Undervalued Tech Stocks

The Nasdaq 100 is up 30% so far this year. It's not easy to find large-cap growing tech companies that haven't already seen significant stock accumulation.

I have been scanning the sector regularly to find attractive longer term opportunities. I remember the early 2000's very well and how accelerating revenue growth in E-commerce propelled so many stocks higher and higher.

The demand for computer power to fuel the growth of AI and large language models is here. Whether you believe it is all hype or the next paradigm of computers like me as personal computers were in the 80s and internet was in the 90s AI is getting investment.

Everyone complains that Nvidia(NVDA) is too expensive at 30 times sales. Here is some historical context on what large companies can do in a bull market.

In the 2003-2007 market Baidu (BIDU) had a price to sales ratio of 30 in spring 2010 and share price of $60. It still ran to $145 at its peak in 12' with a P/S of 44! that's a 100% return after it was at 30 times earnings. I'm not saying Nvidia will grow like that but another 25% return doesn't seem impossible.

In 2015 Alibaba BABA had a price to sales of 16 and the stock still went from $80 to $200 in 2018.

I've been looking at a lot of robotics companies, semi's, silicon miners and IT infrastructer stocks large and small. I've been tweeting about many such stocks for a couple months on Twitter. One such stock, STRC I made a substack article on. Subscribe to my Substack here to catch all my newest deep value net-net ideas.

One recent dive I did was Nauticus Robotics (KITT). It is in the ocean sensory robotics business.

-4.8 Current ratio

-+230% to +440% forward revenue growth,

-36% rev growth this current year

-EPS loss narrowing 6 quarters straight

-no dilution

-risk, only 2 customers

Another interesting thing I stumbled on was that Boston Dynamics a world leader in robotics is owned by Hyundai Motor (HYMTF). They bought the company in 2020 for $1 billion. I'm sure the current market value is much higher now in this AI frenzy.

ARB IOT Group ticker symbol (ARBB) an Asia based smart home technology company IPO'd in April of this year. There appears to be no analysts on it so it was hard to find guidance. I did see some very good growth. There was 2,200% revenue growth in a six month period in 2022. Quarterly earnings growth was 158% per Finviz.com. The balance sheet has a 3.9 current ratio. I need to do some more research but it appears it may be below net current asset value too. The float is only 1.2 million.

Another lower float one I found was IBEX (IBEX). Earnings guidance has been steadily raised over the past few months. Earnings are expected to grow 11% next year. The forward PE ratio is 9.6.

Some of my favorite datacenter stocks are Bel Fuse (BELFB), MongoDB (MDB), Vertiv Holdings (VRT) and a cloud company I like is Zscaler (ZS).

I currently own Nvidia through ETFs and am long KITT and STRC. I may buy or sell any of these stocks in the future. Here is an AI generated image of a modern datacenter.

AI Wars Are Beginning In Tech: How To Invest In Artificial Intelligence

Hello loyal readers! Grab a cup of hot coffee or fresh tea. I have a good one for you today!

My goal is to find the best investment opportunities in artificial intelligence and robotics. After researching the technology in-depth I strongly believe this is the best growth industry opportunity to invest in since the 1990's internet boom. We are still early too! I will continue to put my ideas on the blog here, my Substack and my Twitter/X account going forward.



Microsoft recently made a large investment in OpenAI and has already incorporated AI chat technology into it's search engine Bing. We are continuing to see investment as Inflection AI just secured a massive $1.3 billion funding from major investors including Bill Gates.

If you are brand new to AI technology let me give you some quick background on it. Sam Altman and Illya Sutskever used computers to make a "neural network" that was modeled after the human brain. The computers use high powered "GPU's" graphics cards to process the information.

Deep learning has been going on since the early 2000's but it took major breakthroughs in compute to get us to ChatGPT-3 and 4. Previously, the computers were just not powerful enough. Scientists were also not sold on the concept of scaling up neural nets. This all changed in the last 5 years as computer tech advanced. The increased size of the neural nets combined with increased compute brought breakthroughs leading to ChatGPT.

