Monthly Archives: June 2009

UFood Takes One Step Forward, Two Steps Back

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We haven’t heard much from UFood Restaurant Group, Inc. (UFFC) since it secured nearly $5 million from the private sector in April for expanding its number of locations—14—in both traditional and non-traditional places.

In fact, just last week UFood announced that its Chicago franchisee terminated the operation of three UFood Grill Restaurants in Boston, citing the poor economy.

In response to these closures UFood says it is increasing its focus on non-traditional locations such as airports, hospitals, colleges and travel plazas. They expect to announce several new traditional and non-traditional locations in the coming months to open by the end of the year.

For example, UFood also announced last week that it has signed a lease agreement with Westfield Concession Management for a UFood Grill Restaurant in Boston’s Logan Airport Terminal C. Westfield is a premier company in the leasing of airport retail concessions across the United States.

This will be UFood’s second location inside Boston Logan Airport and the third airport location (the other airport location is Dallas/Fort Worth – the seventh busiest airport in the world). Management anticipates the new restaurant will be opened by early October 2009.

As far as what UFood’s stock price has done, it’s currently trading at $.19, up 58% since we initiated a buy on March 19 at $.12. Considering the stalling of growth, that’s a nice double-digit move for those of you who bought at that low.

If UFood makes the kind of headway it expects in the coming months, we should see the stock move further north. It’s basically been in a trading range of $.18-$.27 over the past three months; although it did reach an intra-day high day of $.35 just days after we initiated a buy.

We still consider this stock a buy at $.19 in case you wanted to invest a small amount until we see some real growth.

Cel-Sci To Borrow $15 Million; Will Speed-Up Vaccine Development

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A new item of interest on Cel-Sci Corp. (AMEX: CVM) hit the wires today, and I wanted to address it and the subsequent move in the stock.

The company plans to raise $5 million in much-needed funds from an institutional investor to speed up work on its swine-flu treatment and also to “validate” its $15 million manufacturing facility in Baltimore.

The Maryland location is where it plans to produce its late-stage, head-and-neck cancer fighter called Multikine, something that’s been on hold until Cel-Sci received funding or found a developmental partner.

Although shares of CVM stock lost 13% on the news and volume of nearly $5 million, this isn’t cause to worry. If you’ll recall when I first brought this stock to your attention, I focused on the fact that the stock had completed a perfect 61.8% retracement at $.47. That meant from a technical standpoint, CVM was poised to rise higher.

It did, briefly, to $.50 a share until today’s news brought it down to $.39. My suggestion is that if the stock drops to 0.36%, set a tight stop in case it falls further from there.

Cel-Sci Corp. also announced today that it has filed a provisional U.S. patent application covering its L.E.A.P.S. immune therapy drugs (vaccines) for the prevention/treatment of H1N1, swine and bird flu.

Some experts believe that by the next flu season the swine flu virus will have evolved and/or combined with other viruses to create a much more lethal new virus. This patented vaccine from CVM could potentially fight this type of mutant virus.

I still see Cel-Sci as a winner. Once it secures an investor, the development process for its swine flu vaccine, its cancer treatment and shareholders’ profits will kick into a higher gear.

Global World $750 Billion Short Of Meeting Green Goals…NFES Is Here to Serve

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I can’t think of a company more entrenched in a monstrous trend than China’s NF Energy (NFES), and if a week-long 45% surge and today’s updated clean energy stats are indicative of what the future holds, shareholders are in for the ride of their lives.

Multi-billion dollar stimulus packages from China and the U.S.—with the bulk of money already put to work by the Red Dragon—boosted spending in the renewable energy industry for Q1 2009 by 12.4%. Spending on wind power led year-over-year increases with 38.5%, while coal-fired generation dropped 15.3%. Hydro and geothermal also grew but at slower paces, 1.1% and 1.7%.

During the year, China went from a small player in wind energy to becoming the world’s largest generator of wind power. China also led the global world in clean energy investments for 2008, responsible for 18% of the 27% overall $36.6 billion increase.

It marked the first year ever that investment in clean energy topped fossil fuels. Perhaps the most eye-opening statistic for NF Energy and its shareholders is that while investors (private and public) poured a record $155 billion dollars into clean energy companies and projects worldwide in 2008, that figure falls far short of the figure it will take for countries to meet their carbon emission targets.

Try this on for size: In the U.N. Environment Program (UNEP) report, “Global Trends in Sustainable Energy Investment 2009,” it says “a minimum of $750 billion” is necessary to finance a sustainable economic recovery by investing in the greening of five key sectors: buildings, energy, transport, agriculture and water. That’s equal to 37% of the economic stimulus packages and 1% of global GDP.

So, you get the picture: There’s simply no end in sight for companies like NF Energy who are in the global hub of renewable energy and attached at the hip of China—the world’s biggest spender on the very products and services it sells.

