Monthly Archives: April 2009

Procera Networks (PKT): Surging to New Multi Month High

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Procera Networks(PKT) on the AMEX is my most current trade idea. The stock is clearly gaining momentum. I provided a Live Chart strong buy recommendation on the stock at $.80 just a few days ago, and the stock surged through $1 yesterday for the first time since October and looking like it wants to work a lot higher.

It’s a software company- they’re in the business of helping ISPs (internet service providers) save money by routing their traffic more efficiently based on importance.

Jackson Spears, analyst at Robbins Group and personal acquitance, has a strong speculative buy recommendation on the stock. He believes their losses on $12 million in revenues in CY ’08 will convert to EPS of $.05 on $28 million in revs in CY ’09. His short term price target is $2.

The stock clearly is entitled to honorable mention for its chart this past week. As you can see, just since I posted the buy recommendation on the stock at $.80 on the 20th, the stock has already provided a 25% return. Volume and price are surging simultaneously.

People, things are starting to happen fast and furious. These absurdly oversold stocks are coming off the canvas and gaining ground. Don’t sit on the sidelines and watch these stocks start to trade back up. Act quickly and decisively when you read something you like. We’re going to start making money on a more consistent basis again.

It’s long overdue as we are a year into this Bear Market, and if you’re like me, it’s worn you out a bit. Time to get back to our former winning ways.

Comments and questions are welcome.

Options Media Group (OPMG) Being Reeled In a Little, No Big Deal

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No big surprise to see Options Media Group Holdings, Inc. (OPMG) shares taking the day off. The run from the April 16th close of 51 cents to yesterday’s peak of 76 cents - on the stock’s highest volume ever no less - is just a little too much heat to sustain. Looks like there’s some profit-taking going on today, which is fine. It may not be a bad idea to do the same yourself, at least with a small portion of your shares.

In the bigger picture, I can’t ignore that the dip today is on minimal volume; it looks like most of last week’s buyers are staying in with the bulk of their trade. I think that’s a smart move too.

OPMG had been in a long-term rut…  a problem with a lack of volume more than performance. Last week’s volume surge had to get the market’s attention though, so I’m expecting more liquidity going forward. That’s good for the buyers and the sellers, but it will also let the stock start moving based on its value rather than volatility.

Anyway, Options Media is going to at least be an interesting story to watch unfold. The growth and opportunity is there - I just hope the market “gets it”. Digital advertising can be a tough arena to grasp and fully appreciate. The growth in the dollars should help though.

What do you think?

Nighthawk Systems Inc. (NIHK) Posts Glass Half-Full/Half Empty Numbers

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There haven’t been a lot of bright spots in owning bulletin board company Nighthawk Systems Inc. (NIHK) lately, at least not until this week. We’ve had to watch shares slide lower (or continue to watch them slide lower) since 2007 despite a much better 2008. Maybe, just maybe, the latest round of news will start to pull NIHK out if its funk….. though at 2 cents, how much more downside is there to go?

Enough rant - on with 2008′s full year numbers:

  • Revenue, up to $3.3 million from $1.7 million…almost a double
  • Gross profit, up to $889,150 (from 23% to 27%)
  • EBITDA improved from a loss of -$2.1 million to ‘only’ -$1.2 million
  • The cash (operating) loss fell from -$2.1 million to a loss of $925K
  • Net loss came in at $4.1 million versus $3.3 million a year earlier. Subtracting out a one-time impairment charge though, the net loss would have been $2.5 million.

That’s it - the numbers don’t lie. Nighthawk isn’t where anybody wants ‘em to be, but they’re at least not heading in the wrong direction.

I don’t know if profitablity is in the cards for 2009, though I do get the feeling investor patience is running thin. The company said 2009′s pace already fell from the pace set in 200, though a deal with ESPN could be expanded. Talk about a company on the fence.

What say you?

China Energy’s Chart Brought to Life On Your Screen - A New Era Has Begun

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OK, I don’t know that my short clip is going to win any academy awards for ‘Best Picture of 2009′, but I think you’re going to like it if you haven’t seen it yet.

Yes, that’s right - the OTC Journal has taken another step towards making this site more engaging, entertaining, and informative. We’ve made a web movie of our thoughts and observations regarding China Energy’s (CGYV) chart. Now you can see what we think with a lot of live-action detail. We hope it’s the first of many site enhancements we’ll be adding in the near future.

Anyway, here’s the link to the appropriate page: http://www.otcjournal.com/China-Energy-Recovery-CGYV-on-Verge-of-Breakout/af/archive/20090415-1/ 

What do you think? Chime in below, as always.

Single Touch - SITO - Bulls Taking a Back Seat For Now

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The bulls were in control in the early going on Single Touch, but the stock has made a round trip back to its starting point, and the bulls are now in the back seat.

I’ve heard both sides to this story.  Trailing revenues are minimal, and the balance sheet is not particularly strong. Then, there’s the issue how to value the AT&T and WalMart relationships in the early going, and the stock might seem to be a bargain.