These vast neural nets are called LLM's (large language models). They use NLP (natural language processing) to retrieve info and generate it. So instead of using code to communicate with the computer you can use words. These massive LLM's are being trained on the internet and thousands of books.

If you haven't checked out the future of chat search I recommend going to Bing.com and clicking the chat icon at the top and using the interactive chat bot which utilizes the ChatGPT technology from OpenAI ChatGPT.

Ask Microsoft Copilot to find your results like you would in Google or Safari. It is incredible and free. The difference vs traditional search is you can talk to it like a person and use more detail. Don't be afraid to test it's limits. It's a streamlined chat style search without the ads, unworthy results in Google's top 10, pop-ups, paywalls or wasted time scrolling multiple results pages.

Microsoft and OpenAI are adding things regularly. You can have it write stories, poems or even articles. They now have an AI image creator too. OpenAI is regularly adding features and plug-ins to ChatGPT-4 if you want to pay for the subscription.

I remember the early days of the internet well in the mid and late 90s. The first time I surfed the web it was with Yahoo search at my dads office because we didn't have it at home yet. I am getting the same vibe using AI powered search now.

AI Is Here To Stay

I think some people maybe even Wallstreet are jaded about AI tech from the over-hype of the recent metaverse and web3 and lack of real-world wide scale implementation. Trust me AI and LLM's(Large Language Models) is legitimate and is going to be revolutionary. How revolutionary? I believe AI technology is someday going to be more revolutionary to mankind than the internet, especially if AGI or something like ASI (artificial superintelligence) or any thing near a singularity is reached.

We still are not experts on what goes on in the brain. What exactly would it take to push AI to a level rivaling human creativity? Human innovation only comes from "learning" and experience after all. If we accelerate the learning as resesrchers are doing as I'm writing this how soon could major scientific breakthroughs occur?

It is already creative and solving problems. these models are still the early versions and are being improved. Eventually, from what I am hearing they could take an Albert Einstein, Sir Isaac Newton, and Nicola Tesla bot and have them theorize on advanced physics. This novice version we have with ChatGPT when you use AutoGPT can perform jokes and I'm hearing even a full comedy skit with a hook and final punchline like great comedians do.

Some people are afraid of advancing this technology that has given a massive technological breakthrough already for the average person. It can proof-read writing, fix spelling and grammar and make sentence structure more consice. It can write articles on any subject. It can write a business plan and do web development coding. Think of it like an assistant for your work or hobbies with the entire knowledge of the internet by your side.

There are crucial externalities like potential slowing investment and the overall economy that could slow down the growth of this technology. If things continue as they are going the research I got from using the Bing AI chatbot(now Copilot) paints a very prosperous picture for growth.

Future Growth

"According to Statista, the market for artificial intelligence (AI) is expected to show strong growth in the coming decade. Its value of nearly 100 billion U.S. dollars is expected to grow twentyfold by 2030, up to nearly two trillion U.S. dollars. These figures are regularly being updated by big banks and analysts as the demand for Nvidia GPUs remains robust.

In 2021, worldwide investment into AI companies increased by 115% since 2020, marking the largest year-on-year growth in AI investment for at least two decades. Total AI investment reached $77.5 billion in 2021. The global AI market, valued at 142.3 billion U.S. dollars as of 2023, continues to grow driven by the influx of investments it receives. This is a rapidly growing market, looking to expand from billions to trillions of U.S. dollars in market size in the coming years."

Best AI Stocks To Buy

Google is behind Microsoft right now with AI search. Bing chatbot came to market first. Bard finally came out but isn't competitive on financial searches. Anecdotally, I've seen mixed feedback for Bard. Googles (GOOGL) main revenue segment is search ad revenue. Google has already been struggling with declining growth in many segments and missing earnings estimates the last four quarters. This new consumer technology is a huge loss for them right now. They are losing some searches to Bing every day now. Granted ChatGPT and Bing haven't moved the needle the real threat is there now. Microsoft being first to market may turn out to be a huge advantage as Samsung has been publicly contemplating dropping Google from their devices.

