting Trading Watchlists On The Other Blog

I have this other domain DynamiteStocks.com that I've held onto for awhile. Years back I used to put trading watchlists on it. I'm going to start doing that again. I just posted one up for trading day 4/7/2015. This blog will continue to be deep value focused and anything else I feel like talking about.
I've been very accurate lately with short set-ups and trading crude oil and natural gas ETF's. So I'll definitely post those if anything. Oil is to choppy for me here. To range bound. I've had success trading the breakouts and breakdowns. No doubt the energy and commodities sectors are moving off of the dollar here. It looks like the dollar is going to continue to breakdown. We will see.

March 19, 2015

Proof The Dollar is Still Correlated With Asset Prices

Pundits will continue to go on CNBC and business new channels talking about how oil and asset prices are a function of supply and demand and even politics. We can continue to laugh at them with confidence. If you've read my blog for awhile you might remember Quantitative Easing and the Stock Market. You might even remember Why U.S. Stocks Will Rise in 2011. Those old posts just show that the FED has controlled asset prices. To some people that's old news but to others I suppose they will never understand it. Probably the hardcore Keynesians.

Today was another FED meeting. I don't care as much about the language of the meeting as I do the market's reaction. Boy did the market react. During the meeting the dollar index practically crashed and oil rocketed up. You can see the price of oil skyrocket around 1pm below in the ETF USO. In the next chart below you will see the dollar fall dramatically at 1pm also.
Furthermore, precious metals like gold and silver spiked today as well. Here is a chart showing gold.














I believe that without the news today crude oil was on pace to continue crashing. It had already reached the lows of 2009 and the technicals were pointing toward a strong breakdown of the chart. Based on the reaction in the currency markets I see the dollar weakening for awhile now. This is a clear "spike top" chart signal on the dollar.

The charts above are from my favorite trading platform Medved Trader. Jerry Medved was the creator of Quote Tracker which is no longer being updated and was scraped by TD Ameritrade. Check out Medved which is in beta and is free for now.

March 14, 2015

US Dollar Update

I've been bullish on the US dollar for sometime now and have been holding the dollar ETF UUP. Fundamentally with the rest of the world debasing their currency and cutting rates its not surprising to see the tremendous run we have seen in USD. I don't know how much longer this will keep up though. How are we in the US going to raise rates when the rest of the globe is cutting? The other thing is the technical side. Looking at the dollar index it has skyrocketed and is going vertical now. This can't keep up forever. I'm happy to trim off 3/4's of my UUP position into this strength on Monday. Selling 3/4's of the position will lock in the bulk of the 10% gains it gave me. I'll have a stop loss on the remaining shares.
It's very interesting to see the continued pressure the dollar strength has put on commodities, especially oil. Oil looks poised to test the lows of the winter.

March 6, 2015

Healthcare, Dollar and More

The US dollar continues to rise as expected and biotech is still incredibly hot. No it is blazing hot. ZIOP from my biotech stocks list in late January is almost a double already. IBB just broke out again and it looks like more highs in a lot of these stocks is in store. I just added some to my trading watchlist for Friday the 6th. On another note my long-term positions haven't changed much. From top to bottom in percentage I'm long FSEAX Asian Emerging Markets Fund as my largest holding, second largest is PFN Pimco Income Strategy Bonds, third is UUP US Dollar Long ETF, Fourth is USL Oil ETF 12mo, fifth is PKD Parker Drilling, and last is KEG Key Energy Services. EDIT Also long LOJN LoJack and silver. Recently I added some more to the UUP long dollar position. I'm very underweight in the two oil stocks. I like all these holdings for the long-term. I may not hold them all for years though. I'm not totally happy. I really need some more diversified US exposure. I might go with a Nasdaq index ETF and Russell 2000 index ETF here soon.

The trading watchlist for Friday the 6th is LAS AXN CYTX ABTL TTI CYTK ATXH. The only short bias is ABTL. My favorite on this list is LAS. If it starts moving it very well could hit 1.50 in a couple weeks based on how it has moved in the past. With the size of the volume here on LAS I see it moving. Back in 2009 or 2010 I remember it had day after day runs of 10-30%. AXN is only good if it breaks over 1.14. If it doesn't it looks dead. All of these are speculative day trade watches.

