Pickle Update, and Market Powering Higher
August 6, 2008 @ 1:15 pm
Oil seems to have thrown in the towel, and the market likes it. I have talked to a number of technicians who feel this summer’s volatility was the death throes of the nasty Bear Market, and all indications seem to agree.
I believe the market’s current resurgence is tied directly to the price of oil, which as I write today’s BLOG is at $118.31- below the $120 level.
I’ll make a bold prediction- mark my words- we’ll see if it ends up being right. Oil is headed to $109. From there, it will consolidate and could go lower or start back up. In either case, I believe it is headed to that destination. I just don’t know if it will correct upwards first, or if it is going straight to $109. I hope it does trade up. There will be a way to make money on its drop to $109.
The dollar is firming again and trying to break above its June high. It is nearly there, and that bodes well for the US economy as it relates to energy prices.
In the interim, the micros we follow have now stopped going down, and some, as is the case with Spicy Pickle, are showing signs of life.
I haven’t written much about the Pickle of late- like most micros, not much to cover in August. However, there was noteworthy news early this week for folks who live in the NY area, and if you want to learn more about the company and what they are doing, all you have to do is turn on your television set.
I have a giant list of TV stations that are on cable and satellite. They include Manhattan, Westchester County, Bergen County NJ, Dutchess County, Brooklyn, Queens, and Staten Island.
Look in your local listings for a WRNN-TV. The show is entitled “Business and Beyond”, and features Spicy Pickle. It airs at 6:30 AM on August 12th, 19th, and 26th.
On the fundamental side, here’s what I have to report. The existing 43 Spicy Pickles are doing very well. The most recent opening in Portage, Michigan, promises to be the most productive store in the chain- it is generating in the range of $3,500 daily- that’s over $1 million in annual revenues.
As things stand today, growth will slow in the back half of the year as the flow of new store openings has been hit a bit by the recession. That fact is already priced into the stock. There are still about 90 more to open, and locations are being actively sought out in at least 6 different cities. The company is also working very hard towards an expansion campaign which would put a whole new light on the company.
The chart of SPKL is starting to shape up nicely. One down trend line has already been broken, and if we can get a second on to give way, SPKL should rebound to a reasonable level.
About 5 trading days ago SPKL broke through that high $.50’s level and broke above the steeper downtrend line. It now needs to get through the longer term downtrend, which would be about $.75. Then we’ll really be making some progress.
Stand by for further updates as news unfolds. In the meantime, it looks promising for a resurgence in both the markets and some of the smaller names as well. The bleeding has stopped, and the patient appears to want to get healthy.
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CBS marketwatch has a very different perspective on SPKL from you and mentions you directly in their article (http://www.marketwatch.com/news/story/spicy-pickle-shares-arent-much/story.aspx?guid={CEF084DF-36E3-413B-A026-506AFB663288}&siteid=yhoof). Do you have any comment on what they said?
Editor: Yes. Surprisingly, our conclusions about the current state of the company are not all that different. Here is my response as published in last weekend’s edition:
http://www.otcjournal.com/Managing-Stock-Market-Fear-Spicy-Pickle-Slammed-in-Editorial/af/archive/20081018-1/
Comment by Irv T — 10/17/2008 @ 4:00 pm
My wife and I ate at the new store in Brooklyn when it first opened. Frankly, we found the flavoring for the sandwiches to be very bad to the buds. We never got a pickle that was a spicy pickle–although we got a regular one. The taste quality was much better at Chipolte Mexican restaurants. We quickly sold all our shares and bought Gern–a much better investment
Editor: Thanks for your input. Sorry you didn’t have a good experience. I like the food, but everybody has their own viewpoint.
Comment by Anonymous — 10/15/2008 @ 9:01 am
I know the market is doing poorly overall, but I am a bit surprised SPKL isn’t doing a bit better in light of the recent acquisition. Any thoughts?
Editor: Not surprising to me. There are simply no buyers around. I expect it will do better if and when greed becomes a factor in the markets. In the meantime, there is clearly no appetite to sell the stock- everyone who owns it seems content to hold it for now.
Comment by IrvT — 10/14/2008 @ 2:47 pm
In response to your comment on my last remarks, what do you think about buying Freddie Mac and Fannie Mae right now? They both went down to pennies and now are roaring back over the last few days.
