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To
OTC Journal Members:
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What A Difference
A Year Makes |
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The market has been beaten up over
the past six weeks. As I wrote in a previous edition, good news is bad
news and bad news is bad news in today's environment. The market's short
term focus is on geopolitical conflict and and interest rates relative
to inflation. Earnings and corporate growth have been booted to the back
of the bus.
For those who are interested, S&P
500 performance is off the charts. The analysts' consensus for Forward
52Wk Operating earnings is $66.20, up $0.27 for the
week and at another new all-time high.
Trailing 52Wk Operating earnings
for the S&P 500 now stands at $58.47, up $0.59 last week
and at another new all-time high. The PE now stands at about 18.9.
I can't help reflect on what a difference
a year makes. A year ago at this time the raging bull/bear debate focused
entirely on whether there really was an economic recovery. Bears argued
the market surge would not be supported by increasing business, and the
market bottom was no where in site.
One year later, the bull/bear debate
focuses on whether the economy is too overheated, and the imminent return
of raging inflation associated with unmanageable growth. The market is
up considerably from where it was one year ago, and the bears were simply
wrong after three years of profits in a declining market.
Today, the FED decided to leave interest
rates unchanged, but made it clear the FED funds rate would be going up,
slowly but surely for the foreseeable future. The market responded by climbing,
tipping its proverbial hat to Alan Greenspan for setting the table to prevent
the emergence of inflation.
This could be a turning point for
a market which has been awfully tough this year, despite awesome corporate
performance.
And, speaking of awesome corporate
performance, here's an update on our latest idea, American Water Star:
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American
Water Star (OTC BB: AMWS); Product Available Online |
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American Water Star is my
core idea in the new low carb revolution. If you are looking for growth,
you are going to find it here.
Since first reporting on the company,
I have learned the following:
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The company recently delivered 73
truck loads of this beverage line to Wal-Mart. It is now
being delivered to 1200 individual Wal-Mart superstores all over
the country. Free samples are being provided every other week for the month
of May. After May, free samples will be given away one week per month for
the next four months to get exposure. It is carb free, sugar free, and
calorie free.
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They achieved more in sales in
the month of April alone than they achieved for the better part of 2003.
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They now own four of their own
bottling facilities: Florida, California, Mississippi, and Hawaii.
The Florida facility has the capacity to generate about $12 to $15 million
in annual sales, and is just ramping up. The Mississippi facility is about
five times as large, and scheduled to come online in the next few months
to meet demand. They acquired all this capacity without taking on any debt.
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Costs are decreasing, and therefore
margins are increasing.
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The popularity of the beverage in Hawaii
is rippling through to Japan.
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The company has applied for a listing
on the American Stock Exchange. If and when it is granted,
this could bring institutional interest into the stock.
Since first publishing on the company,
I have received a number of emails from members wondering where they could
get the beverage. If you don't have a Wal-Mart Superstore in your
area, you can now order by the case online, and have Hawaiian Tropic
drop shipped to your door. I ordered three cases yesterday. A case of twenty
four 17 ounce bottles runs about $20.
Peter Lynch, one of the greatest
mutual fund managers of all time, believed in buying stocks in products
you used and liked. He would tell you to order a case and decide for yourself.
Here's an opportunity for you to take a proactive role as an investor.
Order a case, and decide for yourself if this is a product that will sell.
The financial landscape is dotted with unique food and beverage companies
that had multi year moves as their products gained market share: Snapple,
Clearly Canadian, Ben & Jerry's, and Starbucks are a few that come
to mind. If you had tried their products just after being introduced and
invested in the stocks, you could have made superior returns from your
own experience.
Simply visit American Water Star's
web site at www.americanwaterstar.com
to order the products. Click on the product you want to order off the left
hand menu bar. The Hawaiian Tropic line, which is arriving at Wal-Mart
right now, can be ordered simply by clicking
here.
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AMWS:
Up Trend Continues Despite Pullback |
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Shares of AMWS have been in
a solid uptrend since last July. Over a period of ten months this stock
ran from $.15 to a high of $2.40 as the company introduced new product
lines and started gaining traction.
The stock provided a nearly perfect
50% retracement to the $1.25 level in March, and made its next leg over
$2 as the Wal-Mart relationship became common knowledge.
The stock sold off a couple of days
after the announcement, suggesting some investors were more interested
in a short term trade on the Wal-Mart announcement than a long term
investment.
However, as you can easily see from
the chart, the short term uptrend remains intact. As I am putting the finishing
touches on today's edition, the stock is actually come down to meet the
trendline at about $1.70 on much lower than average volume.
I don't believe a trend reversal
is in the cards for this one, as the company is in a very strong growth
mode. Therefore, the entry point on this stock is ideal right now.
Clearly, the Wal-Mart relationship
was already priced into the stock. It appears the short term sellers have
all taken their profits, thereby diminishing the supply and positioning
the stock to move when the company delivers its next upside surprise.
All indications have American
Water Star growing 400% to 600% this year.
When the market turns its attention back to growth companies, this stock
should do extremely well. If the company has achieved its AMEX listing
by then, it will have greater visibility for institutions. You definately
want to be in ahead of the next wave.
Charts Provided Courtesy
Of TradePortal.com |
