To OTC Journal Members: 
 

China Energy (OTC BB: CGYV): Media Starting To Catch On

EENEWs.net is a web portal committed to all things "Green". EE is short for "Environment and Energy", and the publisher describes its web portal as the "the leading source for comprehensive, daily coverage of environmental and energy policy and markets".

It was brought to my attention China Energy Recovery (OTC BB: CGYV) was recently featured in a two part article, written by Michael Burnham. To read the feature, simply click here.

I would expect CGYV to continue to garner all sorts of media attention akin to today's, and even higher profile media outlets are beginning to sniff around their story. You learned about it first from the OTC Journal, so take advantage of this information edge you have.
 

Some Upcoming Events

There are several important quarterly reports coming about the end of this week. Of significant interest to me will be the China Energy Recovery (OTC BB: CGYV) 10Q filing- I expect to see hard evidence of continued growth, solid cash flow, and profitability. 

Spicy Pickle Franchising (OTC BB: SPKL) is on tap shortly as well. In the case of SPKL, I'm looking for further top line growth and diminished losses. Even with diminished losses, I expect there nevertheless will be losses, and therefore their cash position will start to be of interest. It's time to start looking at when they will run low on cash, at which point they will either have to raise capital on rather unfavorable terms, or reduce overhead to align with their ongoing cash flow. Those who believe the company could go out of business are simply wrong- the recession has definately hurt their expansion, but they can reduce overhead to align with cash flow if they have to. 

Nighthawk (OTC BB: NIHK) is another company who's quarterly filing will require scrutiny. Based on recent public disclosures, it seems highly likely NIHK's top line in the power disconnect business will reflect ongoing growth. I am concerned there were no sales in the set top box business in Q3 as none have been announced, and they were already razor thin on cash at the end of Q2. We'll get an interesting look at how CEO Doug Saathoff is managing in this difficult environment against a backdrop of very limited capital.

My other two followings- PhotoChannel Networks (OTC BB: PNWIF) and eFoodSafety (OTC BB: EFSF), won't be delivering quarterly filings at the end of this week. PNWIF has preannounced it will deliver its audited fiscal year end numbers (Sept 30) on December 15th. EFSF has an off calender reporting period. We will see their mid December for their Q2 numbers which reflect Aug through October. 
 

Sierra Wireless (NASDAQ: SWIR) and Novatel (NASDAQ: NVTL): Less Than Bright Futures

In last weekend's edition I wrote about two wireless companies in a simlar space. Novatel and Sierra Wireless are two companies who have made millions providing the wireless technology to hook notebook computers to internet access while roaming outside one's network. Verizon, Sprint, AT&T, and all the other major wireless carriers offer this service, and the new 3G networks are making it far more efficient.

As I noted in last weekend's edition, both these companies are trading at absurd valuations- in the case of SWIR the stock closed Friday at $8.30 with $6.45 in cash and no long term debt. It's a bit murkier for NVTL on the cash side as they are behind on their filings, but at last count $4.61 per share in cash with a $5.32 share price. No long term debt here as well. 

I dug in a little deeper this past week, and now have a better understanding for why these stocks are so absurdly cheap. It relates to the market's perception of the future of their businesses. 

In the wireless world, the smart phone hand set is morphing more and more into delivering the same functionality as the notebook computer. Browsing the internet for your hand held is becoming faster and far more efficient. Emails flow smoothly into the Blackberry, iPhone, and the other competitors. Spread sheets, word documents, and other functionalities formerly reserved for the notebook with an internet connection are being handled in a user friendly manner by the new generation of hand held smart phones.

Both NVTL and SWIR have made millions providing both hard ware and software for internet connectivity for the notebook. However, the handset manufacturers don't need to include their technology for internet connectivity. 

In short, both NVTL and SWIRare on the downside of their growth curves, and unless they can evolve their technology into something the smart phone manfucturers need, their future has limited upside.

Both companies are absolutely loaded with cash, so they will both no doubt find new endeavors. However, for the time being, the market is not enamored of their future.

Therefore, upon further reflection I am withdrawing my buy recommendations for both companies. This is not to say they are not both absurdly undervalued by any traditional metric. In fact, there's probably a lot of money to be made on both companies as the stocks rebound to a more reasonable level. 

However, I prefer to find companies on the front end and at the steepest part of their growth curves. Not coming down the backside. I sold my position in NVTL and at a small profit, and intend to follow suit with SWIR this coming week.

Home Page : www.otcjournal.com
Email Questions or Comments To: editor@otcjournal.com