I expect all major tech companies like IBM, Apple(AAPL), Nvidia (NVDA), Google(GOOGL), Microsoft (MSFT), Adobe (ADBE), Nvidia (NVDA), Meta Platforms (META), Amazon(AMZN) among others to develop advanced AI for the consumer. I see all of these companies benefiting.

Many hardware and robotics companies will do well too as the hardware needs to be updated to handle AI The two popular AI ETFs are Robo Global Robotics and Automation Index ticker (ROBO) and Global X Robotics & Artificial Intelligence (BOTZ).These ETFs provide exposure to companies that develop, deploy or benefit from AI. BOTZ is more concentrated and has fewer companies in the holdings. This means it is less diversified than ROBO. That isn't necessarily a bad thing though because it means it has potential to have more price gain or loss.

The newcomer in AI ETFs is Roundhill Generative AI Technology (CHAT) it is an actively-managed fund designed to provide exposure to companies involved in the theme of generative artificial intelligence, and related technologies.

Internet security as an industry will do well in the future as well. As it gets harder to distinquish a bot from a human security will need to be enhanced. Very soon, if not already voice security will become compromised as bots copy our voices perfectly.

Cyber Security ETFs

The safest way to play the future security growth is with ETF's such as First Trust NASDAQ Cybersecurity (CIBR),ETFMG Prime Cyber Security ETF (HACK) or Global X Cybersecurity ETF (BUG). These sport expense ratios well below 1%. BUG has the highest average daily volume. There are other ETF's but the daily volume is much lower. It is not uncommon for specialized ETF's to fail to deliver because of declining low volume.

Entertainment Will Boom

I suspect as many creative and coding jobs become replaced by machine learning the entertainment and movie industry will benefit greatly two-fold. Firstly, they will be bringing amazing new visual and creative masterpieces to movies and various forms of entertainment. GPT is already creating comedy sets by comedians that have passed. Large movie companies will improve their margins and have bigger profits.

Many people including myself believe a recession of varying magnitudes could arrive shortly. This is not necessarilly a bad thing for movies overall. During the Great Depression, with the advent of new and impressive film technology, people escaped their daily lives by paying for entertainment. Even though unemployment was high people would pay to see the new technological advances in film at the time.

The 1930s are considered the golden era of Hollywood cinema. During this time, the movie industry thrived. Technological advances such as color and sound made movies truly extravagant. The breakthrough of synchronized sound occurred at the end of the 1920s and that of full color motion picture film in the 1930s. Two companies I see potentially benefiting greatly are Warner Bros. Discovery, Inc. (WBD), and The Walt Disney Company (DIS). Both are publicly traded on the stock market.

Some Major Tech Companies

Microsoft is currently in the process of acquiring Activision Blizzard (ATVI) making Microsoft the third largest video game company. My hunch is they will be incorporating GPT into video games bringing a new level to interactive gaming. Duckduckgo.com search is even adding A.I. functionality.

Adobe (ADBE) has benefited greatly this year from incorporating AI into their Firefly image creator software. They are one of the leading image generators in terms of realism. They have beaten their earnings estimates every quarter this year and hit record revenue. I see them continuing to see much success.

I highly suspect having lived through the 90's that the long-term leader in this new tech will take time to emerge. I expect they will share market share significantly as I-phone people will use AI on their phones and Google people will use Bing or maybe Google or even another company not yet in our radar. The future will include deep learning A.I. advanced large language models (LLMs) are machine learning models that are very effective at performing language-related tasks such as translation, answering questions, chat and content summarization, as well as content and code making. They distill value from huge data sets and make that “learning” accessible out of the box.

I've also seen LLM's referred to as "life long learning machines" which is essentially what GPT does as it learns from your input and corrections. The feedback all companies can get from customers and clients from generative AI will be great for their marketing and profitablity. We are just in the beginning of seeing the benefits to large and mega companies. Imagine how big the impact will be when most small business owners are using AI in the future.

