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TelePlus (OTC
BB: TLPE): January Sales Suggest Big '06 |
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On Friday morning TLPE shared
its January results with stock market investors. They were absolutely outstanding,
and far better than the market understands.
The Liberty Wireless acquisition
is looking like the perfect strategic move for the company. Here's some
hard numbers to consider: TLPE delivered $2.2 million in
sales in January, and delivered pre tax earnings of $130,000.
TLPE is coming off a $5 million
Q4. $2.2 million in January suggests quarterly sales of $6.6 million. January
is a slow month for the company, so one can easily assume $7 million is
a fait accompli in Q1. These figures imply a 40% growth rate quarter
over quarter. 40%, compounded quarterly, equates to a 384% annual growth
rate (nearly four fold growth).
Here's the kicker and here's what
the market doesn't understand: TLPE closed its unprofitable retail
division as we turned to '06. The retail division accounted for $11
million of $19 million in sales in '05. Therefore, after closing
out more than half of its revenue stream, the company is still able to
deliver 40% quarter over quarter growth, and the highest revenue
month in the company's history.
If they still owned the retail division,
TLPE
would
have generate and astonishing $3.1 million in revenues in January alone.
However, management did the right thing by shutting down its only unprofitable
division, because positive cash flow is far more important than revenue.
This company is steamrollering its
way through the small business and prepaid wireless telecom world. So long
as they remain profitable, the risk of owning this stock is greatly diminished.
So, what about the upside?
Take a look at the January surge
in the stock. It was a great opportunity to take a trading profit, and
I hope many of you did so when I suggested it at about the $.41 level.
TLPE is now setting up for
another similar surge. With support in the $.28 to $.30 range, the starting
point will be much higher than the previous $.25 blast off level.
Technicians call it a measured
move. The next volcanic eruption in this stock should take it to roughly
the $.46 level. If it's a streaky, spiking move, profit taking will be
suggested once again. Each little surge into the $.35 range eats up overhead
supply. Persistence breaks down resistance.
TLPE is a great penny stock
to own because it currently is easy to accumulate. Accumulate in the $.29
to $.31 range, and wait for the next blast off. As long as the
company keeps delivering fundamentally, it is coming sooner or later. Click
Here to read Friday morning's press release.
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Let
Volume Be Your Guide |
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Are you a good enough trader to accumulate
on pull backs, or do you jump in when a stock is rapidly rising on high
volume? If you like to jump in as stocks rise, you are probably costing
yourself a lot of money, and often end up with egg on your face as today's
hot stock pulls back abruptly tomorrow. Big, spiky surges are selling opportunities,
not buys.
TLPE is a great example- did
you buy it when it was first covered by the OTC Journal at $.23,
and sell it at $.41 when everyone else was buying? Or, did you buy
it because it was rolling through the mid $.30's range and you thought
it would trade up forever. If you jumped in at the latter, you need to
improve your trading strategies.
If you are looking to accumulate
a favorite stock on pullbacks, how do you know if a correction is strictly
technical, or a signal of problems under the surface? Let volume be your
guide. Here are two recent examples in OTC Journal ideas which you
may find enlightening.
First: Let's look at a stock that
has been trading poorly of late. HDY has been selling off since
their annual shareholders meeting nine trading days ago. I did not attend,
but have spoken with a couple of shareholders that did attend and were
very disappointed with management's excuses concerning delays in getting
the drilling permits in Guinea. The stock sold off fairly violently that
day. The actual day of the meeting is shown by the arrows in the chart.
Note the big drop in the stock is associated with a very high volume day.
I have since sold my entire position
in this stock, betting it will continue working its way lower. If they
pull a rabbit out of the hat and deliver the drilling permits, the stock
will turn around and make me look silly. However, reading between the lines,
I don't believe it is imminent. I'll be looking to re enter this stock
in the $1.60 to $1.75 range if it gets there. I still believe they will
get the permits eventually.
Dexcom's temporary swoon this
past week represents the opposite kind of opportunity. On Tuesday,
DXCM
released year end '05 numbers. Q4 losses were a little steeper than the
market expected, and the stock starting selling of early in the day. The
stock had closed at $17 the night before, and reopened for trading the
next day at the same level.
Within a half an hour of the open,
the stock started down. However, there was very minimal volume associated
with the correction. To me, this suggested the serious money couldn't care
less about Q4, and had no intention of selling. Owning this stock is all
about getting the FDA Approval.
I quickly checked the chart for the
61.8% retracement level, and determined it was $16.30. I filed a limit
order to buy 1,000 shares at that level. It took about 2 hours, but when
I was filled the stock had only traded about 30,000 shares. Minimum volume
for a $.70 pullback. After being filled I picked up another 1,000 shares.
Apparently, I am not the only trader
looking to buy at perfect 61.8% retracement in this stock. The low trade
of the day was $16.28, and the stock turned right around and actually closed
higher than where it opened that day. Friday's closing price was $18.20-
nearly a full 2 point gain in three trading days.
Here's the point of the story. Both
stocks suffered corrections. In my view, one was a buying opportunity,
and the other was a sell. I let volume be my guide- the low volume pullback
was the buy, the high volume pullback was the sell. When you are trying
to determine if a correction is a buying opportunity or a leading indicator
of a problem, let the volume help you decide.
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