To OTC Journal Members:

Just a quick note on last week's trading alert- Udate (OTC BB: UDAT)- The stock so far has been a non-event. Nobody has made or lost much money. The company issued a press release yesterday stating their intention to apply for a NASDAQ listing- Look for the stock to trade above $4 tomorrow with a little luck.
 

Trading Alert: NetSol International (NASDAQ: NTWK)

Our current editorial team has been involved with covering NetSol International since January 15, 1999. The stock was our biggest winner, hitting a closing high of $75 (1835% return) last March, just 15 months after releasing the original profile.

The stock was trading solidly in the mid $20s at the end of August when the market got clobbered. The company has a very loyal shareholder base, but short sellers were able to pound the stock down to a low of $4 on October 19th.

Since then the stock has rebounded sharply. In this past weekend edition we suggested buying if the stock pulled back to $7 from its $7.6875 close last Friday. We had no way of knowing what would happen on Monday.
 

Featured On CNBC's Power Lunch

This past Monday NetSol was featured on CNBC Power Lunch as a stock that had been beaten down severely as was bouncing back. The publicity simply eliminated the possibility of us seeing our $7 entry level in the short term. In fact, the stock traded up to $11.40 that day.

Since then we have been watching every trade looking for a good entry level. There seemed to be resistance at $9, but every time the stock got down to about $8.50 it rebounded.

Today the stock finally broke through the $9 level at the end of the day and closed near its intraday high on a day when the NASDAQ was down. In our opinion this signals a potential break out.

Your risk reward ratio is excellent in this stock. There seems to be good support at $8.50, which is only $.68 below today's close of $9.18. The upside is a return to the mid $20's in the next 30 to 60 days.
 

NetSol's Business Model

For those of you who are unfamiliar with the company, NetSol is a Pakistani based computer programming company. Good programmers are in huge demand, and companies seeking to reduce their development costs outsource their programming needs to NetSol. The company built its reputation by developing most of the Mercedes-Benz leasing software which is currently in use world wide. NetSol has over 400 employees (up from 150 a year ago), and charges $350 to $450 per day for the services of a programmer. They pay that same programmer $35 to $45 per day, which is a comfortable living in Pakistan.

They also own the only broad-band ISP in Pakistan, a country of 150,000 million people, along with a German ISP.

NetSol's year 2000 revenues (June 30 year end) were about $7 million, double the previous year. This year the company is expected to do $20 million in annual sales and turn profitable. We understand the September quarter numbers will be released within the next week. At that time we will get confirmation of their progress.
 

Trading Alert Details

In our opinion today's close over $9 represents a potential breakout. 

Here are our thoughts on this Trading Alert on: NetSol International (NASDAQ: NTWK):

• Buy up to $9.75.
• Set your Stop Loss at $8.50 (Support Level) or what ever your risk tolerance is.
• If the stock can get through $11.50 in the next 10 days it should go higher. Longer term investors might look for the stock back in the mid $20's in the next 30 to 60 days if the NASDAQ gets healthier and short sellers are forced to cover.

These numbers are our opinion only, and not a solicitation to buy this stock. Make up your own mind. If you are looking for a short term trade limit your loss if the stock goes against you. As always, we remind you to review the section on our home page on Trading Alerts, paying particular attention to the section on trading rules. The track record on our previous alerts can be obtained by clicking here.

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