To OTC Journal Members:
 

Comments in the BLOG

There have been no new BLOGs this week thanks to some of the minor inconveniences life sends your way, but I want review some of this past week's highlights. The week started out with me accidentally leaving my travelling conduit to information (my notebook computer) at the security stop at the airport enroute to the Big Apple. I was on my way back Tuesday evening when my family was evacuated from our San Diego home. Apologies for not keeping up with emails and BLOG questions, but I'm sure you understand. 

The family spent two nights in a hotel, and fortunately all is well. However, in the bedlam it was tough to keep up with market issues. Nevertheless, some really great stuff happened this past week, and its worth having a look at.

For starters- how about that Apple Computer (NASDAQ: AAPL) at $185- anybody read the commentary on their Q3 numbers wherein they delivered $1 billion in profits on $7 billion in sales? They blew away analysts' estimates. The commentary- Mac sales going through the roof, fueled by iPod and iPhone users- if you look at my BLOGS on AAPL, this scenario was predicted on target. My AAPL $130 January Calls have turned into one of the best trades I have made in a long time- the mid August $12k investment is now worth about $55K-New target price on AAPL: $125. Still a buy on pullbacks, which will be shallow and short lived.

Secondly and on the total other end of the risk spectrum, how about the news out of our favorite penny stock- Nighthawk Systems (OTC BB: NIHK)? Wednesday morning NIHK announced it would deliver its highest revenue number in four years for Q3- a full 55% above the same quarter one year ago. Here's what important- the Q3 numbers will include no revenues from the recent IPTV set top box company. The first revenues from that product line should appear in Q4- and it should cause another dramatic rise in top line numbers. I still believe this one is going to have another roll at $.25- it's starting to behave really well. Supplies could be dwindling from sellers.
 

Titan Global (OTC BB: TTGL): Is $2 Value Play an Oxymoron?

Risky- Volatile- Scary- Gambling. All adjectives used to describe $2 stocks that trade on the Bulletin Board. Talk to any Merrill Lynch broker and they will tell you $2 stocks are just gambling, and you are certain to lose all your money.

To a certain extent, some of the stocks you read about in the OTC Journal are guilty as charged. They are unproven, with developing technologies, a need for capital, ongoing losses, and what I like to call the "Awesome Burden of Permanent Potential" (see EFSF). People can lose money in these kinds of stocks. If you can't accept that there will be losers, the OTC Journal is not for you.

Titan Global is rapidly becoming an oxymoron- A contradiction in terms if you will. Here's what I mean- this is probably one of the least risky $2 stocks in my experience. This doesn't mean it can't go down. However, the way this company is headed, your downside is limited by the pure fundamentals.

Now that Spicy Pickle's valuation is stretched and I would prefer investors to wait for a pullback, TTGL has become my #1 idea at this time. You should own this stock in the speculative end of your portfolio. I feel very strongly that a lot more interest will be materializing from investors, and you need to position yourself right now. It's not the only idea I have, but I believe it has the most upside potential against the least amount of risk at this time.

This past week, TTGL announced a biofuels agreement for its $400 million Appalachian Oil subsidiary, 4 major new products targeted at the Latino demographic for its telecom division, and the formation of a special division to look at other acquisition opportunities. TTGL is on a roll.

Here's your snapshot. There are only about 60 million shares I&O. The company is currently operating at an annual run rate north of $700 million. The company, according to its most current forecast, is operating profitably on an EBITDA basis. As most of you know, I don't put a lot of credence into EBITDA forecasts- I prefer to look at cash flow. Yes, we no doubt have substantial positive cash flow.

At $2, you are only paying about $120 million for this company, and it is probably worth $1/2 billion.

Here's my comment on the chart. I have circled a fairly lengthy consolidation phase. The longer this extends, the more violently it will move to the upside when it breaks free.

That huge volume bar you see represents a big clean up of the stock, and sets the stage for higher levels. I want you to think of the circled area as an "opportunity" phase. This is an opportunity to accumulate a meaningful position before the stock breaks out. The window of opportunity was short with SPKL and AAPL. With TTGL it has been a bit longer, but I believe it will resolve to the upside as the fundamentals suggest it will trade at much higher levels down the road.

By definition, you must consider a $2 stock risky. On a relative basis, TTGL is one of the least risky $2 stocks you will find, with plenty of upside as more investors learn about this one. A $2 value play? An oxymoron, perhaps. Accumulate and hang in there for a breakout sometime between now and the end of the year. Make yourself some real money on this one.
 

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