To OTC Journal Members: 
 

The Dog That Comes When Called

Like our faithful family Labradoodle, China Media Express (NASDAQ: CCME) did exactly what I predicted it would do two days ago. The dog came when I called it. In today's ugly low volume rout of the markets, the stock "filled the gap" that was created earlier in the week when CCME raised its profit forecast for 2010 considerably.

CCME now says it can net $82 to $85 million in profits this year, up from the initial guidance of $71 to $75 million- non GAAP of course, since GAAP accounting is now becoming meaningless to the investment world. There are convertible preferred shares, but I can't see how this new forecast puts the EPS for this company at any less than $2 per share. Q1 top line numbers were up a whopping 137%, so this is a superstar in the making. They also have lots of cash, so it's unlikely some stupid financing would derail this one. This company has thousands of flat panel displays on municipal buses all over China, and advertisers just love the viewing time they have to the captive audience.

The CCME chart had two notable gaps of late. There was one gap to the downside in late June as the market was falling apart. Early this week, the stock gapped up on the news the company was increasing its profit forecast for the year rather substantially.

As predicted earlier in the week, today's red bar came down and filled both of those gaps. 

Therefore, technically speaking, now is the time to jump into this stock. 

I believe it's likely the company will deliver $2 in EPS this year, so under $10, this stock price seems absolutely absurd. In the big time correction and anemic summer volume, lots of stuff seems absurd, but this one is my personal favorite absurdities.

I am long both the common stock (at $12.75) and the December $7.50 call options. 

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