Wandering in Deep Value Land

As many of you know Benjamin Graham had a famous style of investing that sought to purchase deep value stocks selling for large discounts to their net current asset value. It's also called the cigar butt approach. You find these cigar butts laying around and sometimes they are good for one last puff. There are different kinds of deep asset value stocks. There are the cheap for a good reason and then there are the cheap with good potential. The deep value companies in industries that typically turn into deep value traps are biotech and semi-conductors. So many of these have traded for huge discounts to net current assets and even had some profitability but the stocks never come around.
Some of the best net current asset stocks I've seen tend to be in businesses with simply better business fundamentals. A lot of these will even have a "brand moat" they can in-circle around their little castles while working to bring the company back from the gutter. An example of one of these former net current asset stocks that turned around was sports retailer Finish Line years back.
The first stock I am going to look at today is SkyPeople Fruit Juice (SPU). It is in China so I proceed with caution. SPU trades on the Nasdaq and has a market cap of $51 million. It is in net current asset deep value territory because the company has $66 million in net current asset value. I simply took the $200 million in current assets and subtracted the 36 million in total liabilities. So, we are at a discount to NCAV. I bring this one up because cash has been extremely stable.
The next one is Books a Million (BAMM). BAMM has a market cap of $36 million and net current asset value of $21 million. We are not in NCAV land yet but this is something to watch. The stock currently trades at $2.46 per share and NCAV is $1.4 a share. Net tangible asset value is $6.50 a share.
Disclosure: no position in SkyPeople Fruit Juice SPU or Books a Million BAMM at time of writing.

Thoughts on Markets During This Political Event

With all the talk of a possible currency semi-crisis from a default I really don't see any markets taking that threat seriously. The US dollar index is still pretty far from its two year lows. This even considering all the quantitative easing that has been going on since those lows. The news media of course blows any movement in the major indices like the Dow Jones out of proportion. It really hasn't been that volatile. 100 point swings! Ohh my! Today saw one of the bigger spikes in the VIX up about 16%.

There are still a lot of stocks in play out there hitting some highs. Something entertaining happened the first week of October. A lot of people thought Twitter's IPO ticker symbol was TWTRQ. TWTRQ in fact was a pink sheet company called Tweeter Home Entertainment. The stock ran up 1,000% on huge volume.

I've noticed a lot Chinese stocks are in play lately. This company called Vision China Media is up so much here. To much I think. It's going supernova now and I believe there is going to be a lot to short once it starts to break a previous days low of the day.

Disclosure: No position in VISN, long TVIX

Follow Up on the Baltic Dry Index and Shippers

I made a post on the Baltic dry Index early this year as it looked like it was possibly forming a bottom. Some people believe the index to be an economic leading indicator. I did some subsequent posts on some shipping stocks. Well, the bottom finally came on the Baltic Dry Index and it looks like a bullsih consolidation. It has just so slightly broken out of the trading range it has been in all year. I put up a chart that shows the breakout of the range and retest. We've just retested and it's still moving strong here. Shippers like ESEA, PRGN, DRYS have some very nice momentum charts. A lot of them are coming off high flags like GNK, BALT and SBLK. My favorites are Euroseas ESEA and Dryships DRYS.

VIX Setup and Market Direction

After one heck of a run in the major indices this year it's time for a pull-back. At the least a healthy consolidation. I drew up the charts for this post about a day ago and the VIX spiked 12% since then. Briefly, the VIX I believe should spike and the vehicle I like for it is ticker symbol (TVIX) Velocity Shares Daily 2 X long VIX. We are still around the bottom of the trading range for VIX as the chart below shows. Also, there is a lot of room for a pull-back in the S&P 500 as the trend line below shows. So, a correction should ensue. Another major turn of events that very well could and should prompt a pull-back is the FED decreasing its bond buying which they have hinted at lately.

Solar and Alternative Energy Stocks

The alternative energy sector is continuing to perform well. I found a couple small companies with good charts that I like. Primarily I like the charts. Jinko Solar (JKS) is one of the solars I posted on Twitter awhile back and it ran 17% today on good volume.

The first new one is Ballard Power Systems (BLDP) with a market cap of around 200 million. BLDP sells fuel cells which is a very promising alternative energy. The stock price just broke out of a triangle consolidation.

The second one I like is Suntech Power (STP). STP is a 250 million dollar company that also just broke out of a long triangle. Both of these stocks look ready to keep running.

MEET Flag Setup

I've had MeetMe Inc. ticker MEET on my watchlist since it made that big run about a week ago. It's started a flag on Fridays run with light sell volume on the flag and looks poised to continue to run again. I am going to put a buy stop order in at 1.87 a share. I also added LEE XXII JKS to the watchlist.

Trading Range Breakout For Crude Oil

This is a followup to the post I did on crude oil in June. The triangular consolidation on crude had been forming for a long time. Crude finally broke out of the ascending triangle. This is a very bullish chart still and I wouldn't be surprised to see a 110 retest. Triangles are very powerful chart signals. I drew up a new chart and I posted it below. The trend line breakdown I circled was very telling of what direction it was heading. That was definitely a failed signal.

I sold my KWT solar etf position for a slight loss at $46. I didn't get an ideal entry and didn't like the price action so a stop loss is a stop loss. I'm thinking of uploading some video posts in the near future here. I'm looking for a good desktop video software so I can show what I'm talking about simultaneously.