March 1, 2015

Loss on EXEL Trade



















Friday I had EXEL along with a bunch of other stocks on my watchlist. EXEL was a bull flag continuation breakout setup. 2.99 was the high of the previous run day and was the resistance level I was looking for a break of to get long. It came and printed 3.00 on decent volume. So I got long and filled at 3.00. EXEL immediately failed to hold that 3.00 and fell off the highs and slowly declined. I'm thinking it is just consolidating and the uptrend over 3.00 will start any time soon. The market makers were pretty crafty on EXEL Friday and the 3.00 was the failed breakout. I finally realized I am probably wrong on the breakout today and cut my loss at 2.88. I actually put the order in trying to get 2.91 but with the market order I got a lesser fill. When a stock is moving fast I will always use a market order especially on the entry. I would rather catch a big run with a less than favorable fill than miss the whole damn thing with a limit order. It was not a superior setup to take from the beginning because based on its past runs 3.15 - 3.20 would be the most it would go anytime soon. The risk reward wasn't really there. I also waited a bit to long to cut the loss after the 3.00 didn't hold. I think based on the setups risk reward the position was a bit oversized for me. This one is looking like a good short candidate since the 3.00 breakout failed. I put up a new post on the 27th about the direction of the USD.



February 27, 2015

Direction of the Dollar

The US Dollar has been on a serious bull run lately. No doubt macro forces via the FED's guidance on rate raising are behind it. Since late January the USD has been consolidating. I've been waiting to see what becomes of it. Well folks it has formed a beautiful symmetrical triangle consolidation. A very clear one. I can't remember the last time I've seen such a clean symmetrical triangle on an index or commodity. Maybe gold in 2009. I mean it's that clean and pretty! Below is a chart of gold I drew up in 2009.







Image above from this old article on gold.
The USD has now spiked up off the tip. The chart says Bullish with a capital B. I expect a breakout over the highs and more gains. Here is the chart of the dollar. I've been long the dollar with the ETF UUP.

Crude Oil Trade

Crude oil has been forming a trading range lately with support being particularly defined. With a steady decline right onto support I saw an opportunity to get long. Getting long right on support gave me a clear area for a mental stop loss. Not only that but the upside potential conservatively was the top of the trading range at resistance. I drew up the trading range below.















The stock I used was UCO the double long crude oil ETF. The chart of USO and CL are very similar. I bought UCO at 8.07 on the 24th of February and tweeted it on Twitter. The doji candlestick it printed on the 23rd pretty much confirmed my area of support. It just hung out and declined a little around support after I bought it. I was fine with that as all that mattered was the action off support.

The next day oil ramped up big and UCO hit an intraday high of 8.57. Along the way I sold about 3/4ths of the position at $8.28 locking in the gain. Expecting more run days I held the rest overnight. I set a sell stop loss at 8.15 and the next day stopped out of the rest of the shares at $8.15 for a slight gain. Scaling out the way I did in tranches selling 3/4ths of the position with the gain really made this trade work for me. I missed the top but caught a good gain which I'm happy with. This especially since my thesis of a run to resistance is proving wrong so far.

We'll have to see what happens with oil over the next 24-48 hours to get an idea of direction. It very well may continue higher or we could crash below support. If there is a gap down below support oil will definitely be testing the lows of the winter.

February 18, 2015

CRIS Short Daytrade

I was following CRIS with a short bias for the past couple days. It went from $1.20 to $3.00 in about a month. It had about eight straight days of positive gains with no red days heading into today. Yesterday it looked like the buying volume had finally exhausted itself. Without any consolidation these runaway stocks like CRIS usually end up crashing pretty hard and fast.















The breakdown finally came this morning. I posted this trade on my Twitter. Looking at the intraday chart below you can see that $3.50 became resistance three times. Dollar marks and $.50 marks are often important technical levels on stocks under $10 a share. The $3.50 was tested and never broken this morning. As soon as I saw the stock go red on the day (negative) and the support of $3.30 from yesterday taken out I wanted to get short quick. The big sell volume was great too. Ideally I was looking for a pullback to the $3.40s to short. That was incase the trade went against me and the $3.50s were taken out. So I had a mental stop loss of $3.51. It actually came back up for a bit but I filled at $3.31 short.

I was confident and happy with this as more downside was evident from the stuff I just mentioned. CRIS continued to plunge as you see on the chart. I covered at $3.19 taking $.12 a share in gains. I took the quick gain because these biotech stocks can be quirky when it comes to holding losses. Just when you think the run is over and the stock is doomed they run again and again. It went on to a low around $3.00 and made a wild recovery into the close. I still say short bias on this one but like I was saying bio's are tricky sometimes. I won't be scalping this particular stock again soon.