Final Thoughts

Finally, as far as stocks go I see the most obvious alpha in shorting the companies losing to this technology right now. I am long May Google puts so if the stock falls I see profit. I plan on continuing to long puts as the market is not aware of the changes happening with chatbot search.

It's hard to pick the sole long-term winner with new technology as every other technology breakthrough has shown. Few would have pegged Amazon a lowly book seller as becoming the giant it is as just one example. With this in mind, going the ETF route like ticker BOTZ or CHAT with diversification is the safest bet. Even a Nasdaq 100 fund or Invesco ETF like ticker symbol QQQ is heavily exposed to big tech which are all building AI.

I expect many industries will benefit from this technology becoming acessible to consumers. Right now Microsoft, Google's Bard and Snapchat are battling in the war for large LLM's. More newcomers are popping up rapidly. Now there is Perplexity for Android and conversational HeyPi an AI assistant. These are certainly exciting times.

I also write a free Substack on value stocks. Subscribe here for free value oriented stock ideas. I cover Ben Graham net current asset stocks, net tangible assets and net cash values.

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Quality High Yield Dividend ETF's and Stocks

How To Invest In Dividend Stocks For High Yield

With high inflation the search for yield protecting from inflation becomes more challenging. Everyone knows about bonds but I'd like to dive into some vehicles I believe have a good shot to beat the risk free rate.

Marc Lichtenfeld's book Get Rich with Dividends: A Proven System for Earning Double-Digit Returns really opened my eyes to the possible returns from the right dividend stocks. I had read of famous portfolio manager Peter Lynch's study on an all stock retirement portfolio beating any bond portfolio. I was just naturally inclined to view equities as riskier than bonds though.

I now conceptualize a diversified equity portfolio as equal or superior to bonds. Not that there is never a place for bonds but with smart stock selection I think there is edge in dividend stocks. I am going to touch on some interesting dividend ETF's and a stock with a stable history of dividends. I like to invest for quality and above average yield and steady returns.

The first high yield ETF we will look at also has the highest yield at a 19% dividend yield paid monthly. Cornerstone Strategic Value Fund (CLM) is a $1.6 billion closed end fund started in 1987 with diversified assets. By diversified I mean everything practically. From large-cap tech, healthcare, energy, MLP's, foreign equity, and other ETFs. Ten year total returns have been pretty much on par with the S&P 500 index. It underperformed the S&P by about 1%. CLM's management was smart to be overweight tech going into 2023.

Highland Global Allocation Fund (HGLB) is the next ETF with an 11% dividend yield payed monthly. 10 year returns were 5.3%. It is a discretionary fund designed to have low correlation to the U.S. equity market and they have done well with that objective. It holds an unconventional portfolio of equities and debt. One of it's largest holdings is communications company TerreStar Corp. via their stock and debt. They also have a variety of REIT's, MLP's, energy warrants, utilities, sovereign debt and preferred stock.

High Income Securities Fund (PCF) has a long track record having started in 1987 and sports an 11% dividend yield paid monthly. The share price has had very low volatility since it started and 10 year returns at 5%. It primarily invests in discounted closed end funds. It holds an extrememly diversified portfolio with 57% of assets in funds, 20% in preferred stocks and 16% in business develpment companies. It holds a whopping total of 45 closed end funds from global equity to corporate bonds. It also holds some RETI's and a steel company preferred Steel Partners. It has some minor allocattion in other sectors. Though the long-term returns are nothing overly impressive I like the share price stability over the years and consistent dividend.

Ternium S.A. (TX) is an $8 billion steel company that sells steel in many Latin American countries and the U.S. It has a 7% dividend yield and the stock has returned 13% over the last 10 years. Free cash flow has been stable and has even grown since 2019. Total shares outstanding has been unchanged at 1.9 million over the last 4 years. They have payed dividends since the 1990s and increased the dividend since the late 90s.

I believe these ideas can provide some high grade unconventional diversification to an income portfolio. I also highly recommend the Lichtenfeld for learning how to invest in high yield dividend stocks.

