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StockGroup Technology
(OTC BB: SWEB)- Stage IV Breakout Underway |
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In last weekend's edition I covered
the four corporate cycles which lead to price breakouts. My concept sparked
a lot of email traffic. Most of you asked me to try to identify what Stage
I'm reporting. Everyone's looking to buy as a stock is making the transition
from Stage III to Stage IV. You book profits in the shortest
time possible.
It's hard to do. You know a stock
has made the transition to Stage IV because it has broken out of
its former price range on high volume. If it's already broken out and you
didn't own it during Stage III, it's too late.
StockGroup appears to be making
the transition to Stage IV. As you can see from the chart, the stock
enjoyed a massive volume surge last week. Volume reached levels this stock
hasn't seen in years. In 2003, StockGroup completed several financings
which eliminated all the company's debt and provided healthy levels of
working capital. In return for the money, an excess supply of stock was
created which temporarily mortgaged the future stock price. The company
has taken the capital and used it to expand as evidenced by many new business
wins. Three new contracts were announced last night after the close. Last
week's volume may have paid off the mortgage.
Therefore, it was just a matter of
time before the market absorbed the excess supply of stock and was ready
to make the transition to a Stage IV breakout. We could be on the
cusp of a major breakout in StockGroup. Until now, the stock
has been range bound for eight months.
Two independent analysts have projected
a stock price of $.60 plus on StockGroup. Earlier this year,
StockGroup
was chosen by the Associated Press to become their purveyor of financial
tools, and since that time new customers are being booked regularly. Their
partnership with the largest news organization in the world virtually assures
long term success, and it was just a matter of time before the market made
the transition to Stage IV.
I believe the company will eventually
be bought out. The financial content industry has been going through a
major consolidation phase, and the Associated Press relationship
has enormous value. StockGroup is one of the only smaller targets
left in this industry group.
The stock is now making its fourth
try to break above $.40 this year. The fourth try might do it.
Click
Here to read last night's news release highlighting three new contracts.
If you missed last weekend's edition
on the four phases leading to stock breakouts, click
here to review. It's an important concept.
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Imaging
Technologies (OTC BB: IMTO) Delivers Huge New Contract |
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Tuesday, just after the market closed,
Imaging
Technologies delivered a massive news release on a new business win,
and the stock surged on prolific volume.
The company, which has shed its former
business, is now a PEO (professional employee organization). Small
companies use Imaging Technologies to hire their employees. The
company currently has about 6500 employees on behalf of other small businesses.
The shear number of employees allows Imaging Technologies to negotiate
favorable terms for employee benefits such as health insurance and pension
plans. The companies have the advantage of eliminating the human resource
department and simply writing one check per week. Everyone wins.
The new contract represents annual
payroll of approximately $43 million. A second phase is contemplated,
covering over 500 franchise outlets, representing $154 million in
annual payroll. The new contract covers 150 franchise outlets for chains
such as Burger King, Taco Bell, and Kentucky Fried Chicken.
This is obviously an important milestone
in the company's evolution. However, I don't believe it will lead to a
Stage
IV breakout in the stock. The stock has traded over 50 million shares
in the past three trading days. It tried to make the $.05 level, only to
be repelled. Clearly there is substantial overhead supply.
In addition, the story is a bit convoluted.
There are several subsidiaries operating various components of their business,
which is confusing. Furthermore, the company has yet to file a financial
statement on their June quarter, which is touted to be the first quarter
of real PEO business. As June is their year end, we have to wait for an
audit to be completed and a 10K to be filed. ITEC recently filed
for a time extension for their 10K filing.
We could be in the early stages a
significant opportunity, but I will wait for the smoke to clear before
providing an opinion. Use it as a source of funds if you have a nice profit,
or stay in for the longer term. It's your call. I expect to report more
on this one in the future as the facts become clearer.
Click
Here to read the press release.
Charts Provided Courtesy
Of TradePortal.com |