February 11, 2015

How I Got Started In The Stock Market

How I Got Started and How I Evolved
The year was 1996 and my mother told me my grandfather was giving my sister and I each $500 as an investment. He had to open the account in his name as I was only 15 at the time. He took me on the appointment to set up this investment account. We drove downtown to meet his stock broker in one of the city's few skyscrapers. The office suite was like one of those scenes from Oliver Stone's 1987 Wallstreet. We went to the stock brokers lush corner office and he and my grandfather talk a little. My grandfather emphasized he wants this to be "for the long-term." They talked a bit more and we were jettisoned to another office where his secretary took our information. My first stock broker has just split my $500 between two mutual funds. The first fund is called The Alliance Bierstein Technology fund and the second is the MFS Emerging Growth fund. Remember this is the mid 90s and the historic stock market gains from internet technology has barely even started. This is not a bad fund to be in at this time. Infact it couldn't have been a better industry.

My grandfather explained to me how I need to keep track of the ups and downs of these funds and you can check it in the newspaper. I didn't realize it at that time but what he was doing was teaching my sister and I a valuable lesson. The lesson was to start nvesting at an early age. I had little interest in these investments at that time. I guess he knew that didn't matter because simply being exposed was all that mattered. My parents sure would never have thought to teach me about investing. It might have even missed me my whole adult life.

Time passed. I checked the statements from time to time and my $500 turns into roughly $1000 in the bubble in 99' and 00.' I had taken some of this money out before this and eventually after the stock market crash of 2000 there wasn't much in the account. The question I asked is how did this happen? How did my broker let my account crash? I didn't know much of anything about stocks and investing but this was obviously a bad thing. So, I took it upon myself to learn some basics about mutual funds. I end up learning that all the stock broker did was pick a mutual fund on a best guess. Whoops! They were load mutual funds with high expense ratios. At this point I figure I can be a better investor than my stock broker. I have access to the same information on the internet and can see the same mutual funds in the newspaper. Little did I know then that brokers are salesmen. There is a fiduciary responsibility they uphold but they and their firm have to make money. 

The stock market has crashed and I'm getting interested in stock picking from reading all about it on the internet and seeing the ebbs and flows of stock and mutual fund prices in the daily newspapers. I'm reading great free beginner articles on this cool site called the Motley Fool. I spent hours and hours a week learning the basics of stocks and investing in companies. I'm learning everything about fundamental analysis on the income statement, balance sheet and cash flow statement. Those Motley Fool articles and website taught me a lot. I started learning about these great stock pickers like Warren Buffett and Peter Lynch. I'm hooked. I buy my first investing book called Beating the Street by Peter Lynch.

In 2001 I bought my first individual stocks. My first stock investments are purely contrarian plays. I see Lucent Technologies and Kmart's stock prices hammered. I understood their businesses and figure these two companies are going to weather the storm and recover. Things got worse before they got better though. Both Lucent and Kmart enter into bankruptcy. My investments become virtually worthless. It turned out later my thesis was good because after Kmart came out of bankruptcy they listed their stock on a new exchange. Kmart's stock went on to be a huge success. Very huge. It was a multi-bagger. The stock went up over 100%. The only problem was I was still holding the worthless shares on the old exchange.

 I started reading books on Warren Buffett. I became a big student of his. I probably read five Buffett books. This led me to Ben Graham and Fisher. I never cared much for reading about Fisher. I definitely preferred Graham. I read Graham's Intelligent Investor a few times. In 2002 I read one of the investing newsletters my grandfather gave me from time to time when I would go over to his place. One of the authors liked this company called Fortune Brands. This powerhouse conglomerate sold alcohol, golf, home and office equipment. The big brands were Jim Beam, Masterlock, Titleist and Swingline staplers. The stock had a low PE and obvious stable growth prospects. I held onto Fortune Brands for over 4 years and the stock did well. The 2006 real estate collapse really hurt their home products. They would eventually spinoff the office products and the liquor business got bought recently. Some other companies I held for long periods of time were International Game Tech and Stryker.

 I called myself a value investor and solely used fundamentals. I figured that was the only way to go. I picked some bad stocks like Movie Gallery and a value trap financial. With Movie Gallery I had a gain at one point that turned into a loss. I guess after some of these bad choices I realized crunching the fundamentals of a company wasn't good enough. When do you sell for a profit? When do you cut a loser? Most value investors have no idea of risk management or managing a position. There can be a level of arrogance in simple value investing. The other question I asked myself is what is good investing? Peter Lynch called it an art and a science. Well if something is as much art as science I'm sorry that is pseudoscience and not predictable. Trading in stock markets has to be moderately formulaic and predictability is important. A lot of reasoning for stock investments is "a story." The story is they did this in the past and this is happening in the future. Basic contrarian investing is probably better than most peoples definition of value investing. I'm getting off on bit of a rant so I'll continue were I left off. It was 2007 and I had made what appeared to be great value investments in Movie Gallery and this deep asset value financial. Movie Galleries stock fell apart and the financial didn't move up or down for a year.