Net Net SORL

I recently looked through a lot of NCAV net-net's. These are stocks with market caps below net current assets. The most compelling recent net-net I noticed is a company called SORL Auto Parts.

SORL Auto Parts (SORL) is a Chinese company that develops, manufactures and distributes automotive brake systems and other key safety related auto parts to automotive original equipment manufacturers, and the related aftermarket both in China and aboard. The Company’s products are used in different types of commercial vehicles, such as trucks and buses. SORL is trading below net current asset value and is profitable. It even has earnings growth.

Crunching numbers straight from their annual 10-K filing the market cap is $51 million and net current assets are 124 million. At the current stock price of 2.65 it is trading 41% below net current asset value. Cash has also been stable over the past couple years which is good. Moving from the balance sheet to the income statement we find earnings and a current PE ratio of 4. The PEG ratio (price to estimated earnings growth) is incredibly nice at .89 over the next 5 years. In 2012 the company had free cash flow of around 29 million for the year.

The stock had a big run from 1.80 a share in Sept of last year all the way to 4.00 in February of this year.

Crude Oil Chart and Position Update

I'm long KWT the solar ETF from a $49 entry. I have a mental stop loss of $46 a share. Around $38 a share is more of an ideal stop area because it is below the old resistance from Fall of 2012. I run a lot of Stockfetcher scans throughout the week and there are a lot of long setups that keep popping up as the market is still in bull mode. I only scan for stocks priced from pennies to $10 a share. This pull-back in the major indices looks like just a consolidation right now after that huge run-up.

I try and follow crude oil regularly. I've posted up a chart that shows the resistance level that crude has failed to break through over the past 12 months. Along the way from where the price is from the summer of 2012 there has been some triangular consolidation that you can see in the chart.

The short-term chart technicals clearly say to get short right here. If I actively traded CL futures the stance here is definitely short biased. We will have to see what becomes of the triangular consolidation over the coming weeks. It may be very telling.

Solar Stocks Play

Solar stocks are continuing to deliver big returns lately. One way to invest in the solar sector is Market Vectors Solar Energy ETF (KWT) or the Guggenheim ETF (TAN). The Guggenheim TAN is more overweight First Solar FSLR and it's price fluctuates more in lockstep with the stock. I like KWT more because it's not so heavily invested in FSLR. I wouldn't be surprised to see more double digit returns from solar as a sector this year. Technically, the charts on solar as a sector look very bullish here. See the picture below. I see a lot more upside. Of course, with big run-ups in all solar stocks across the board some stocks not so worthy of such high multiples will eventually fade out. I remember the big run in solar around 2007 and 2008 and the ridiculous multiples pegged on even the best companies. Some of the PE ratios were totally insane like Nasdaq bubble of the year 2000 insane and of course they eventually came down to reality. I'll be looking for some good shorts eventually after the momentum continues. The momentum is going to continue for awhile though.

Deep Value Stock PRLS

I find Peerless Systems (PRLS) to be one the more compelling net current asset stocks I currently know of. The company has a market cap of $10.1 million. There is $4.58 per share in net current asset value and $1.77 in net cash per share. The stock last traded at $3.35 per share. They've repurchased a lot stock over the past couple years. The company has bought in aggregate 482,111 shares of stock or $1.8 million in fiscal 2013. Additionally, from February 1st of this year to April 23, 2013 they repurchased $230,652 of stock.

Caribou Coffee Bought By Private Equity For $340 Mil

I recently read that Caribou Coffee was purchased by a private equity company for $340 million. This is surprising yet at the same time not all that surprising to see the second biggest coffee chain next to Starbucks get bought out. People have been speculating on a buyout for years. I've been writing about Caribou Coffee (former ticker symbol CBOU) since 2009 here on the blog. I remember back in either 2009 or 2010 Caribou was actually trading for not that much over its net tangible equity value. The recent purchase price was for over 30 times earnings.

YOU On Demand Holdings (YOD) Trade Setup

YOU On Demand (YOD) has had a big sell-off and is down to $1.57 here. I like this stock a lot technically here. This is a very clean and tight symmetrical triangle bull flag. Looking at some fundamentals the market cap is $18 million. There is nothing stellar in the financial statements that I saw. Revenue growth is flat. No net income. I like the balance sheet however. I looked at quarter end Sept 2012 and the past couple years. The balance sheet is healthy. There is about $10 million in tangible assets, $22 million in total assets and total liabilities of just $13 million with just 17K in long term debt. I like what I read on the founding partners bio. This is more of a technical play and I am going to put a buy stop order in for 1.71 a share. If it breaks out above the flag I want to be long. I'm watching the consolidation on BLDP to. Something worthwhile technically may develop or it may not. That's how it goes. I'm also watching PRLS as a pure fundamentals play which has net cash per share of $2.62.

Apple AAPL Short Setup

Major indices are holding up very strong around their highs. Although, Apple (AAPL) saw a drop today of 2%. Looking at the long-term chart here one can see how AAPL likes to congest right around resistance and then breakout as it did twice in the chart below. I drew in the red lines where the consolidation occurred.

So, onto the chart now and the short setup. I see this as a particularly attractive short trade because of the failed signal. When the recent gap down got filled it was a bullish move, however, that gap fill failed because we are now back into a breakdown. Rather, the massive fade is just continuing. There is a bunch of support coming up at around 400 so we will see what happens there.