Gold and Miners Poised To Make a Big Run

Throughout history there have been many years and even decades when gold outperformed equities. The question I am going to ask is "is this time different?" I am particularly interested at looking at the 1970's when the U.S. had high inflation and low economic growth. The FED is tightening yet many economic indicators are slow to point to a full-blown recession. Inflation has been hard to tame for Jerome Powell thus far. Stagflation is a probable outcome in this economic scenario. There is also the increasing potential for geopolitical events as it relates to oil as there is tension between eastern and western nations.

So far, many parts of the economy have been unprecedently resilient to higher rates. Housing has been one of them as many people are buying from fear of missing out and moving to cheaper cities. The second period in history that saw gold outperfrom equities was 2000 to 2012. This was following a long secular expansion and tech bubble collapse. We now are at the end of a long expansion and crypto and Bitcoin bubble burst.

Gold also did well following the 2008 banking panic but I am particularly interested in the years when gold rose as stocks fell. These are the years in the 1970s and 2001 to 2003. So, I see a couple likely scenarios economically. The FED tightening causes a recession that is mild or severe. If it is mild I see a possibility of inflation sticking around like the 70s. If it is severe and there are major bank panics it will likely be resolved quickly as 1907 was with J.P. Morgan helping bail out Trust Company of America and the 2008 panic were. In 2008 much of the deflation came in less than one year as housing collapsed and banking products failed. The Government in 2008 was fairly quick to inject capital and launch QE in 2009. Gold benefited from that.

In 2009 I predicted the pivot point on gold and was bullish right before its historic run. I said, "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." I had noticed a triangle formation on the gold chart.



What Can We Learn From The Past?

Let's switch gears and go back to the 1970's. It was a period of much uncertainty politically and economically. The highlighted regions show two periods where stocks fell and gold rose. Even the entire decade had stocks losing to gold. Gold traded for $35 in 1971 and went to over $850 returning 2,300% in ten years.

Next let us view the 2001 recession and gold and stocks. We see yet again periods when gold rose as equity indices fell in 2001 to 2003. This was during the recession of 2001 when unemployment rose from 4% to 5.5%. Then Fed Chair Alan Greenspan kept interest rates historically low during his tenure.

Here is a longer-term chart of equities and gold.

The gold market is now signaling extreme strength as the daily chart is showing a very powerful consolidation pattern. It is a bullish triangle formation as you can see below. Gold miners are alreading breaking higher from this consolidation like Franco-Nevada (FNV). I am currently long the gold ETF GDX calls. Other liquid ETFs include VanEck Junior Gold Miners ETF GDXJ and SPDR Gold Trust GLD. GLD doesn't hold physcial reserves though. Sprott Physical Gold Trust PHYS is a gold etf that holds actual gold.

Final Thoughts

Everyone is scrambling to find cheap gold mining stocks. As gold is consolidating at levels near last years highs I see a good possiblity of different scenarios. Over many recent years gold has been a "risk on" trade. Meaning it usually will only rise when stocks and other assets do. There were a couple days during the most recent banking troubles, however, where gold and Bitcoin had positive days while equities fell. Currently, gold is surpassing Bitcoin in this potential "flight to safety."

I see it rising as it did in 2001 and 2009 if the FED ends up reacting to a recession with QE like 2009 or with another extreme loosening like in 2001. The odds are stacked that we are going to get a recession with historic FED tightening and yield curve inversion. The other scenario is a recession with elements of inflation sticking like the 1970 and even a weak U.S. Dollar.

Whether one sees it as a stagflationary safehaven or an inflation hedge on a declining stock market. I see gold as a historically wise investment vehicle at this time and for many years to come as we sort out this economic cycle. It may start making new highs very soon or it may take months before the momentum starts but I see gold moving higher over the next year. Increasing allocation to gold just makes sense.