I kept scouring the internet looking for new information. In 2007 I came across this blog by Tim Sykes. Tim turned $12,000 into over $1 million by the time he was 21. He had run the top short-biased hedge fund in one of the years he ran the hedge fund. He had just started the blog before I found it and he was re-creating his success by trading a small account of less than $30,000 with the goal of turning it into $1 mil again. He was transparent and posting all of his winners and losers on his blog. He was mostly using technical analysis and was winning roughly 80-90% of his trades. That caught my attention. Before that I was sure technical analysis was worthless. All the mainstream media and investment industry chicanery pointed to investing as the best approach in stocks. Warren Buffett even wrote that paper The Superinvestors of Graham-and-Doddsville!! And Tweedy Browne's What Has Worked in Investing! Was I going insane?

Seeing technical analysis work before me quickly changed my mind. Through Syke's site I stumbled onto another traders site. This guy had a daytrading chatroom. His name was Muddy and his wife Laura traded with him everyday. Also in the chat were some other great traders like Greg Simmons. I started following the chatroom during market hours in the Spring of 2008 in college. They only traded volatile equities. I watched and these people were making money everyday. During the summer I started trading a very small account, got a data feed and decent enough software platform to daytrade. I was using a Tradeking and Zecco brokerage account and DTN IQ Feed run on Quote Tracker. 2008 was an incredible time to be a day trader. During the summer and fall the banks were collapsing along with the market and the VIX was sky high.

Muddy would scan every night for stocks with the highest day range. You type this into Stockfetcher.com "show stocks where the average day range(10) is above 7 percent and close price is between 1 and 10 and volume is above 300000." The top day rangers would be down 30% and up 20% everyday. Very high beta stuff. I would look at my watchlist of 30 stocks at the end of the day and literally all of them would be up or down atleast 10%.  A monkey could have traded those. I'll never forget those stocks like Newcastle NCT, Ambac Financial ABK, General Growth Properties GGP, GFI GFIG, Fortress Investment FIG. As soon as a dayranger went to a new low of the day or red on the day from the previous close it was easy to ride for a gain. The trick is waiting for the momentum. You simply buy when it is going green and short when red. Nine times out of ten if it went green on the day it would keep going green and red would continue red. Just this knowledge was enough for about anyone to trade successfully in late 2008.

Armed with the knowledge that technical analysis worked I read some books on it. I read Darvas' How I made $2,000,000 in the Stock Market and Schwager's Getting Started in Technical Analysis. I read some other basic technical analysis stuff on the internet. Learning from a 30 year veteran trader Muddy was the best thing that could have happened to me. He described his trading style as "like a caveman." I was now more of a trader than an investor. I started another blog on my domain DynamiteStocks.com where I just put up charts and watchlists. I kept StockPursuit.com going with the deep value theme and would find some pretty cool value stocks with good technicals. A lot of these reader reviews on my blog were from around that time. My main focus had shifted to trading but I never abandoned contrarian value investing. You can combine fundamentals and technicals but they are just different. Today I call myself a discretionary momentum trader who also does contrarian and value investing. With fundamental investing in stocks I always prefer small and micro-cap deep asset values.

After all that in 2012 I started a career in sales in financial services with a top 10 financial company. I had to shut down all of my blogs. I got my series 6, 63, life and health insurance licenses. I did that for just over a year. Before I had to shut this blog down I was averaging 50 unique page views a day and bringing in a part-time income from affiliate advertising. I was getting a lot of Google "juice" in the search engine results pages and using search engine optimization very effectively in the discount online brokers niche. My passion for trading and investing led me into a lot of other ventures like working at the financial company and online marketing. I've come a long way since the 1990s and am very excited about the future.
  


February 4, 2015

Small-Cap Value Oil and Energy Stocks









I like researching and writing these articles. I always try to post here atleast once a month. I could probably post almost every day because I love analyzing and blogging but I doubt my girlfriend would like that. She would probably punch me.

The drop in oil prices has brought a lot of energy companies share prices down significantly. Key Energy Services (KEG) is a $313 million dollar well servicing company out of Houston, Texas. This small-cap has $443.8 million in net tangible asset value(tangible assets - total liabilities). So with a market cap of $313 million and tangible assets of $443 million it is selling for less than all the working capital and equipment it owns. This is even with the stock price up a whopping 17% today. In 2013 it had $64 million in free cash flow. As a small company the stock presents the possibility of significant growth in stock price as it recovers. The downside is earnings haven't been consistent over the years.