If you are like most novice investors long AAPL then this post may come as incomprehensible to expect Apple stock to drop. I would ask you one question as this applies to anyone who ventures into capital markets. Do you want to be right? Or do you want to make money?

Supernova on GNIN

I posted up GNIN last weekend as a short trade watch for Monday or Tuesday. The crash finally came on Tuesday after the stock went supernova all the way over $3.00 a share. GNIN actually printed $.42 a share today! This is a classic pump and dump chart. The volume came in out of nowhere in January and it saw a steady climb that ended in this massive fade. Incredible drop in 3 days.

Looking at Net-Net BAMM and Short Watch GNIN

Net-Net BAMM I am currently looking for some net-net's and deep asset value worth writing about. After spending some time going through a stock screen I found Books a Million (BAMM) to be one of the most compelling net current asset stocks I saw for the time being. In looking in the stock market sewers for deep value stocks one can often find somewhat of a diamond like Silver Leaf Resorts SLVF or Adams Golf ADGF were. I'm not sure if BAMM is a diamond but it is something to look at if the stock price gets a lot cheaper. So I think it is something to just watch as the price here at $2.40 is just below net current asset value.

Short Watch Green Innovations (GNIN) Green Innovations (GNIN) traded over $7 million shares Friday and is currently going full zombie. It's up from $1.00 to $2.75 just this month. It's been running everyday and buying volume is eventually going to get exhausted. It's been volatile on the way up so it will be volatile on the way down. To short a momo stock like this it's a bad idea to short when it is green (positive) on the day. It needs to crack the previous days close before it is a short setup. The setup is going to be here very soon. Could even be Monday or Tuesday.

Dry Bulk Shipping Stock SHIP

Hello folks. I put this shipper Seanergy Maritime Holdings Corp. (SHIP) up on Twitter about a week ago after the dry bulk shipper post. SHIP is a low floater. It has a small float and it only has a market cap of $26 million. It has run especially well along with all the other shippers. It's a really good one to trade because of how volatile it is. Very high day range. It had a huge run in January from $1.20 to $2.70 a share. It just printed a hammer off this new flag. Right now it definitely looks like another flag because of the decreasing sell volume I drew the red lines over.

Old Net-Net Blonder Tongue BDR On The Move

Former net-net Blonder Tongue Labs (BDR) has 5.5 mil in net current asset value and a market cap of 9.6 million. It has always been one of those perennial net-nets. Always below and around net current asset value. Unfortunately I wasn't watching it lately. It has bottomed out as this chart shows. I circled the failed breakdown. The stock then was in breakdown mode until the lower low turned into a spike bottom. Confirmation of the failed breakdown is where I drew the arrow. Failed signals can be very powerful. The second chart is the beautiful flag it printed. The chart is real bullish here still even though I missed the perfect setups and price. I'm long biased on BDR.

Follow Up On Shippers

DRYS made the push I was looking for in the last post. That was the move. FREE still has light sell volume on this consolidation so the set-up is still there on a strong intra-day move on volume. It needs to run to atleast .26 tomorrow before it is a good set-up. It needs to atleast break above the prior days high.

Watch The Baltic Dry Index and Shippers

The Baltic Dry Index has formed a little base recently. It is far from a confirmed bottom but it has held this area very well. Very big blocks of shares have come into the shippers that haven't been seen in awhile. I really like NEWL FREE and DRYS with a long bias here. Watch FREE, DRYS and NEWL this week.

Gold Technical Analysis January 2013

Gold is still in a secular uptrend. The yearly charts are a lot more choppy. There was a spike bottom in the chart below that is getting retested. I don't see any good signals here because of how choppy the long-term chart is. Crude oil is equally range-bound and in an uptrend the past couple weeks.

Some Cool Economic and Market Videos

Economic discussion on currency and gold from the most unique economics blog on the internet. Below is a short talk about market cycles, bubble jumping and the challenges of pure investing. The video quality is bad so just listen to it. Part 1 Part 2 Part 3

Quantitative Easing and The Stock Market

As you may know it is widely hypothesized that quantitative easing has contributed to the rise in asset prices the past couple years. Here is that in pictures.

click to enlarge

I think in the near-term any QE3 would probably more than likely continue to lift assets. I find now that getting a grasp on major economic trends locally and globally can make industry and equity selection much easier as well. As any QE continues stocks and commodities will rise especially metals like gold and silver. Same dance, only a new song.

A Contrarian Setup With Penson PNSN

Last week Penson Worldwide (PNSN) a major international clearing firm and the second largest clearing firm in the U.S. came out about $42 million that might bring a write-down. A board member who had a relationship to the $42 million resigned. Immediately following this news the stock crashed from $5.00 to $2.73 a share in two days.

Although the $42 million seems significant it is only a measly 0.49 percent of their $8.7 billion in average daily customer balances. Penson also has more than $5.8 billion in cash and equivalents. They even had a pretty good recent quarter. In their last quarter revenue was up. I don't see this development seriously damaging their long-term business. In-fact with a market cap now of around $100 million I see this as an attractive valuation.

Although this is an opportunity there are things to keep in mind. Over recent years their revenue growth has declined slightly and they aren't consistently profitable. Overall, I think this is a more speculative play but I think there is a good setup for a small position here off what appears to be some capitulation and technical strength.

