To OTC Journal Members:
 

Comments in the BLOG

I was away last week, so didn't get much done in the BLOG. It's a typical August- not much going on and stocks tending to grind down on light volume. This week looks like more of the same. One interesting event worth publishing on- A huge print in BPTR last week. On August 18th there was a 1.8 million share trade. I have heard some rumors - all positive- and will try to have 411 in a day or two.

To use the BLOG, simply go to the home page at www.otcjournal.com - the BLOG will scroll down automatically on the right side of your screen. The most current journal entries appear in the middle of your screen. Check back frequently for updates particularly when stocks are moving to overbought or oversold levels or in volatile markets. Your questions and postings do not automatically appear, so don't bother posting the same question multiple times. I personally go through to moderate and respond to every question.
 

NeWave (OTC BB: NWWV): Continues to Deliver the Top Line Growth

NeWave delivered it's June quarterly 10Q financial this past Friday, and top line growth continues with a couple of interesting twists.

NWWV finished the quarter with $2.67 million in revenues, up 43% over the same quarter in '04. The company elected to write off a lot of bad debt on a one time basis, which made the net revenue number look weak. In successive quarters the number should return to a more normal ratio, thereby diminishing the effect of the one time write downs.

Companies have some latitude in these matters, and it makes sense for NWWV to get this out of the way while the stock is trading poorly. That way, in successive quarters when the stock has momentum, the financial statements won't be bogged down with one time events.

In addition, there was a substantial non-cash expense paid in the form of shares to nationwide spokesperson Bob Eubanks for his participation in the upcoming infomercial and future efforts as a representative of the company. He is engaged for the next two years.

In my view, any bad news you could glean out of the filing has already been priced into the stock. On the plus side, the top line continues growing.

NWWV is spending the summer beefing up its infrastructure to handle the incoming call volumes expected from the nationwide roll out of the infomercial in the fall, and bringing a number of services in house to enhance revenues and profit margins.

I am hoping for a repeat of the 2004 fourth quarter performance. The stock doubled from mid August through to the end of October. It is certainly setting up for this possibility with a sell off akin the Spring of '04 and continued revenue growth.

The stock had a nasty sell off in the April to August time frame (in '04 it was May to July). As you can see from the chart, it spent most of the time camped below the 3x3 displaced moving average.

Recently, it has poked its nose back above, and is currently camped right on the line. A short fade, followed by another penetration to the upside would be very bullish.

The chart is telling me the following. If the stock trades above $.93 with any volume, a serious turn around could be in the cross hairs. In the interim, if the stock trades below $.78, look out below. Those opening new positions at current levels should set $.78 as their stop loss, with about $1.50 as target price before year's end.

In the next four to six weeks the NWWV nationwide informercial will start airing. The company is anticipating a surge in sales volume and subscribers.

If the infomercial works, the stock has unlimited upside. I'm not anticipating big revenue growth in the September quarter, but the October to December period should be breakout time.

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