Email : info@otcjournal.com
URL : http://www.otcjournal.com
To
OTC Journal Members:
For the first time in months small
stocks are beginning to trade well. With year end tax selling over, and
a revitalized market for technology stocks, small stocks are beginning
to come off the bottom after the worst nine months in the history of the
NASDAQ.
The management of many small companies
were wisely reluctant to share good news with the investment community
in the last two months. In the environment we had at the end of last year
any good news was met with selling pressure. Bad news was met with devastation.
With no hope of stock performance, many companies chose to take as many
write downs as possible and withhold news of substantive progress for a
more favorable environment. Good news is now starting to come.
We had a great week with MedGrup,
our current favorite choice in the microcap arena for 2001. The stock closed
one week ago Friday at $1.50, down from a previous high of $4.875. Two
outstanding news releases highlighting new business opportunities yielded
a high volume week with the stock trading as high as $4.375, and closing
at $2.75 for an 83% gain. This stock is now rebuilding its value
and hopefully headed for new highs.
As we pointed out in a previous edition,
Wall Street Analysts continue to astonish us with their uncanny ability
to be completely wrong. Every stock in the semi conductor group had been
consistently down graded in December by these Wall Street geniuses. One
would think that down grades mean the stocks are going down. Intel (NASDAQ:
INTC) had a great week, appreciating about 10%, along with the rest
of the group.
Lucent (NYSE: LU)
is our favorite current example of Wall Street stupidity. Virtually no
brokerage firms have a strong buy recommendation on the stock. However,
the stock has managed to find its way from $13 to $20 since the first trading
day of 2001.
With MedGrup on its way to
higher levels we have chosen to feature PhotoChannel (OTC BB: PHCHF)
in this weekend's edition. We believe this stock is dramatically oversold
and due for a major rebound.
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PhotoChannel
Networks (OTC BB: PHCHF) |
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Having seen a high of $1.6875
as recently as September, PhotoChannel closed Friday at a mere $.31.
Despite the poor stock performance, the company continues to make substantive
corporate strides, and is actually ahead of its business plan.
This past week Roche Securities issued
a Speculative Buy recommendation on the stock with a 52 week
target price of $1.25. Perhaps this analyst has the unique ability
to pick one at the bottom. If the stock can find its way back to $1.25,
this would represent a 300% return on invested capital from today's
levels.
We believe the stock is poised to
rebound into the $.50 range which would be a 60% return
from
Friday's close.
PhotoChannel is
positioning itself to be a leading provider of online digital photography
services. There is an explosion in the use of digital cameras by consumers.
Salomon
Smith Barney, PhotoChannel's strategic advisor, believes this
industry will grow dramatically over the next 10 years.
The company's recent accomplishments
include:
-
Over 100,000 members have
enrolled at the company's website since October, substantially ahead of
projections.
-
Procured Hotjobs.com as the first
Internet community to utilize PhotoChannel’s business-to-business
services.
-
Increased the viability of its open
network by forming a strategic alliance with Genuity Incorporated (NASDAQ:
GENU). Genuity will contribute $37 million in equipment
to be installed at the first 7,500 network members without any capital
cost to PhotoChannel or participating members.
-
Signed Wolf Camera Inc.
to the PhotoChannel network as print fulfillment members. This advances
PhotoChannel’s
business model to the “one-to-many” phase in which customers are served
from many regional printing facilities. Wolf, a private company
founded in 1974, is the second largest specialty photography outlet in
the U.S. With 550 retail photo labs, Wolf will allow
a PhotoChannel customer, and family members, to pick up prints of
pictures from any Wolf outlet. A customer in Washington ordering
a set of prints from PhotoChannel’s website will be able to pick
them up at a Wolf outlet and a family member in Florida can pick
up a similar set from another local outlet.
-
Canceled pending merger with MotoPhoto
as the company's financial performance deteriorated substantially from
its 1999 profits. However, PhotoChannel will still be able to take
advantage of the MotoPhoto customer base as a result of a newly
crafted agreement.
Watch for this stock to rebound. We
have heard rumors of highly substantive positive news releases in the near
future. The stock is oversold and ready to rebound.
As always, we beg you to read the
section on Rules
For Successful MicroCap Investing found on the left hand menu bar of
our home page before committing any capital to a microcap stock.
We are preparing a market forecast
for next week from some of the smartest people we know. We hope to have
it for the mid week edition. Have a great weekend.
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