More IX Energy News Points To Boom In Business

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IX Energy (IXEH.OB) released more news today that shows how business may be booming soon for the designer and developer of solar and other alternative solutions.

The company said that it had completed a fully operational 20kW solar system on the rooftop of the Town Hall in Warwick, NY.

“We are pleased by the completion of this project, which is an extension of our plan to increase our efforts to deliver turnkey renewable energy solutions into the government sector and to help municipalities bring clean, green solar energy solutions to their cities,” said Steven Hoffman, CEO of IX Energy.

Shares of IX Energy soared 30% today.

NF Energy - NFES - Hot China Penny Stock; An Early Look at the Chart

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We’re off to a pretty good start with my newest idea- NF Energy.  Picked at $.69 this past Wednesday post close, the stock has since seen a high print of $1- net 45% in the early going from bottom to top if you traded it perfectly.

On Thursday the stock traded the highest volume in its history and a penny below the highest price. Investors are already recognizing the value this one offers with $.10 in EPS last year. With the growth they should deliver in ’09, value wise anything up to $1 is a bargain basement value in my view.

However, value is not always the immediate story. The chart plays a role as well, so it’s worth taking an early look at the chart and starting to think about the possibilities of a pullback. After all, this little stock has come a long way in a short time.

Here’s a look at the chart over the past two months. It started out as a $.20 stock.

It peaked out with a five fold move in short order, so a little pullback could be in order simply on a technical basis.

If it were to pull back, I’d be looking at the $.70 level as the ideal entry point.

Not only is it the 38.2% retracement level, it’s also the point at which the stock would pull back to the uptrend line. As long as the stock does not trade below that 45 degree angle line, it’s still in an uptrend.

I don’t know if it is going to happen. It certainly has traded up to this level quite easily. It might just continue higher. On a value basis, it’s entitled to.

I only bring this up to help investors have a plan for a pullback. It’s hard to say what’s going to happen.

Also, this posting will give you an opportunity to ask any questions you might have about the company.

Comments and questions are welcome.

China Energy - CGYV - Chugging Back Up The Hill

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I was in Europe for 2 weeks and fell a bit behind on my correspondence and blogging. When I returned I spent some time plowing through emails and BLOG comments, and was both surprised and entertained by the reaction of some investors to CGYV’s recent pull back to the low print of $1.50. Pretty funny stuff. This formerly hot China stock has cooled off considerably.

For those who are interested, you might want to check out this Bloomberg interview with the investment banker who financed the company. Click here to view the video. It was a pre Asian market open on Thursday, the 11th.

I don’t know why the stock pulled back like it did. I suspect it had a lot to do with a delayed reaction to Q1 numbers, which were admittedly abysmal.

One might easily believe the company, after three consecutive years of double digit growth, had fallen on hard times after looking at the Q1 numbers. After all, the company only delivered $1.5 million in revs in Q1- not much relative to expectations of more than $30 million this year.

This is of little or no concern for those who understand this company’s business model. It’s not the kind of company that delivers consistent daily sales. It’s a large project oriented company, that does a lot of work in house before delivering. Then, they get to book about 90% of the revenues. The rest comes over time.

The company delivered on a rather large project the first week of April which they had hoped and planned to deliver on in late March, so a big swack of revs won’t book until Q2, which should be a good quarter.

In the interim, I find it interesting that none of the whiners about this stock are making much of the $5 million financing the company closed. This was a convertible security, with a 9% coupon, that converts at a non adjustable conversion price of $1.80.

Consider what this means. This is a Hong Kong based fund. Their analysts went directly to the company and performed extensive due diligence. They came away with the impression they could make a significant return on their investment from $1.80 per share in CGYV. True, they get 9% while they wait, but if you wanted to put up $5 million, you might be able to get the same.

That’s the first thing. Second, and perhaps far more intriguing- what are they going to do with the money they raised? After all, if you look at the Q1 balance sheet, you don’t see any need for the cash- at the end of March they had $4 million in cash, $4.75 million in receivables, and $9 million in inventories against $2.9 million in payables- that’s pretty strong.

A Profitable Q2 Precursor For CGVY - China Energy Recovery

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A recently completed waste heat recovery system for Zhejiang, China-based Mingye Chemical Fiber will add another $400,000 to the Q2 2009 coffers of China Energy Recovery (OTC: CGYV)…a quarter that should blow away reported revenue gained in the first three months of the year.

You see it’s all in the timing for China Energy. CGYV books its revenues when it ships out projects for delivery to the customer. If a major project isn’t completed prior to the cut off for the quarter, the company cannot book the revenues.

When CGYV delivered just $1.5 million in revenue for Q1, some investors saw that as a major disappointment. That’s because the $4.85 million generated from a completed project for a customer in New Guinea missed the cutoff for reporting Q1 revenue.