Nevertheless, SITO is providing a ride- $2 to $2.50, now $1.70 over a period of two short weeks.

If you have a trading mentality, now is the time to jump in or add to your position. Now is certainly not the time to sell.

The company is going to take some time to really ramp up on the revenue side.

They are just getting their campaign started with WalMart. Nextel Mexico goes in June. AT&T is still their marketing arm. This could really ramp up over the course of this year.

SITO could continue to be a real rodeo ride. More news will be out with huge players. Look to accumulate on dips.

The Bulls Are Winning the SITO War So Far

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It’s not been a bad start at all for our Single Touch (SITO) position. We first mentioned it on March 30th, and saw the stock move from the prior day’s close of 2.00 to 2.20. We got on the soapbox again on April 2nd following the Mexico news, and the stock reached as high as 2.55 the next day. Certainly we’d all love to see an overnight quadruple, but all things considered we have something to celebrate so far.

As far as today goes, the dip all the way back to 1.80 - in retrospect - seems to have served two purposes. One, it shook out all the nervous-Nellies who probably shouldn’t have been in a trade in the first place, and two, the rebound back up to the current level of 2.39 verifies that traders are buying on the dip. You could still do the same even at 2.39 though… this is really a compelling stock, and the numbers truly could make this stock worth 5.00 in the foreseeable future.

What’s not quite as obvious with the whole “pullback-n-rebound” theory was the growing bullish volume on the way up, and minimal volume behind the temporary dip. That’s the subtle clue that most people stayed in the trade.

It’s still a little too soon to call it a trend - more like a curious nuance. It’s a good start though. I just hope the trek to 5.00 from here is a little more well-paced than the last couple of days have been.

Got a thought or a comment? Leave ‘em below.

China Energy Recovery Posts Knock Out Numbers

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Of the 8 small companies I have on my current menu of ideas, China Energy continues to be the one I believe offers the most upside potential with the least amount of risk. Why- check out today’s earnings release for 2008. Here are their achievements:

  • Revenues up a mere 95.6% - $23.18 million in 2008 up from $11.85 million in 2007
  • Gross profit increased to $5.07 million, a 138.2% increase from $2.13 million in 2007
  • Gross profit margins improved to 21.9%, as compared to 18.0% in 2007
  • Profits increased by 110.6% to $1.61 million in 2008 from $0.76 million in 2007
  • Without the aforementioned non-cash expenses of $0.72 million, net income would have been $1.83 million, an increase of 185.9% over that of 2007.

Total shareholders’ equity improved to $7,623,445, up from a negative $213,989 in 2007
EPS came in a $.041. Without the one time, non cash pub co expenses, EPS would have been about $.086 per share

Ok- anyone you spin this, these are simply great numbers. When analysts finally catch on to this company, they will love the increase in gross margins. So, not only are their sales numbers rising quite dramatically, the percentage of gross profits CGYV enjoys from the sales is going up as well. This means the company will be able to generate higher profits on the same revenues.

Now, let’s look at the 4th quarter to help us figure out what’s going to happen in 2009. CGYV delivered $7.2 million in Q4, which suggest they are
on an annual revenue run rate of $28 million.

CGYV delivered $6.1 million in Q3- quarter over quarter growth was 18%. If they can keep up at that clip, let’s look at ’09 numbers. CGYV should deliver $8.4 million in Q1, $9.9 million in Q2, 11.66 million in Q3, and 13.76 million in Q4.

CGYV could deliver $43.72 million in revs in 2009- another whopping increase of 88%. If gross margins stay the same, gross profits would come in at $9.6 million. Margins will increase as it won’t cost them any more money to be a public company. In fact, a bunch of one time, non cash expenses would no longer apply- I’d look for about $5 million in net profits, or $.17 in EPS.

If you still like the good old fashioned idea of PE ratios, in any normal market environment a company with a growth rate of 80% should trade at a minimum 40 times earnings.

So, if all this forecasting comes to pass, 40 times .17 would give us a stock price of $6.80.

All this perfect math can give you a guideline, but it rarely follows the play book. They are upside surprises and disappointments along the way. Nevertheless, the numbers are the numbers, and based on the numbers there is no recession going on at China Energy Recovery.

In fact, there is an enormous amount of chatter in the media about the $680 billion China stimulus plan, and a lot of chatter about a substantial amount of those funds going towards energy efficiency and cleaning up the environment.

Manufacturing is down in China in 2009, but what’s being done is going to the most efficient factories. Therefore, in order to compete, these factories need to retool, and what better way than with government subsidy money.

The chart is that of a stock just looking to break out on some sort of volume increase. I don’t know when that’s going to come. The volume has dried up, and there’s virtually no downside pressure at these levels. This stock is easy to hold when one simply looks at the corporate performance. Sooner or later the buyers will come, and this stock will be ready to surge.

It’s simply a no brainer. Sometime this year China Energy will go nuts, and I hope you are along for the ride.