The price action looks like the beginning of a bullish engulf. Buy volume needs to stay steady for this to continue. I like an entry point on price strength above Fridays close. If the stock doesn't follow through here, however, I only want to watch and see how the technicals develop.


full disclosure: no position currently

Macroeconomic Stock Plays

I have been writing a lot about macro trends from monetary metals like gold and silver, oil to rare earth element stocks. Outside of the precious metals I haven't included that many individual stock picks. So, today I'm going to look at a couple of stocks.

Rare Element Resources (REE) mines for rare earth elements and gold. REE has a market cap of only $568 million at yesterdays close of $13.17 a share. Their Bear Lodge property looks to have a substantial amount of rare earths. I think this major is a good addition or alternative to other majors like Molycorp (MCP).

If you are interested in rare earths here is some information from the US Government Accountability Office on rare earths in the defense supply chain. One interesting tidbit from the report is that once a company gets the capital to begin a mine it can take from 7 to 15 years to get a property fully online due to regulatory procedures.

This next stock is currently my favorite setup at the moment. It is a natural gas company called Union Drilling (UDRL). While there is roughly $200 million in net tangible asset value and only a $237 million market cap I'm more interested in the chart play. The $10.40-$10.50 area has become a resistance level and as it stands today it is still consolidating around these levels. This is bullish consolidation currently and I see UDRL heading higher if it can print $10.61.

I expect a significant move higher either today or the next couple trading days.

A Final Thought
I believe that a top down approach continues to be one of the best strategies in this current environment. I want to continue to look at the oil and gas drillers, commodities and the precious metal miners. The writing has and should continue to be on the wall in regard to these areas outperforming.

There's Still Time To Buy Commodities

I want to talk a little about the macro situation in this article. More importantly I want to share my thoughts on crude oil at the moment. I also have a silver stock that looks interesting.

I won't go deep into the thesis behind the bullish case for commodities because I talked about that before. I still think it is important to be allocated in hard and soft commodities at this time. There is going to continue to be "dollar" inflation and this should allow certain assets like stocks and especially commodities to continue higher. It's essentially a Cantillion Effect. The rise in prices we have seen across the board really can't be totally explained otherwise.

Commodities Gains

Crude Oil At The Moment
Oil looks particularly bullish fundamentally and technically still. In the big scheme of things it won't be good at all if oil takes off like it did in the 70s or 2008. Some of you probably know the story from the late 70s but if you don't there was a severe oil crisis. There was also very significant inflation that was only struck down by Paul Volcker getting interest rates up to a whopping 19%. This saved the dollar but it also brought a recession.

Oil has gotten particularly volatile lately. Part of this is uncertainty about supply following the revolutions. There was a news story about what might happen if Libya and Algeria shut down supply.

Technically, there has been some congestion following the big spike day. It looks like bullish consolidation. It's starting to be confirmed as there was just a pop out of it. If we continue hitting new highs I think there may be some more explosive momentum. There definitely is more upside.

3 month chart of crude oil

As far as holding oil for any time period the best instrument is the futures themselves (CL). The US Oil Fund ETF ticker (USO) is a terrible way to play oil. It's because of the way the contracts roll. The ETF must buy oil futures contracts and sell them before expiry. As a result there is decay in the ETF. The natural gas ETF (UNG) is a good example of the dynamics of these ETFs. Natural gas has been pretty flat but the ETF has performed even worse because it bought the expensive monthly contracts and had to sell them cheaper right before expiration.

I think United States 12 Month Oil (USL) holds longer contracts than USO. USL has outperformed USO over long time frames.

Teucrium WTI Crude Oil Fund (CRUD) is also another alternative as it tries to buy contracts on three different maturities to offset decay.

Silver Mining Stocks
Here are some ideas in the mining sector. As silver continues hitting new highs I like this Canadian junior miner Aurcana Corporation (AUNFF) here. It's a smaller company and in the penny stock range. Some other larger market cap names that are worth a look include Hecla Mining (HL), Silver Standard Resources (SSRI) and Pan American Silver (PAAS).

Why U.S. Stocks Will Rise in 2011

I think it is highly likely that the U.S. stock market will continue to put up significant gains in 2011. The reason is nothing complex. In-fact, it is just a simple phenomenon that has been going on since the 2009 lows in equities and continues to lift asset prices at this moment. It is quantitative easing and the Federal Reserves commitment to attain significant dollar inflation. Anything else one hears to the contrary is just chicanery.

But before we delve into this and the future let us look at a similar economic situation and how stocks performed in those years. In the depression immediately following the crash in 1929 banks were failing, assets were deflating and commercial credit was collapsing.

But what happened to stocks all through the 1930s despite high double digit unemployment? Stocks went up!

The big catalyst that allowed for the rise in stocks was that we went off the gold standard in 1933. This depreciated the dollar significantly and you can even see it in the CPI below.

click to enlarge

The same thing is going on now with the dollar and equities as it did in the 1930s. Bernanke has even admitted publicly that the goal of QE is to raise stock prices.



Final Thoughts
The macro picture hasn't changed much this past year and likely won't for some time. The FED will continue to try and prop up the debt bubble by rolling cheap money. Stagflation remains one of the best case scenarios. Money will run to the best assets while the bad assets continue to deflate. So, I see major commodities like oil and agriculture continuing to do well while real-estate remains flat. And of course metals like gold and silver will do well. This is all nothing new of course but I think it is going to be the status quo for many, many months to come.