So, on top of the recent $400,000, you can add at least another $4.85 million to its Q2 revenue for at least $5.3 million. CGYV said its backlog of contracts signed, sealed, and delivered in 2009 to be worth $32.5 million, so who knows when the rest of that will come trickling in.

When Q2 earnings come out (I haven’t heard any dates yet), I’d expect the current stock price of $1.57 to shoot up as CGYV investors celebrate en masse.

Nighthawk May Be Spreading Its Wings Soon

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Nighthawk Systems (OTCBB: NIHK) is one of those micro-cap stocks that can move up very quickly on light volume and fall very quickly on heavy volume.

Such was the case today after the company addressed its record revenues and enhanced margins during 2008 and painted a powerful story for growth for 2009 and beyond.

Heading into today’s news, NIHK sold for $.02 but rose 27% in mid-day trading. As the day went on, volume increased as did selling and Nighthawk closed at $.025 (+13.64%).

NighthawkThat $.02 mark is key. The stock hadn’t budged from it since March 2, suggesting that $.02 might be a bottom and that falling below it would not be a good sign.

However, if investors take what Nighthawk Systems CEO H. Douglas Saathoff said to heart, the stock could gain momentum in a short period of time. A year ago in May, shares sold for .08.

That’s all contingent upon Nighthawk delivering on its promises of a growing customer base, new products and better sales channels leading to growth in the second half of 2009.

Saathoff pointed to new relationships as the reason the company should be able to supplement existing order flow for set top boxes in the latter half of 2009.

With government spending for smart grid devices on the rise, demand should lead to growth in sales of power control devices in the latter part of 2009.

I know those are a lot of shoulds, ifs and buts. Until the numbers can speak for themselves, this stock is risky but promising. If you want to take a shot and hop in at what might be the bottom, go for it.

Just know what you might be getting into.

Brazil, EWZ Hot…Newbie BRF May Turn Even Hotter

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I’ve been hot on Brazil for some time now, and the price of EWZ continues to sizzle. From our $35 entry point to today’s $57.28 close, those of you who bought EWZ hook, line and sinker are sitting on a 64% unrealized profit…not to mention the sweet 4.7% yield it’s delivering.

With $6.06 billion in assets, this large-cap value ETF has many admirers. I’m sure the newest small-cap Brazil-based ETF will be just as popular and profitable.

Just weeks old, trading volume on Market Vectors BRF zoomed from just 30,000 to 282,700 with $11.1 million in assets and an 18% gain since its May 14 inception.

The reason I’ll be keeping an eye on this one is mainly due to its broad, small-cap focus. Accounting for over half of the nation’s IPOs in 2006 and 2007, Brazil’s smallest stocks fell swiftly during the height of the global crisis and almost all newly listed companies fell below their offer price.

These depressed prices represent excellent value for investors who believe in Brazil’s long-term growth prospects…as I do.

Get this…Brazil just recently announced that it has enough money lying around that it would follow in other booming countries footsteps in setting up a sovereign-wealth fund, worth between $10 billion and $20 billion, to invest its excess cash.

Also, long considered a global power in agriculture and natural resources, Brazil has added a key ingredient that had eluded it: a currency with staying power (remember what that used to be like?). As a result, the greatest burst of prosperity the country has witnessed in three decades has been unleashed, attracting foreign investors by the score and providing a growth engine for a flagging global economy.

Finally, a little icing on the cake: Back on April 30, Standard & Poor’s upgraded Brazil’s debt to “investment grade” - making Brazil the last of the BRIC nations to have its creditworthiness win that coveted seal of approval.

Now, I don’t see BRF as a complement to EWZ, but as a possible replacement for it. My 2009 target price for BRF is $60, and we’re inching closer to that mark every day. As we know, small caps historically outperform large-caps coming out of a recession.

And, like here at home, Brazil struggled to pull itself through. It’s nowhere near the trouble the U.S. still wallows in, and signs of growth are abundant. As its economy continues to churn at record RPMs, those undervalued small-cap stocks that make up the BRF stand to blossom quite nicely.

Interestingly, just two stocks make up 50% of EWZ: Vale S.A. (NYSE: VALE), the world’s largest iron ore producer; and Petrobras (NYSE: PBR), an oil, gas and energy producer. Next come two major non-state owned banks, making up the next 11.5%. That’s nearly 60% of the ETF in four companies—a rarity in the ETF world.

BRF is comprised of 51 stocks with the following sector breakdown: Consumer Discretionary, 31.7%; Materials, 15.8%; Financials, 11.7%; Utilities, 10.7% and Industrials, 10.5%.

So, we’re looking at a broader piece of Brazil in BRF. I definitely have this small-cap ETF on my radar screen. I’ll let you know when it blips even louder.