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.

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.

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.

Funny Market MEME's

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.

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.

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.

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.

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.

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.