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When I look back on all these worries
I remember the story of the old man who said on his deathbed that he had
had a lot of trouble in his life, most of which never happened
Winston Churchill from Their Finest
Hour |
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Bottom Fishing-
Follow Those in the Know |
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Are small and microcap stocks oversold
and poised to bounce, or are stocks simply trading where they belong? A
look at a startling emerging trend helps provide the answer.
Mergers and acquisitions in the micro
cap world are booming. Many companies trading at 1% of their former valuations
are exploding off the charts in sudden moves after months of inactivity
and listless trading.
These moves are not fueled by renewed
entusiasm for the stock market. Instead, larger companies within their
industries see value, and are buying companies at bargain basement prices.
For example, last week, shares of
digital-rights management company InterTrust Technologies (NASDAQ: ITRU)
traded up to $4.20 after spending most of 2002 in the $1 range. This stock
traded to a high of $80 in early 2000. InterTrust received an all cash
tender offer from Sony and Royal Philips for $453 million.
Another example is Gish Biomedical
(NASDAQ: GISH), which traded for $.25 cents a share just two months
ago. The current level of $1.76 represents a 600% return for investors
who were willing to buy when no one else wanted the stock. CardioTech
International (AMEX: CTE), a maker of synthetic blood vessels, will
purchase Gish for $7.6 million in stock. CardioTech inherets Gish's FDA
approval as a registered medical device maker.
Microcap Optaa Food Ingredients
(Nasdaq: OPTS) received a $28 million all-cash takeover offer from
Stake Technology in October. Opta's stock was stuck in the $1 range for
most of the first quarter, and is currently in the $2.50 range.
This extraordinary increase in mergers
and acquistions in the microcap world is being fueled by larger companies
within the respective industry, not market investors recognizing value
and bidding up shares.
If this trend continues, fund managers
and investors everywhere will begin hunting for the next acquisition target.
These smaller oversold issues will start to drift higher, and this will
act as a catalyst to get individual investors and fund managers back into
the micro cap world.
If you want to know if many are of
these small issues are undervalued, look at what their big brothers are
doing within their own industries. They are buying, and it's time for you
to start buying also.
We are looking at several opportunities
that have the potential to follow the patterns demonstrated above. Stand
by for ideas.
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The
Case For A Significant Rebound In the Technology Sector |
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The recession appears to be waning,
and this belief is starting to be reflected in stock prices. With numbers
now in for third-quarter gross domestic product, the U.S. economy has enjoyed
a very anemic recovery over the past year. It has grown at a 3 percent
rate, with 3.6 percent growth in the domestic economy since the recession
began to wane one year ago.
Buried within the GDP numbers are
signs that technology spending is finally coming back, and stock prices
are beginning to reflect the change.
In the new GDP report, business investment
in equipment and software increased at an annualized 6.5 percent in the
third quarter - its best performance in 2 1/2 years. Computer sales are
up, rising at a 75 percent annual rate in the most recent quarter. Business
spending on durable goods increased 23 percent annually. Wireless is recovering,
with top-line sales and profits at Nextel, Verizon and AT&T coming
in surprisingly strong. Customer demands for cable and broadband are returning
as evidence in performance at Comcast. In short, the tech sector is being
reincarnated from the dead.
If the tech sector rebounds strongly,
the market will once again become the preferred place to put your money.
If the NASDAQ can get through 1430 convincingly, many technicians believe
this will represent a major trend reversal, and higher levels could be
imminent this year.
Charts Provided Courtesy
Of TradePortal.com
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