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A Tale of Two
Stocks: US Energy (OTC BB: USEI) and SubUrban Brands (OTC BB: SUUB) |
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It was the worst of times, it was
the worst of times. That's a little reference to the famous Charles Dickens
novel, A Tale of Two Cities. If you didn't get it, you haven't read
the book.
The actual opening line in Dickens
book goes like this: "It was the best of times, it was the worst of times".
For the two stocks that are the subject of today's year end wrap up, it
was the worst of times in 2006.
However, this is truly a tale of
two stocks that pretty much had the same abysmal charts, but off a totally
different record of achievement. One company achieved nothing, the other
did extremely well. Both stocks traded terribly. Go figure. Here's a review:
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US
Energy (OTC BB: USEI) |
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Here's the chart of US Energy
since I started covering it last April. As you can easily see, the stock
has been a disaster. After a brief blip from $.20 to $.40, the stock spent
the remainder of the year headed straight down the toilet.
US Energy has been a source
of major frustration in 2006, and it's not because the stock has traded
poorly. As any seasoned microcap investor knows, you are going to have
your failures and successes. Failures are easy to take. Company has a plan
- management makes promises. The company doesn't deliver, and the stock
falls apart. With small and unproven companies it is part of the landscape
and happens all the time.
US Energy is a different breed
of cat. This company struggled for nearly nine years as it developed its
unique and proprietary fuel saving technology. This was a major breakthrough
year. The company had increasing sales quarter after quarter. It even announced
an enormous contract signing.
In May of this past year if you had
told me USEI would announce a $54 million contract signing, I would
never have believed the stock would end the year at less than $.10.
Nevertheless, it's what happened,
and it's all about momentum. Momentum is one of the most powerful forces
in the Universe, and it was at work here. This stock has been overwhelmed
with supply for the entire year, compliments of the hangover resulting
from 8 years of toxic funding. Shareholders paid the price against a backdrop
of corporate achievement which far exceed most microcap companies.
One of the key problems lies with
the management. They are unwilling to commit the time, energy, and capital
required to clean up the mess that is the stock price of USEI. They
thought it would happen on its own. It didn't, and it never does at these
levels.
I will continue to cover the big
events from this company in 2007 sporadically. I don't believe the stock
is ready to turn up yet, and I am concerned that this management team will
be crazy enough to effect a reverse split at these levels. That would probably
take us down to a another, lower level.
If you didn't sell at the two previous
SSLs of $.27 and $.12, and you still own the stock, you might as well stick
it out. If the company delivers on '06 announcements, it is inevitable
this stock will rebound at some point in the future.
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SubUrban
Brands (OTC BB: SUUB): It Was the Worst Of Times |
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As you can see from the chart, SUUB
has delivered the same abysmal failure performance wise. However, there
is a major difference. Based on corporate performance, SUUB deserves
to be exactly where it is.
After spending several months putting
out self congratulatory press release after press release claiming to have
the hippest, trendiest, coolest hip hop clothing time of all time, the
company has simply fizzled. They had orders from a few major high end retailers,
but there has been no explanation forthcoming from the company as to where
their sales have not materialized.
I have been criticized by several
subscribers for not going negative on this company earlier in the year.
This is one of those promises, promises, promises situations. It was claimed
prosperity was just around the corner after they raised a whole bunch of
money. I checked the SEC filings today- no one has been willing to bite.
I can live with these kinds of results
because the company failed. It's the nature of the microcap beast. Some
fail. This one has. Could it come back? It's a remote possibility. If the
circumstances change, I will let you know. For now, in the words of the
infamous Tony Soprano- Forget About It. Dead man not
quite walking.
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