Silver Analysis

Even after this run-up I see some very bullish signals setting up in the price action recently.

Fundamentally, the bullish case also remains as Ben Bernanke and the FED has pledged to keep rates low for some time and also because they have embarked on QE 2. I think it is very likely we will see QE 3,4,5 etc. eventually. Especially considering Japan is still back at a zero interest rate policy and doing even more QE here now 20 years later. There's also a lot of stories going around on JP Morgan's possible short covering going on and just how big some of these traders positions are. Whether or not there is a massive short squeeze taking place or about to take place I'm not sure but it certainly would just add to the bullish case.

Silver Chart Analysis

There was a much larger consolidation from May through August that came before the big run we've experienced recently. This recent one is a lot smaller and tighter. Old resistance has been retested successfully where the arrow points. There was major resistance at those levels. Another bullish thing is there has been a flurry of hammer and small doji candles here around trend support. In the past months there would be hammers off trend support right before big runs.

Some potentially bearish technical things about the chart are that trend support was broken. Silver was trending very well for months but that cracked. After such a run though trend support widens so this isn't a hugely bearish signal. It is more of a neutral one at this point.

In final, if silver can push up a bit from here and hit 29.57 I see significant upside. If it fails to follow through I'll switch and be short biased.

Stock Below NCAV

Thomas Group (TGIS) has a market cap of $4.14 million and from the November 12th quarterly report there is $4.18 million in net current asset value. The stock had an unusual volume spike on 12-01 and printed $2.99. The price is currently at $1.90. It is pretty speculative to me as a long term hold but I think it is worth looking at over the next couple days for a trade.


full disclosure: no position

Quantitative Easing 2 Explained Video

This funny Xtranormal cartoon has been making its way around the internet.

Gold Technical Analysis

Gold is pushing up around resistance in the 1,000's. This area it is approaching has been rock solid resistance as you can see from the first chart. A technician that uses normal trend lines and not an internal trend line will fail to read this market correctly in my opinion. That first line is way to high and was a result of momentum and emotions in the market. The arrows show a range that it tends to trade in. A resistance level it finds easier is in the second chart with the top resistance line.

Of course to clear all this resistance though it is going to have to take out all these spike tops. The grand daddy chart is last. You don't want to miss this.

This chart below is the chart to be looking at on gold.

This chart sends a powerful signal. It is saying that it is more than likely that gold the commodity will continue higher. Let me rephrase that. Very likely. Let me explain what I see.

The bottom red line is golds support trend line. In lamens terms the price keeps bouncing off of it and it goes higher. This is bullish and good for buyers. Price was consolidating off that trend line. The interesting and important thing here is the triangular consolidation that has taken place.

I want to wait a week or two to see what happens as gold tests its former highs. Any congestion would be bullish. If it breaks out I think it still would be a good idea to put on a position or with stocks or ETF's. There is a possibility that this could be a failed signal. In that case it would be a good short on a move to the low 900's. But the technical picture right now is buy, especially on a new high in the low 1,000 area. I'm not sure how the fundamentals support a major run. I feel like the best time to play it is if we see hyper-inflation. I can't ignore market forces though with the technical analysis. China and other foreign countries who hold US debt could up to something?



full disclosure:no positions in gold commodities or stocks at time of writing

China Rare Earth Metals Mining Stocks

The past week or so there has been a macro play on China tightening supply of rare elements. The mining sector in general has been extremely hot this year of course off the back of metals like silver and gold rising. This latest news which I imagine is further driving speculation of supply issues has boosted the share prices of a lot of mining stocks.

Rare earth minerals have a plethora of uses from fuel, to computers, and even lasers. This company called China Direct Industries CDII does magnesium mining and has rights on zinc mines. The balance sheet has $49 million in net tangible asset value against a current market cap of just $50 million.

full disclosure: no position in CDII

Cheap Stock Parlux Fragrances (PARL)

PARL has net current asset value of around $89 million and a market cap right now with the stock at $2.47 of about $50 million. A big bulk of NCAV is in inventory.

There was some significant volume in the stock on Friday and it is testing up against this long standing range it has been in since last year. The stock has been stuck between about $1.50 and $2.40s a share. Price action wise I think it is more likely to pull back the next couple days than start running higher. I may buy it a lower price. We'll see. I've just got it on a watchlist now.

full disclosure: no position

Silver Leaf Resorts Looks Cheap Again

Silverleaf Resorts (SVLF) has gone back down below net current asset value. It's brother in the industry Bluegreen (BXG) is down a lot too and below NCAV but I didn't like BXG's last quarterly.

SVLF has $127.8 million in net current asset value and is trading at a market cap of only $39.4 million at the moment with the stock at $1.04.

full disclosure: long SVLF @ 1.04

Health Care Bill Stocks Breakout Play

Near Net Current Asset Stock & health care stock Forward Industries FORD products include soft-sided carrying cases, bags, clips, hand straps, protective face plates, and other accessories for medical monitoring and diagnostic kits, cellular telephones, and bar code scanners. I read in the annual report that diabetic products were 75% of sales in 2009. With more people now being covered by the government all these people who are or are about to get type II diabetes should add to that segment.

