Home Page : www.otcjournal.com
Email Questions or Comments To:
editor@otcjournal.com
To
OTC Journal Members:
This week's BLOG entries were all
about CREE (NASDAQ: CREE). Those who have been following my commentary
on CREE should recall I have been suggesting owning this one at
about the $26 level. Above $30, in this market environment, I would suggest
selling covered calls, which is a reasonably conservative way to generate
income from your position while we wait for much higher levels. CREE
is a "green" company, with technology I believe will eventually be the
preferred replacement for the incandescent light bulb.
CREE swooned this week on
a less than stellar earnings report, and it dropped perfectly into my buying
range. More on the company below for thoe who need a refresher course.
The BLOG is your opportunity
to ask questions and offer comments. I will make an effort to answer every
legitimate question. If I don't know the answer, I will contact the management
and get the answer. Alternatively, if you have questions you don't want
publicly displayed, you can always email me directly at editor@otcjournal.com.
If you submit a comment or question, it will not appear on the site until
I have responded.
To use the BLOG, simply go
to the home page at www.otcjournal.com
- the BLOG scrolls down from the upper right hand corner. The most
current journal entries appear on the right hand side of you screen. Check
back frequently for updates particularly when stocks are moving to overbought
or oversold levels in volatile markets.
 |
CREE (NASDAQ:
CREE) Cooperates: Market Hates Earnings Report- I Love Price |
|
CREE came in with weaker than
expected earnings mid week, and the stock was beaten down pretty hard by
Wall Street. These emotional sell offs make for great buying opportunities
in good companies, and CREE has traded perfectly down into my range
to accumulate the stock.
What do the two things in this picture
have in common? Well, one is extinct, and the other will be soon. The incandescent
light bulb will soon be going the way of the dinosaur. Canada, Australia,
Brazil, Venezuela, and the European Union all have plans to phase out the
incandescent light bulb over the next 5 to 10 years.
Thomas Edison is credited
with having invented the incandescent light bulb, but there were competitors
in the late 1800's. Historians will tell you the first successful light
bulb was demonstrated on October 22, 1879, when Edison got his then
current version to illuminate for 13.5 hours before it died.
In the short term, many believe the
CFL
(compact fluorescent light) will be frequently used as a replacement.
It's a fluorescent light that screws into the normal light bulb socket.
However, I have a couple in my house, and the lighting is very poor. Incandescent
lighting also has some environmentally unfriendly components (high mercury
content).
Enter the LED bulb. You see
it pictured here. Right now, they are very expensive. However, they last
15 times as long as an incandescent bulb, use 85% to 90% less energy, and
are much brighter.
As compared to the CFL, they
last 4 to 6 times longer, and use about 1/2 the energy.
The LED bulb is solid state,
and here's how it works. Instead of a lighting element that glows in a
gaseous enclosure, electrons flow across a semi conductor junction and
emit light. It is very bright light, takes very little energy. The drawback-
right now it is more expensive to manufacture.
CREE has lots of competition
in LED lighting. Phillips has been gobbling up smaller companies
in the LED space (TIR Systems and PLI), and stiff competition for
mobile applications (i.e. cars, mobile devices, etc) has been coming out
of Taiwan.
However, reports I have read indicate
the CREE technology is 30% to 50% more efficient than
that of the big boys in lighting: Phillips and Nichia (subsidiary
of Siemens).
Several analysts expect CREE
to have a competitive advantage in the general lighting market over these
larger companies, and therefore could be an acquisition candidate at some
point in the future. GE would be a likely candidate to take them
out at a big premium.
LED lighting is clearly the
wave of the future. Today, it is still expensive. Analysts believe it will
go the way of the computer chip- every 18 months for the foreseeable future
the illumination power will double and the cost will be cut in half.
CREE's earnings this past
week came in at about $.07 when the market was looking for $.11. Of course,
the stock sold off quite harshly. The stock had run up a bit into the earnings
release, and gapped down from $30 to $26- a gap I believe will be
filled over the coming weeks.
The company delivered $125
million in revs- up 5% from the previous quarter, and 38% more
than the same quarter one year ago. In the next quarter, which is their
4th fiscal quarter, the company expects to deliver $130 million in revenues,
and earn about $.06 no GAAP, and $.12 non GAAP (a real measure of cash
flow).
As you can see from the chart, CREE
ran from about $20.50 to $35.56 in the October to February time frame.
This week, it finally pulled back to a nearly perfect 61.8% retracement
of that entire move. Technically, I love these kinds of entry levels. Furthermore,
there was huge volume on the big blow off day- In fact, it was the single
highest volume day in two years. This suggests everyone who wanted to sell
has done so, probably making it possible for the stock to move up from
here quite easily.
As LED lighting technology
gets less expensive, adoption will start to be more widespread. It will
be driven by both legislative agendas and energy saving motives. CREE does
not have the only technology in this arena, but it has the best.
Their is little debate in the financial
community about their technology. Most of the debate surrounds the valuation.
It is a heavily shorted stock, and very controversial.
Personally, I love the future of
the LED light bulb, and CREE is the way to play it. Buy right now
up to $27. SSL - I'm not worried as long as it holds up over $25. Longer
term, I'm still looking for $50.
Currently, I own 3,000 shares at
an average cost of about $27, and 25 $25 May Calls at $2.175.
Home Page : www.otcjournal.com
Email Questions or Comments To:
editor@otcjournal.com
|
|
Spicy (OTC BB: SPKL) Opens #37
|
| This morning,
Spicy
announced it finally got its first new restaurant of 2008 opened. The new
San Diego store, located right in between the downtown area the Little
Italy district, opened this past week and delivered outstanding numbers
with absolutely no promotion.
In addition, the company announced
franchisee Jason Cox has already signed a new lease for a second location
in No. County San Diego, and is looking for a third site.
More improvement, and more to come.
This stock is becoming really undervalued as the company continues to deliver
outstanding results without much movement in the stock price. |
|
|
V2K (OTC BB: VTOK) Opens Kiosks in 2 Big Box
Stores
VTOK has not been a fan favorite
yet, but I'm not giving up on this one. Yesterday, the company announced
the first two installations of its new kiosks have been installed in "Big
Box" stores in Tampa and Denver.
Like many of its micro brethren,
this stock has been very quiet. I wouldn't be surprised to see VTOK
start to get some legs one of these days. Put is on your watch list, and
let's see if interest doesn't start to materialize in the near future. |
Free Annual Reports
