Monthly Archives: March 2009

Ufood Technical Update

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Well, we’re off to just a fantastic start with my latest offering- UFood Grill- UFFC. I launched last week when the stock was trading at the absurdly oversold level of $.12, and now that investors understand the company is cashed up again, the stock has been nearly a triple in a few short trading days.

As you can see, from the $.12 start, the stock has now appreciated 166%- from $.12 to a high of $.32.

It’s done better than even I thought it would in the short term. I don’t think having a 500 point up day in the DOW hurt one bit.

If you’re watching this, and think you missed the boat, you’re probably right if you want the absolute bottom.

From a common sense point of view, I would not suggest buying now. In fact, if you were an early buyer, it might make some sense to limit your risk and take some money off the table.

If you’re looking to get in or add more, here’s a chart with FIB retracements. Your first level to look at is $.25- a buy there. at $.19 it’s a strong buy.

Comments and questions are welcome.

FAS Entry Level

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Lately I’ve been trading the FAS and the FAZ with some success, and I want to share my trading strategies with those looking for some fast action.

The financial sector has been extremely volatile of late, and lends itself to trading, especially when you use the triple leveraged ETFs to do so.

Here are the symbols- FAS and FAZ- FAS is the triple leveraged long, and FAZ and is the triple leveraged short. Last week I notched about a $5k gain going long FAZ (which is betting the sector will go down) at about $29. I sold at about $34 on Friday.

I believe there is enormous upside in the financial sector. I have written extensively about mark to the market on the balance sheets of the banks, and Congress is even poking it’s unwelcome nose into this situation.

The banks are being forced to mark their mortgage portfolios down to absurd levels, and this is creating a hidden asset and a lot of upside in this beaten down sector.

There are three events that could take FAS (the triple leveraged ETF) from the current $5 level to about $20-

The three events would be a modification of the Mark to the Market accounting standards, the restoration of the uptick rule, and the SEC eliminating the rampant naked short selling.

After a big run up in the financials, I’m looking for a good entry level to get long again. I believe it will be about $4.50 on the FAS.

Here’s the chart. As you can see, in only nine trading days, this thing motored from $2.20 to $7.80- that’s some big action.

Last week the financials gave back some of these gains.

When I see this particular ETF back in the mid 4′s, I’m going to get very interested, and probably load up.

The correction was overdue. You should be aware this ETF is extremely volatile, so this idea is not for those without a strong stomach and a disciplined ability to keep the emotions out of it.

$4.25 to $4.50 is your entry level on a pullback next week. Stay tuned and we’ll see what happens.

Comments and questions are welcome.

UFood Off To Reasonably Good Start

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UFFC- Ufood Grill- is another idea of mine to match my long term belief in Spicy Pickle. These fast casual concept companies can be huge as their reach spreads, but the recession has derailed both of them from the rapid expansion they would normally be on.

I feel both stocks, while still highly risky, have had all of the possible bad news priced into them, and had reached levels that assumed the companies were going into bankruptcy.

Friday’s news put UFFC on solid footing for at least another year financially, and their ability to raise capital in this dismal environment was a bit of a testament to people’s belief in their future.

I thought $.12 was an absurdly low price for the stock, and the market bore me out in Friday’s action. It was the highest volume day in the stock’s history- it traded nearly three times as many shares as it ever has in the past.

The stock made a high of $.25, and closed at $.20. A one day Fibonacci retracment is not a perfect barometer, but it’s a good starting point.

If you’re looking to be a buyer, I believe the $.16 to $.19 range would be prudent- more towards the bottom of the range if anything.

A break through the $.25 level would give us some new upside levels to look at. We’ll see what happens next week. More news would be grand.

Comments and questions are welcome. You won’t see your question answered right away. Give me a day to respond.

PhotoChannel’s Q1- A Closer Look As Promised

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PNWIF- long a following in the OTC Journal, finally delivered a strong quarterly performance. Can you spell “too little too late” as far as the stock price goes. We needed this a year ago.
In case you’ve forgotten, PhotoChannel provides and ecommerce solution to retailers for photo finishing. You upload your digital images to a web site, then go into the store and pick up your prints in one hour.

They landed Costco in 2008, and spent about 9 months implementing the infrastructure to handle the volume, along with CVS pharmacies, WaMart Canada, parts of China, and other large retail chains.

PNWIF only provides the web interface, and make a few cents for every print. Q1 of their ’09 was the 4th calender quarter of the year, and their first profitable quarter in some time.

Revenues came in over $7 million at nearly $7.2. Profits were about $300k, which doesn’t represent a great margin. However, the company netted an additional $700k in foreign exchange gains, which shouldn’t be considered part of the business model.

On the other side of that coin is $1.4 million in amortization expense, which you can add back in to the cash flow picture. Therefore, the company really netted about $1.7 million on operations, which is pretty good in my view.

They spent $1.8 million on software development, which is too high in my view. They need to spend less.

At quarter’s end they had $8.4 million in cash and receivables, which is not so good against  $8.7 million in payables.

In short, a very satisfactory earnings report, but not a blockbuster once you take the balance sheet into account.

Their $.03 in EPS is really closer to $.06 per share in positive cash flow, which suggest the stock would be very fairly priced around $3 to $5, but not in today’s market.

The chart shows a stock that is doing far better than the major indexes, so we’ll take that as a victory.

For long term investors, this one is a gem. If you’re wondering where it will be in the next few months, impossible to call.

Comments and questions are welcome.

China Energy Recovery: In Pretty Good Shape

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Amazing what growth and earnings will do for a stock. At $1.50, CGYV’s price doesn’t seem like any big deal relative to the company’s performance.

However, consider the relative performance of the stock. Nearly every major average you can site- The DOW, S&P 500, NASDAQ, the Russell 2000- they are all falling through to new 12 year lows, and far below the lows set last November. Technically, at this point it’s impossible to call some sort of bottom.

However, CGYV, on a relative basis, is holding up pretty well. After all, the last time the Indexes traded to these levels, CGYV traded to a low price of $.90.

Today, CGYV is 66% higher than it was in November with all the major indexes falling to new lows. So, on a relative basis, that’s not so bad. Helping fuel the recognition for this issue is information found in the recent Obama quasi State of the Union address as follows:

“We know the country that harnesses the power of clean, renewable energy will lead the 21st century. And yet, it is China that has launched the largest effort in history to make their economy energy-efficient.”

China hasn’t exactly been the poster child for clean energy over the past two decades - its rapid economic climb led to serious pollution problems. But in the past couple of years the Chinese have been pressing on with an energy-efficiency campaign that is projected to result in hundreds of billions of dollars’ worth of construction upgrades by 2020.

Investors are beginning to realize CGYV is smack dab in the middle of the “hundreds of billions” in construction by 2020. Cleaning up the atmosphere in China is just beginning, and it will last a long time.

Look for another double in revs this year, with a push for $100 million in revs in 2010. When it translates into a higher stock I can’t say. However, eventually money will flow back in this direction, and when it does……

Comments and questions are welcome.