I believe the market cap was just over NCAV. Net current asset value is $22.2 million and current market cap is around $22.5 million. The stock is volatile though and was up 19% Friday so it could actually dip below. They have a great balance sheet. The bulk of quick assets are in cash. I am sure there are a lot of other health care reform stocks out there as well that will benefit from the government subsidies if you will. This is just one that caught my eye because of the huge volume last week. MDF is an interesting chart too.




The stock is in a clear uptrend and seems to be possibly a failed double top on this wide ranging day spike. The only concerning thing is how much of an appetite is left after this run but being around NCAV seems positive in this regard. Hard for me to pick a spot technically to enter because the stocks momentum looks strong here. I might play it of continuation or a pull-back to new support at around 2.60. It's actually a better investment and hold type of play probably on health-care. Luckily one of the few long-term investments I still have is a healthcare mutual fund that I've held for some years. I sold my Stryker SYK about a couple years ago.

full disclosure: no position at time of writing

Healthcare Stock Vision Sciences VSCI

VSCI is a healthcare company that makes endoscopes for medical and industrial uses. VSCI has a market cap right now of $48 million. The balance sheet isn't as deep value as I usually look at but it is good.

Balance Sheet
Looking at the balance sheet we have current assets of 8,806 - inventory of 3,915 = $4.89 million.

$4.891 mil / $2.720 million in current liabilities = healthy quick ratio of 1.79

Also, there is $3.5 million in net tangible assets. The balance sheet looked good enough to me.

Income Statement
They had good sales growth year over year in 2009. Fiscal 2010 looks like negative sales growth. This first quarter of their fiscal 2011 revenue was down 21%. Urology and bronchoscopy sales were both up and ear nose and throat sales and repairs etc. (guessing that is industrial segment) were down.

More from the first quarter they just reported

• ENT and TNE sales decreased 63% to $0.4 million from $1.2 million
• Urology sales increased 28% to $0.9 million from $0.7 million
• Bronchoscopy sales increased 113% to $0.4 million from $0.2 million and
• Repairs, peripherals, and accessories sales decreased 33% to $0.3 million from $0.5 million,

It looks like they haven't been profitable on the bottom line annually for atleast a couple years. Looks like there was positive EPS of $.57 in 2007 annually(2008 fiscal?).

Some Thoughts
It looks like this healthcare companies biggest problems have been gross margins. Morningstar shows a 37% gross profit margin in 2004 and it's just been slowly declining since.

The old CEO resigned in November of 2009 and was replaced with an interim CEO who was on the board since 2005. I'm not sure if this has changed as of late right now though.

Ownership
The interim CEO Warren Bielke has bought 300,000 shares of stock just this year. Some $320,000 worth.

Morningstar says American Funds Smallcap World 529A has a 3.3% stake.

More Observations
The stock price went from $1.50 in late '07 to $6 in early '08.

The conference call for Q1 2011 was on August 12th. Interestingly the stock ran 28% after the conference call on the 12th through late August. I haven't read the transcript of that call yet. I didn't see it on Seeking Alpha. The audio looks to be here. The thing is though the call may not have actually been significant as far as the way the stock traded. It might just be correlation without causation. I would like to know if they have any guidance on revenue or earnings though.

One thing that stands out is the stock traded 590,000 shares on July 23rd and a whopping 1,109,200 shares July 26th! The stock has three month average trading volume of only 68,000. That was some unusually heavy volume. I believe that the last time the stock traded over 1 million shares intraday was in September of 2007.

full disclosure: no position but I have it on my watchlist

Penny Stock CIT Triangle Trade

CIT which is now a penny stock got some news on Friday and subsequently the stock took off. CIT broke out of the days trading range and hit $.93 before people started taking profits which jolted the stock quickly down to the $.70s. CIT began to consolidate.

Here are some other triangles.

This is an ascending triangle.

A longer time frame triangle .

And another intraday trade triangles.




full disclosure: no position

How To Trade Triangles

There have been a lot of bio-tech and pharmaceutical stocks in play lately. It is time consuming and very hard to make a good long-term trade in these companies. Luckily, if you can just recognize chart patterns and use basic technical analysis it can take just a couple of minutes or even seconds to get a read on the next direction for the stock.

There's the triangle and key resistance levels. Three times the stock couldn't budge above 5.00. One time the resistance was even 4.99.


full disclosure:no positions

Former NCAV Stock Blonder Tongue

This former NCAV cheap stock Blonder Tongue Laboratories BDR popped 70% today off of earnings.

Operating EPS was positive vs a loss prior. Sales were up driven by digital video encoders. It looks like there is about 14.7 million in current assets and about 7 million in debt. So, this big pop pushed it over NCAV. But it still might be in play. I guess we will see.

disclosure: no position

My Movie On The Stock Market

This site xtranormal.com is pretty neat. It only took me about 15 minutes or so to make this conversation on the stock market movie.

Deep Value Golf Stock

Adams Golf ADGF this little golf club manufacturer that I've talked about a lot in the past has been bottoming out over the past several months and just recently reported their quarter. Revenue was slightly down but EPS was up huge from $.05 to $.21 year over year. They gained some market share in the US.

Net current asset value is $29 million. The market cap is currently right below at the moment at $27 million. So it is in net current asset value territory still at the moment. I bought some the other day at $4.15.
















