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OTC Journal Members:
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Market Comment
- Squeezing In Leads Us Towards Day of Reckoning |
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In the June
21st edition (last weekend) I covered the bulllish case for the market.
I showed a long term chart of the S&P 500. This index, along with all
the other major equity indexes, convincingly pierced their long term downtrend
lines in May, converting many technicians from the bearish camp to bulls.
This weekend we'll take a look at
the short term picture as we near a critical juncture. The market won't
go straight up forever. The current uptrend, which began in early March,
continues to confound money managers trying to accumulate stocks at reasonable
levels. The market looked like it might capitulate this past week. Instead,
it behaved like a perfectly trained hunting dog. It put its nose down and
sniffed the uptrend line for three days, and then ran away. The trend line
held perfectly.
The Nasdaq's failure to break down
below the support line leaves the uptrend intact. So when do we top out?
As you can readily see from the chart, the NASDAQ has failed to break above
the the 1690 mark after making three attempts.
Therefore, we are close to arriving
at an important day of reckoning. The market is squeezing into the end
of the triangle. It will either break above the horizontal resistance level
at 1690, or break down below the support line. A break to the upside probably
means the uptrend continues. A break below support means we may be in for
some sort of an overdue correction, which would bring a short trading alert
on the QQQ's. This stategy is a great hedge for enhancing returns while
you wait for the market to resume climbing.
Regardless of what happens, there
will be individual stocks that continue to do well. Here's one that's likely
to continue moving to the upside:
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StockGroup
Technologies (OTC BB: SWEB) - Analyst Says Company Is At Low End Of Range |
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I was hoping our members would get
a chance to accumulate shares of StockGroup as it held below the
$.30 mark. In this past Thursday's edition (click
here to read), I pointed out the stock was undervalued as compared
to its peer group.
The opportunity to pick the stock
up while it remained cheap was sabotaged by Investrend Analyst Ryan Fuhrmann.
In a news release which came out early Friday morning, he published the
first Investrend update on the stock in quite some time. SWEB ended up
trading 1.3 million shares (the highest single volume day in two years)
and closing at $.34 after making an intra day high of $.38, up net 17%
on the day.
On Monday there will probably be
strong follow through as the Investrend update gets circulated. I published
a price target of $.42 on SWEB, assuming it became fairly valued as compared
to its peer group.
Apparently, the analyst at Investrend
does not agree. They have a price target on the stock of $.55 to $.65 and
a "Speculative Buy" rating. Fuhrmann describes the stock as
"trading
at the low end of a comparable price to revenue multiple".
In light of this update, perhaps
we should raise our expectations for the stock. Like myself, Investrend
is looking to possibly upgrade the price target. In the news release Fuhrmann
states "a target valuation and earnings model will be provided following
the company's next earnings announcement."
There is still a 27% return
left in SWEB when it hits the initial target of $.42. If
the stock achieves the bottom of the Investrend projected range, there
is a 66% move left.
A break through $.38 on Monday would
be very bullish for the stock. This would be a new 52 week high.
Here is the complete text of Friday's
news release for your review. There is some excellent information contained
therein. After reading, decide for yourself if you want to target $.42
or $.55. You make the call.
| Press Release Source:
Investrend; Stockgroup Information Systems
Stockgroup Information
Systems Trading at 'Low End,' Says Investrend Research Analyst Ryan Fuhrmann,
CFA
Friday June 27, 9:55 am
ET
NEW YORK, June 27, 2003
(PRIMEZONE) -- Stockgroup Information Systems (OTC BB:SWEB.OB - News) (TSX
Venture Exhchange:SWB) has been assigned a rating of ``Speculative Buy''
and is trading at the ``low end of a comparable price to revenue multple,''
according to Investrend Research analyst Ryan C. Fuhrmann, CFA, who is
transitioning coverage from Michael Whitney, CFA.
