To OTC Journal Members:
 

Comments in the BLOG

I posted a BLOG on HESG about 45 minutes into the trading day on Wednesday. I advised everyone to stick with the suggested $.75 limit order from the previous night's edition on the GNC reorders for SHUGR™. Since publishing that edition on Tuesday after the market closed, the stock still has not traded down to the $.75, but I believe it's going to.

Right now, my mission is to play contrarian, review some of the good companies who's stocks have been blown out, and accumulate them when every money manager on the planet is playing weatherman and selling anything that is not energy related. When we get passed these storms, and calm returns to the markets, the standard 4th quarter rally will bring these stocks back up to reasonable levels. Until then, there is no reason to pay too much. Real sustainable breakouts are not going to happen with Rita threatening the Texas energy infrastructure. If you participate now, you will enjoy 20% to 50% returns between now and year's end.

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.

If you've been waiting for my previously announced new idea in the biotech arena, there has been a temporary delay, but it's coming- probably the first week of October.
 

NeWave (OTC BB: NWWV): This Company Can't Get No Respect

Who could forget the great comedian Rodney Dangerfield? I Can't Get No Respect was his mantra, and he had audiences laughing until their bellies hurt for thirty years with that line.

Like Rodney Dangerfield, any stock that isn't energy can't get no respect in these tenuous times. Investors are confused and scared, and confusion and fear lead to profitable opportunities.

I don't always adopt the contrarian viewpoint. However, out in front of the best time of the year for stocks in a year when we need a good quarter, I believe we have a unique opportunity.

Who could forget Al Czervik- Rodney Dangerfield's side splitting character in classic comedy Caddy Shack. Wasn't it Al Czervik who said "They're All Selling!!! - Then Buy, Buy, Buy" when he was talking to his broker on the telephone from his golf bag. Al Czervik was a contrarian.

Like Rodney Dangerfield, NeWave is a stock that can't get no respect in the current environment. From a stand still start up in August of '03, the company only achieved a staggering 481% year over year growth rate as revenues rose from $1.126 million in '03 to $6.548 million in '04.

This year the company achieved its first $1 million month in April, and appears to be headed for a $10 million annual run rate by year's end. They have closed some unprofitable subsidiaries, reduced marketing overhead with some clever new programs, and have a mandate to turn profitable by year's end.

For those who need a reminder, NWWV is in the business of putting people in business on the internet. It's a subscription based service. A mere $9.95 gives you a trial membership, and $29.95 per month keeps you going. NWWV provides a huge variety of products you can resell through your own virtual store. It is estimated there are approximately 800,000 people making a living on eBay alone, and many more want to join the party.

Early this week NWWV announced it had achieved the 235,000 member milestone. More importantly the company updated the market on the progress of its new marketing strategy- the long awaited nationwide roll out of the infomercial, starring Bob Eubanks, is slated to be tested in about 12 markets next month and go nationwide by January. When people start receiving their home heating oil bills this winter, many are going to be looking for ways to supplement their income just in time to see the infomercial on their TV.

Here's a weekly chart of NWWV going back to when the OTC Journal first starting covering the company. As you can see, early participants were rewarded with a cool double on the stock in the first year. There was one more spike challenging the $2 level in early '05, and the stock has swooned to a new all time low ever since.

Corporate performance has contributed to the pullback. The company got slightly off its growth path in the late spring as they evolved their marketing programs and shut down two subsidiaries that weren't generating results. Now, they should be back on track.

The company's mandate is to turn profitable by year's end through a combination of cost cutting measures and top line revenue growth. 

I believe the stock has a good shot at getting back to about the $1.50 level this year. There will be rotation out of the energy sector after oil prices peak and calm returns to the markets. Seasonally, the yearly low point is September 27, give or take a couple of days. This generally marks the turning point towards a gallop to the barn for small stocks until about the end of January.

As I write today's edition, the stock is offered one time at $.80. There are only four offers between $.80 and $1.05. Any surge in volume could take this stock over $1 in a heartbeat. It has been blown out and sellers have had ample time to unwind. 

It's a bargain basement steal at current levels. I strongly recommend a limit order of no more than $.90. If the volume increases substantially, there will be some sellers who appear and provide some supply. Don't chase it. I'll probably post a BLOG tomorrow morning with some thoughts on the trading pattern. 

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