Just recently broke out of a long trading range and had strong unusual volume.


full disclosure:long ADGF

Who's Been Buying This Runaway Stock Market?

The stock market keeps rallying but who is buying? Charles Biderman says the pension funds and flows into mutual funds aren't responsible. He says the amount of capital that could drive this type of rally seems to be coming from somewhere else and a lot of it is after market hours in the futures markets. I have no idea if his numbers are even accurate but I found this interview on Bloomberg he did a couple months back interesting.

Click here for Video

Baby Boomer Resort Stock

Silver Leaf Resorts is in the business of getaway and destination timeshare resorts in the United States. They cater to short vacations and tourists. This is one of those stocks that bottomed in December 2009 and not in March 2010. I really wish I had payed it more attention early this year. It's one of those deep value land plays.

Asset Valuation
I was fairly surprised at how cheap it appears on an asset level. There is $176.319 million in net tangible assets and as of March 8, 2010 38,140,043 shares outstanding. This gives us a $51.87 million market cap against that $176.31 million in net tangible assets or a 29% discount to NTAV.

I crunched net tangible asset value per share at $4.62 per share and the stock is only at $1.36 as of the close today.




It has technically just broken out of a trading range but has a lot of resistance around the 1.50 area. I think this cheap stock goes higher over the next few days and tests that 1.50 at the least and probably will continue higher from there.


full disclosure:no position at time of writing however I may go long (buy) the stock this week.

Silver Mining Penny Stocks List

Silver Stocks list

Timberline Resources (TLR) is into mining for gold, silver, zinc, and copper deposits. They've had some impressive revenue growth over the past 3 years. However no net income yet annually. Last quarter was net income positive though year over year with a profit of $241,061. Technically, right now it is still along the trend line and at the end of a triangle consolidation.

Kimber Resources (KBX) announced a new mineral resource estimate that has significant tonnage of high grade gold-silver mineral resources with excellent metallurgical recoveries. This stock ran from .60s to 1.31 currently and still might have some momentum. It has resistance however that must be dealt with in the 1.50 area.

Mines Management Inc. (MGN) is primarily a silver mining company. The technicals look a little better now that it is trying to break out of this trading range.

Endeavour Silver (EXK) so far has seen its stock price pretty correlated to the price of silver. Out of all the silver mining penny stocks it appears pretty correlated here.

Silver Stocks to Watch
The iShares Silver Trust (SLV) is a very liquid vehicle and a conservative way for making an investment in silver online in the stock market.



The silver vs gold chart shows that gold is up just over 30% this year but silver is up over 60%. Gold has gone practically parabolic currently. Is silver overbought currently? Tough to say but technically it doesn't appear so. I think these are some silver penny stocks to watch for potential upside. In the event of a hypothetical crisis I believe silver historically has outperformed gold by a wide margin.


full disclosure:no positions

Deep Value NCAV Penny Stocks

I found a few interesting stocks below net current asset value the other day. A couple of these I know from the past as being volatile. In other words they just didn't trade super thin for months and years, rather, they have been scooped up by institutions before.

Qiao Xing Mobile Communication Co.(QXM) does handsets in China and is really beaten down here. I found it off a screen and when trying to double check to make sure it is sub NCAV if that's a major criteria for you. I didn't see a recent filing on the SEC website and don't want to put a whole lot of time into DD so do your own DD in this regard.




Infosonics Corp. is an old favorite because I made 20% on it last year over a few days and got out near the top. They distribute wireless handsets in Central and South America and distributes high-end products under the Verykool brand name. Off the balance sheet there is $25 mil in NCAV and a $16 mil market cap.

I just got filled finally today on this one at $1.13 and am long.




Seanergy Maritime Holdings SHIP

This is a dry bulk shipper and is beaten down but the technicals indicate it might be bottoming short term.

EF Johnson Technologies EFJI

I really nailed this one awhile back and called the top later on it too.

Unfortunately I don't think I bought it. But, anyway it is back below NCAV of $38 million. It might be bottoming out here. If I play it I might pick it up at mid $.90s so I have a clear stop loss on the breakdown signal.



clean technical bottom so far



full disclosure: long IFON for a trade

What Can't Be Hidden

A Seriously Struggling & Flawed U.S. Economic Model
There are a lot of negative things going on economically in the U.S. One of them being the fact that one in four homeowners are underwater and home values and retirement account values are two of the most important determining factors of consumers purchasing behavior. We are in an economy where over 70% of GDP is consumer spending. The retirement accounts are up for now but valuations are about fairly priced at best on US stocks because right now they are discounting an economic recover probably more along the lines of 2001 than 1931 after our Great Depression or 1990s Japan. These people think the 2000s weren't a continuation of the bubble!!? Hello! Greenspan and the housing bubble. The 1990s and 2000s can be corrected by a 2 year recession we have just had?!! I might even argue that the bubble actually started in the 1980s and even earlier with the consumer leveraging up on credit cards and a long standing government induced housing price bubble. The housing based economy is set up on a phony premise of everlasting cheap gasoline and fuel prices, endless supply of credit and perpetually rising home prices.

International Turmoil
There is a real threat of sovereign debt defaults like what we saw with Iceland just recently. Greece, Spain, Dubai and Japan are at risk of default and possibly eventually other major countries. The stock market hasn't realized or priced in additional defaults. That could start a domino effect. I was reading about the Asian currency crisis in the late 1990s. It all began in the small country of Thailand (then seemingly insignificant) and spread to South Korea, Japan, Brazil and Russia. Are Iceland and Dubai like a Thailand was then?