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Full disclosure: I am long GDX call options currently and may take positions in stocks mentioned. I have no physcial gold holidings. I have approx. two dozen silver coins.

charts courtesy bullionvault.co.uk and stockcharts.com

Two Interesting Deep Values

Here we go with the two deep values! I recently ran a screen looking for a particular kind of deep value stock. I was looking for either sub net tangible asset value or net current asset value. I screened out Chinese, semi’s, and biotech as these in my opinion tend to be less reliable as investments in the micro and small-cap space.

One of the more interesting I found was Crimson Wine Group, Ltd. (CWGL). I’ve rarely seen beverage companies below net tangible or NCAV before. A couple good ones that come to mind from years ago were Caribou Coffee and Coffee Holding when they were briefly below net tangible asset value. Caribou Coffee was bought by private equity after I wrote about it. I’ve never seen a wine company near deep value level.

Crimson Wine is currently trading for 59% of net tangible asset value. It is a wine wholesaler and direct to customer. From the most recent SEC EDGAR filings we have net tangible asset value of $221.4 million and market cap of just $133 million. Net current asset value is not far away at $72 million. They haven’t diluted with any recent offerings the past couple years as shares outstanding has been stable and slightly down. Cash has been stable on the balance sheet also. Cash is slightly up over the past couple years.

The company has had a slightly profitable quarter in the last year. The share price has been up and down. The stock had a good run from fall of 2020 to summer 2021 and has been down since. I always like to see a stock price that has had some kind of history of share price appreciation. So many small and micro-cap companies never have any history of stock appreciation so it is always nice to see the market can indeed react to positive performance. The company had positive free cash flow for the trailing 12 months ending Q3 last year of $8 million.

The second stock is Save Foods, Inc. (SVFD). It develops and sells eco-friendly green treatments for the food industry to enhance food safety and shelf life of fresh produce. This one is a small micro-cap with a market cap of $5.3 million. Net current asset value is $6.63 million. They grew revenue a whopping 88% from 2020 to 2021 although there is not an annual net profit in the last three years. Cash has been stable the last three years, however, shares outstanding has been diluted. From the second to third quarter of 2022 share count went from 2.8 million to 4.5 million.

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Disclosure: I currently have no position in either of these stocks.

Starting a Substack For Net Current Asset and Deep Value Stocks

I am starting a substack for strictly stock analysis of deep value net-net's and net tangible asset stocks. Here is my Substack. Here are a couple of the most recent deep values I came across from my screening. This is the first round of interesting sub NCAV or net tangible asset value stocks. Screen excludes Chinese, semis, biotech. In millions. These figures and for the ones going forward I will be getting the most recent numbers via the SEC.gov Edgar search database.

CWGL $221.4 NTAV, $72 NCAV with $133 market cap

SVFD $6.63 NCAV $5.3 market cap

AOUT $105.4 NCAV 115.5 NTAV $124 market cap

Market Direction

I'm watching the major indices very closely day to day. Fundamentally the economy is resiliant in the face of FED rate moves not seen in decades. History shows that when the yield curve is inverted as long as it is there is a recession. I believe we had a recession in Q1 and Q2 of last year as GDP went negative two quarters in a row. That is the time tested measure of a recession. The definition of a recession was tinkered with but to me we had a mild recession thus signaling the effect of the rate hikes.

I think many bears are ignoring that possiblity that the recovery was quick and rates were not high enough to bring a double dip recession. I don't know if we will get another this year but it seems it is going to take much higher rates to bring it about. The Covid stimulis and FED action was massive and it appears underated. It is very likely PE multiples are now high as they were in 2009 also because the market is forward looking. It very well could be that growth will continue even with rates at current levels.

One thing is for sure the economy is different now with secular labor and supply chain issues. Work from home is still common with many companies. Maybe all this has something to do with why the economy keeps spurting along. Housing has been resilent too with rates high. The bear thesis doesn't make sense if employment is still low and the housing market ok.

Technically, the market is uptrending currently and many support levels were found on the October low last year. I'm leaning more to major US indices going higher the next month or two but we shall see.