Energy XXI (EXXI) owns oil and natural gas wells and has a cool $1.42 billion in net tangible assets and a market cap of just $336 million. This is 76% below net tangible assets and 82% below book value. The company was profitable since 2012 but earnings are trending down.
















The final oil stock is Parker Drilling (PKD) a $384 million dollar company with $492 million in net tangible assets. So we are still at a discount to net tangible assets. This one is not as cheap as the ones above, however, it boasts a lot more profitability. Earnings are more consistent. Infact it was profitable in the second and third quarter.
















If oil prices are actually bottoming here as they appear to be doing small companies will have some nice appreciation. They come with more long-term risks of course versus their large cap counterparts. The ones above are basically penny stocks which is fine with me as they are traded on good exchanges and present some value and technical opportunity. I hope you enjoyed these oil and energy ideas on this value investing small cap stocks blog.

January 27, 2015

Biotech Stocks List

A lot of markets are at crucial areas here. The US major indices are probably going to decide which direction longer term they want to go. They could continue range bound for awhile longer though unless the Patriots get a hold of the air in the futures markets. They are at the top of the trading range here. You can especially see this in the Nasdaq. I was going through some scans and medical stocks kept showing up in large numbers. Biotech is one of the hot industries right now. So, I am putting up some of the best biotech charts I found. If the Biotech ETF IBB is not good enough for you these are some potential trade ideas. These are all momentum stocks in bull flags or breakout plays. This is purely from a technical analysis standpoint. SCMP that I put up a couple days ago was pretty cool because it was nice technically and with fundamentals. It's breaking out again up 6% yesterday. I don't know what is up with the value stock JVA technically. It has some crazy prints the past couple days. It looks like it could be going a lot lower now. Well, good for us value investors. As I'm typing this it is very early Tuesday morning the 27th. Let's get to the list.

First we have Dicerna Pharmaceuticals (DRNA) which has formed a triangle consolidation on light sell volume. Well formed triangles are one of the most reliable patterns. If it breaks out there should be a lot more on the long side but also if it breaks down from the triangle there will likely be more downside. Long bias on this one though but we shall see.














Next we have Athersys (ATHX) This one just broke out off of trend support. It did a hammer first on trend support and is running again.
















We have ZIOPHARM Oncology, Inc. (ZIOP) next. This is a cool one because it gapped up, consolidated into a bull flag and is coming off the flag with a hammer.
















Last is (Agenus AGEN) which is very similar to ZIOP. We have a gap up on very strong volume, a flag on light volume and we are testing the gap now.

January 21, 2015

Bottom Up and Top Down Stocks

I went through some scans I typically go through and thought I'd post some that caught my eye. The first one bottom up is Sucampo Pharmaceuticals SCMP.  The chart was cool because it just broke out of consolidation on very strong volume. It's also at a 5 year high. I looked at it some more and this is just under a $700 million dollar company with a diverse portfolio of pharmaceuticals it sells. The good thing I see here is the earnings revisions. Next quarters earnings estimate is $.11 up from $.05 90 days ago. The current years estimate is $.47 a share up from $.22 ninety days ago. Next years EPS is currently $.60 up from $.40 ninety days ago. It's always great when earnings are revised up. With the stock at $15.66 this gives us a forward P/E multiple of 26. With earnings growing about the same rate the stock is conservatively fairly valued. However, the next 5 years are expected to grow more giving the stock a mere .35 PEG multiple(price to earnings growth). Lots of bullish stuff going on here.

SCMR New high on volume

 
 I found this coffee company called Coffee Holding Company ticker JVA. It is a small company with a mere $34 million dollar market cap. Coffee companies are usually good businesses especially if you are selling beans wholesale, which they are. They are profitable and I see no reason the stock should trade around net tangible asset value. Roughly $20 million is net tangible asset value and the market cap is just above it at $34. It's around technical support and just had a wide ranging day up 7%.
that is technical and fundamental support
















The top down one is oil. I think it is a good time to start scaling into crude oil long. Everybody knows the ETF USO. USO is a terrible way to invest in oil. It's because of the way it rolls the contracts. It has to turnover futures contracts thus resulting in a lot of decay. The futures themselves CL is ideally the best way to trade oil. There are better ETF's like 12 month Oil ETF USL . USL holds longer term contracts and thus more closely resembles the actual price of oil. I'm long some USL now. Full Disclosure: long USL