The strange thing so far I'm reading is there was lack of banking supervision prior because they were actually exploited by government giving public loans disguised as private and major asset bubbles were busting around this same time as well. A lot of these Asian countries had less than 30% of GDP comprised of exports which in my view gives some clout to the Austrian economists on what is possible in none Latin American economies and even ones as big as the U.S. There have been a lot of currency crisis in Latin America because of the cyclical nature of their economies among other reasons. In my view what happened in Asia in the 90s and in Iceland just recently shows that currency crisis are possible in a large country like the United States. It's hard to envision a scenario for the US for rates on our bonds not to go up and assuming the economy must continually be jump started and defense spending stays the same there could be serious trouble for the dollar and a following of the rest of the Western nations.

What good is deficit spending and artificial GDP growth like in China where there are empty cities if you still have to pay the piper for decades of juiced excess like here in the U.S.?

When it comes to the possibility of a continuing rise in stock valuations and a lasting improvement "absent stimulus" in the U.S. economy and even China's the burden of proof is on you bulls.

Some Links to Think About
"While deficit hawks have long warned that policymakers need to curb deficits and debt, the new wrinkle is that the U.S. budget deficit picture has worsened so much largely because tax revenues have fallen off so sharply that the government is likely to reach a crisis point much sooner than under past forecasts."

http://finance.yahoo.com/news/Bipartisan-budget-group-says-apf-3303488614.html

"The 2009 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached nearly $107 trillion in today's dollars! That is about seven times the size of the U.S. economy and 10 times the size of the outstanding national debt."

http://www.ncpa.org/pub/ba662

What Happened To The Green Shoots?

Delusions of Grandeur

Is it actually possible that the green shoots were merely the result of short-term stimulus and inventory shifts by companies? Is it possible that the trajectory of GDP could go sideways or fall for years or even a decade or two after a serious unprecedented structural shift in the economy?

Bernanke said today many times that the current budget deficit is unsustainable. He also said that deficits of over 3% of GDP are unsustainable over time. These two facts would be troubling but lawmakers and the FED believe they are temporary because solid economic growth will shortly return.

All scenarios revolve around the premise of a solid recovery returning. It has to because we are facing a falling tax base and baby boomers retiring. I'm afraid a stagnant economy like Japan in the 1990s will not even be considered by lawmakers when it comes to spending programs and balancing the budget. But I guess why would it? The U.S. has produced one of the greatest economic track records ever in history. Even more rare and impressive about it is the history of economics on the whole when it comes to other countries is often a very dismal one.

Whether or not things get under control shorting treasury bonds and the dollar should be a good long-term macro play. Of course it is difficult here with the potential for at any time a panic rush to dollars but if there continues to be a flock that creates a mini bubble shorting the dollar seems like a no brainer because at the least it will fall from debasing.

Some articles and videos I have come across recently

Deathbed of Keynesian Economics Will Be in U.K.

Jim Rogers: The Dollar is Doomed

Net Tangible Asset Value Stock Plays,Oil & Retail

I crunched oil and natural gas stock Delta Petroleum's DPTR net tangible asset value to be around $515,000 vs a $368,000 market cap.

I'm pretty bullish on commodities and oil with Bernanke being re-confirmed. He's going to drop dollar bills from helicopters or even outer space if he has to to get the economy going(or just to hold its ground). Commodities have done very well the past 10 years because of inflation whether one wants to believe CPI or not. Gold has outperformed the major US indices since 2000.

Retail stock Borders BGP is just over net tangible asset value but has been beaten down a lot lately. I'd especially like to see some commitment by institutions with upgrades because it very well could continue to drop.





full disclosure: no position in BGP or DPTR at time of writing

Former Net-Net Stock MSON Soaring

I just noticed former ncav MSON in a technical scan that I initially noticed at the beginning of 2009 is in play on new distribution news. Right now it is a little over net current asset value and I don't know their story here other than there was huge volume recently on this news. As the stock showed in April it can run straight up a ton fast.

I think it might consolidate right around $3.00 around this black resistance at 3.00. This news might give it the potential for a richer valuation of course and more follow through. It's pretty thin and usually doesn't trade that many shares a day.


click for larger image















full disclosure:no position

Investimonials.com Financial Reviews

My site is up for review on Investimonials now. Investimonials is a new site for honest user reviews on anything financial from books, brokers to blogs. There's not a lot of transparency in the finance niche and I think this site might have some promise for providing it to newbies.

If you want to take a minute review my blog here

I haven't been posting in this blog as much lately because I am posting my trading stuff on DynamiteStocks.com now. I'm still going to blog about fundamentals and macro stuff on Stock Pursuit like I have been recently. It just won't be every week and that often but rather when I feel like blogging on something like I did on the Buffett Burlington purchase. Google webmaster was showing that post got linked to from the Huffington Post and a Buffett focused blog.

Also, if the market has a serious correction(probably won't happen to soon) I'll throw up some of my net-net ideas here.

Upcoming Post
I'm thinking about a macro play on commodities. More specifically, a play on exporting commodities from the United States. I'm going to do a blog post here on that shortly and will lay out my thesis and brainstorm some of the ways to play it.