The full report, along
with important disclosures and disclaimers, is available at http://www.investrendresearch.com,
at http://www.investrend.com/articles/secondlevel.asp?level=182
Fuhrmann said a target
valuation and earnings model will be provided following the company's next
earnings announcement. Whitney had assigned the company a $0.55 to $0.65
per share target valuation in November, 2002.
Subsequently, said Fuhrmann,
Stockgroup has announced the elimination of its convertible note and all
remaining long-term debt. ``The earnings announcement on May 16 detailed
quarterly revenue growth of 36% over the same year earlier period and 9%
quarter over quarter,'' and the company's partnership with the Associated
Press is the ``most significant event in company history.''
The analyst stated that
``debt was reduced by 23%, or $400,000, from $1.8 million to $1.4 million
and has subsequently been eliminated. Gross profit increased to 74% year
over year (from 63%) as revenue grew and cost of revenue decreased by 5%.
Gross profit expansion demonstrates the scalability of Stockgroup's operations.
Operating loss stood at ($252,155) due largely to a 45% increase in G&A
expense that resulted in a large increase in payroll expense. Net loss
for the quarter stood at ($468,185), or ($.02) per share.
``Weighted average shares
outstanding for the quarter nearly doubled to just over 20.5 million shares
from just fewer than 10.8 million shares in Q1 2002. Share issuance resulted
from the acquisition of Stockhouse and exchange of convertible notes,''
noted Fuhrmann.
``Stockgroup continues
to sign high-profile clients and partnerships, including Microsoft (NasdaqNM:MSFT
- News) and the Associated Press,'' and it is clear that the company possesses
an appealing and useful product to offer its clients, witnessed by the
signing of high profile clients and appealing gross margins. We are expecting
the Company to achieve near break-even operating results for 2003,`` Fuhrmann
concluded.
The company is enrolled
in Investrend Research's unique and pioneering professional analyst program,
which facilitates independent analysts to provide financial coverage for
shareholders and investors in companies that otherwise would have little
or no analyst following. Institutional coverage enrollment fees vary, up
to $25,800 per year. Stockgroup is paying the enrollment fee for this coverage.
The program is the largest in the world and includes a number of safeguards
to reduce or eliminate conflict.
Ryan C. Fuhrmann, CFA
covered the Health Care industry as a member of the MBA Investment Fund,
LLC, at the University of Texas McCombs School of Business. He currently
follows energy and technology companies as a valuation consultant. He previously
covered the biotechnology industry for Houston-based money management firm
Dyer, Robertson & Lamme. Prior to this he was a portfolio manager in
Chicago at Northern Trust Company where he managed individual discretionary
and non-discretionary trust accounts. Mr. Fuhrmann is a Chartered Financial
Analyst, member of the Association for Investment Management and Research
(AIMR) and the Dallas Financial Analyst Society (DSFA).
Investrend Research has
been a leading independent equity research publishing and distribution
program since 1996, with over 68 AIMR-qualified professional analysts posting
more than 550 reports to date. Anyone may enroll a company for coverage.
Enrollment fees vary, up to $25,800 annum for full Institutional coverage.
The fee for this coverage is being paid by Stockgroup. Analysts are paid
in advance for their initial reports by Investrend to insure independence,
and no one associated with Investrend may own or trade in the equities
of companies under coverage.
Anyone interested in
receiving alerts regarding Stockgroup research should email info@investrend.com
with ``SWEB'' in the subject line.
Contacts:
Stockgroup Information
Systems Inc., John Bevilacqua, Corporate Communications, (800) 650-1211,
ext.180, ir@stockgroup.com. Web site: http://www.stockgroup.com
Investrend Research Div.,
Investrend Communications, Inc.: (718) 896-5060, R. Hempel, email: info@investrend.com.
Web site: http://www.investrendresearch.com
--------------------------------------------------------------------------------
Source: Investrend;
Stockgroup Information Systems |
Charts Provided Courtesy
Of TradePortal.com |
