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As I'm gearing up for the new idea I'm going to introduce next week, there's a couple of current ideas looking really strong. Stocks are starting to break out, and I couldn't be more excited.
The small cap market has been in "pause" mode for the past few weeks. Volumes have dried up, but stocks are not giving back a lot of their gains. There's two forms of correction- a violent pullback is one, but light volume sideways trading is another.
There's enough cash in money markets to buy the entire stock market. We're diving into earnings season for Q3, and I believe the surprises will be to the upside. Stocks are starting to catch fire again.
Here's a few updates on OTC Journal
UTA is on fire again, and today is trying for a new all time high. It needs to get through $17.34 to make a new all time high. If it does, it might just scamper right to my $20 price target.
If you haven't gotten on board this speeding train yet despite the many times I have featured it, perhaps this fast growing and very profitable China based travel agency can arrange for a ticket to get on board.
Since I'm not a big fan of chasing stocks, here's where I would board this train right now. I've circled a .382 retracement of this new move which started at $11.60, and is now at about $16.
The level you want to go in is about $13.50. UTA recently announced a major expansion at its home offices, and is presenting at the China Roth Conference in Miami Beach early next week. Motley Fool has also been flogging the stock of late. It's worth noting they are on the band wagon now. I published on it back in June at $8.
The stock is pulling back a bit now after a nice run this week. A break through $17.31 would bring my $20 price target into the picture. When it gets to $20, I'll recommend locking in the 150% gain (300% on margin), and looking for something more undervalued.
Bottom line- if you're not onboard,
hope for a pullback to around $13.50 and get into it. If it powers up to
my price target of $20, take your well deserved gains, and head for the
next undervalued idea.
FRPT, which is one we don't have huge gains on yet, started trading very well this week, and the rumor mill is churning out all kinds of information.
Force Protection designs and manfuctures the defacto replacement for the Humvess our Armed services were driving in Iraq in the early stages of the current war. The unsafe nature of the vehicles was widely publicized when Secretary of Defense Rumsfeld was dressed down by the troops and the media and publicly humiliated about the unsafe design of the early Humvees. They had little proper defensive armor against land mines.
I published a buy recommendation on this stock at $5.20 back on July 18th. I believe the stock is still a buy, and there's an opportunity to take advantage of the market's short sighted reaction to the loss of one large contract.
This stock absolutely cratered back in July when it was disclosed a $1 billion order that was supposed to go to a joint venture between FRPT and General Dynamics (NYSE: GD) instead went to Oskosh.
The stock got hammered on a gap down from nearly $10 all the way to $6. This week, the stock started to show some signs of life as it traded above the level of the gap for the first time since that fateful day in July.
As you can see from the chart, the stock poked its nose above the $6 mark on increasing volume for the first time in three months, which is technically a very strong sign. Furthermore, the company announced some cost cutting measures this past week which should enhance earnings going forward.
The rumor mill has a new contract for 4,000 humvee type vehicles the Marines want in the pipeline, but I couldn't confirm this is imminent. In cases like this, the stock moves up now, and asks questions later.
Technically, I love that this stock
is finally trying to head into that gap. I believe this one is going to
fill the gap and make it back to the $9.50 level. Under $6 this one should
be added to a small cap portfolio.
Here's the good news. There's a brokerage firm willing to raise BOCX up to $6 million. This is an endorsement of their technology. Here's the not so good news- the way the financing is structured, it could be a damper on the stock price for the immediate future.
Paulson Securities, a Portland based small and microcap underwriter, is acting as the placement agent for a financing of up to $6 million. Early this week, there was a registration statement filed, commonly known as a "shelf registration". Also known as a secondary, I'm not sure exactly what the correct language is today, but I can tell you how it works. I would guess Paulson has been around in this space for 25 to 30 years.
The company is going to go through the registration process which could take anywhere from 1 to 6 months. At some point, the SEC will declare it effective, and the shares contained within the registration statement will be priced, and Paulson Securities will place the shares with their customer base.
At the point of effectiveness, a negotiation will take place between Paulson and BOCX on the final pricing. Once the transactions take place, the shares will go into the accounts of the investors as free trading stock, and the company will recieve the proceeds less commissions and fees.
If the entire amount is billed, which I suspect it will be, the company will receive about $5 million net proceeds, and be well cashed up to move the Recaf cancer detection marker forward.
Here's the problem- the market won't know where this financing will be priced until it gets priced, so shareholders will probably be reluctant to pile into the stock from a technical perspective.
Typically, these kinds of financings are priced pretty close to the market - perhaps just a very slight discount to where the stock is trading at the time.
The good news- a long standing brokerage firm in the small stock space is willing to raise them a lot of money relatively speaking. This is an endorsement that their technology has significant upside. However, the structure of the financing could lead to some quiet trading in the immediate future.
Quite often, once priced and closed
in these kinds of situations, the stock takes off again.
I also have updates on CVM and CAMP to share, but I'll save those for tomorrow.
Also, next week is new idea time, and I couldn't be more excited about this one. All they do is make money, money, money, and no one knows about it. You will.