Coffee Holding JVA Stock Update A Net-Net

I've covered JVA on the blog for many years and shared my honest thoughts on the company. It's been so beaten down in this bear market it is now at .62% of net current asset value. In the past it would bottom out around net tangible asset value. This is one of those rarer cases where a profitable or recently former profitable company becomes a net current asset value stock.

If you are new to deep value the net current asset stocks get their attention because of famous investor Ben Graham who taught Warren Buffett. Net current asset value is a rought liquidation value of the whole company. Of course the true liquidatoin value is usually lower given the inventory and equipment and long-term assets are likely going to fetch less than on the books. They are usually priced so cheap for a reason too.

JVA is now merging with another company. Here is a piece of the SEC filing.

As a condition to the Merger, Pubco shall also acquire all of the issued and outstanding Delta securities from the Sellers in exchange for Pubco Ordinary Shares (the “Exchange” and, collectively with the Merger and the other transactions contemplated by the Merger Agreement, the “Transactions”).

As a result of Transactions, JVA and Delta will each become direct, wholly-owned subsidiaries of Pubco, with JVA stockholders receiving approximately $31.5 million (or 4.79%) worth of Pubco Ordinary Shares (the “Merger Consideration”) and Delta stockholders receiving approximately $625 million (or 95.21%) worth of Pubco Ordinary Shares (the “Exchange Consideration” and collectively with the Merger Consideration, the “Business Combination Consideration”), subject to certain adjustments, at an implied diluted value per share of $5.50.

The Business Combination Consideration may be adjusted if Delta closes certain acquisitions prior to the closing of the Transactions. The Merger Agreement also includes an earn-out to existing stockholders of Delta, consisting of $50 million of additional Pubco Ordinary Shares, which will be released to Delta stockholders if and when Delta achieves $70 million or greater of net income for fiscal year ending 2023. The company they are merging with is private so I don't know anything about them.

Disclosure: I have a position in JVA

Net Current Asset Stocks

As the market continues to be weak I am going to start looking for cheap stocks below net current asset value and net tangible asset value. I just ran a strict scan looking for super discounted assets. This is the first scan I have done in awhile for these as I never thought it would produce much in the most recent bull market. This scan is cherry picked from criteria of price-to-book value of .5 or less, long-term debt to equity less than .3 and return on equity over 1.

The most interesting ones are Vaccitech plc (VACC) with NCAV of $187 million and a market cap of $89 mil. VACC has postive earnings this year with $.22 last quarter and $.42 the quarter before that. Cash has been pretty stable the past year and currently it has $200 mil in cash.

We also have TD Holdings, Inc. (GLG) with $154 mil in NCAV and a market cap of $59 mil. Not as much cash as VACC as the large majority of the current assets are in account receivables. They had a couple recent slightly positive quarters of $.02 earnings per share and $.05. The stock has tried to bottom and has been sideways for months with support around $1.00 a share.

Stock Market Top Bull Trap Set

You may remember my blog post from late October where I outlined the scenario of a stock market bottom. I gave the exact levels it would need to break through to confirm and had a good read on the price action down there. The very bottom came on CPI day in October. It was also a bear trap. A bear trap is where the price action begins to go lower enticing sellers and short sellers to sell. What happens though is the momentum quickly shifts back to bullish as price fails to continue to go lower. We saw an epic bear trap on that October day. It was one of the largest reversals from a 52 week low in history.

You may or may not have noticed that on CPI day this week the market shot up early but fell after the CPI news. It was another trap!! And on CPI day again! Maybe it's a big coincidence or the CPI and inflation expectations are the main driver of equities during this time. Inflation is one of the biggest economic factors affecting consumers and businesses these days and not to mention the FED's decisions. We can see the two CPI days in this chart and how it is breaking the uptrend line. It tried to reclaim trend support on the CPI day which was yesterday and that is when we got the big failed signal. Failed signals are powerfull. It will take something special to continue higher from here. I'm not yet fully committed to this being the top but if we see a break of the yellow line around 389.50 on SPY it's game on for more lows.

We've got some obvious rounding top formation going on in small-caps.