Editor: I couldn’t even comment on that question. I have no expertise or ability to gauge what potential value the equity might have down the road. However, along those same lines, I will tell you I bought XLF October 20 call options today for my own account. I’m betting Congress will get it’s head out of its hind end and pass the “rescue” initiatives over the weekend.
Comment by Irvt — 9/25/2008 @ 12:29 pm
Wow!! Stocks are sure taking it on the chin these days, even SPKL with locations, a good product, and what looks like a good future is getting hammered. I look at what Warren Buffet did with Goldman Sachs and think: buy when it’s cheap. It’s pretty cheap right now.
Editor: I agree it’s cheap. However, I don’t believe it’s the best place to put new money now. I have chronicled that the company is struggling with the recession just like every other restaurant chain, and their growth has slowed considerably. Also, their not in the best group out there.I would wait until the market starts behaving a bit better on this one.
Comment by Irvt — 9/24/2008 @ 1:31 pm
so larry what is it spkl gos down and its a bad market the gos up 700pts and spkl doesn’t fart is it now a bad company
Editor: Amazingly intellgent comment. Unbelievable. If you have a question, ask it. If you have an intelligent comment, make it. If you don’t like the company and you own it, sell it. If you want to make a negative comment on the company, make your argument intellgently. If you have any sort of real contribution, we’d be happy to have it. Based on your contribution, it strikes me you would be best off taking a remedial writing class for 6th graders.
Comment by Anonymous — 9/19/2008 @ 2:03 pm
Hello,
Do you have any updates?
Editor: Working on some stuff now.
Comment by Airjoe — 9/16/2008 @ 8:22 am
Where are you on this company they are about to go under and not a word from you
Editor: Geez- what an absurd comment. You can’t tell the difference between a stock going down, and a company going under? Why don’t you stop into anyone of their 44 locations today and let me know if the company is going under.
Comment by Anonymous — 9/16/2008 @ 5:36 am
Any idea what is going on today with the huge decline? Please update/advise
Editor: Kind of a silly question with the DOW down 500 and the markets getting obliterated. Tough times. This shall pass. We should have some positive stuff on the horizon.
Comment by Airjoe — 9/15/2008 @ 10:25 am
This is taking a mighty hit today . Any news coming out that might save us , or give us hope ?
Editor: I hoping for some transitional stuff shortly.
Comment by andy — 9/15/2008 @ 9:20 am
since there is no way to respond to your video way was this company trading at 12.00 in june and then fell like a rock in aug and sept?
Editor: I’m pretty sure I mentioned in my presentation that the previous pricing was meaningless. We are now starting to get a meaningful level.
Comment by Anonymous — 9/13/2008 @ 7:23 am
Just use this way to inform that the SPKL video at your homepage does not work well (25% missing). Would like to listen to the rest of it.
You seem to have trouble with some unpatient little ‘investors’….well, I have had my problem with some of your recommendation as well (FMLY, etc.), nevertheless I would not blame you for my mistake not taking care for the stoploss. Greed was the problem. Howver, I like the story of SPKL very much and share your opinion that this is a longterm story. I will accept a drop till .40. (Got in at .63) but will accumulate by and by very carefully. The higher the price the lower my order, the lower the price the higher my order. But, as I said, at .40 I’ll stop this ‘game’. But, honestly said, I do not believe we’ll going so low. As I notice you are going to stop covering SPKL at the 22th this month. Is there a chance you still comment on SPKL?
Editor: Certainly. Some things are being worked on to restore the company to its former robust growth. It’s a tough environment for them as well as a lot of US based companies. I intend to comment on SPKL for some time. You might notice that from time to time I do sell small amounts of stock to pay for operating the company. I have not sold one single share of SPKL in many months. I believe one of the affiliates has sold a few shares, but not me.
Comment by Michael Williams — 9/12/2008 @ 8:58 am
This stock has been going down for 11 months now why would anyone put money into it?
Editor: I’m not suggesting you do. There will be a bottom somewhere.
Comment by Anonymous — 9/12/2008 @ 8:01 am
It look like they are following the foot steps of efsf all you keep stay is that news is coming and it never does I really don.t think this companies are sharing information with you anymore
Editor: I’m not saying anything. I don’t know where you people think this up. I report as they provide information to the public. If they don’t provide information, how am I supposed to report it? I told everyone to sell these things if they weren’t going to be long term and put up with it. You should have simply sold a long time ago.
Comment by Anonymous — 9/11/2008 @ 5:52 am
the end is near sell sell
Editor: Highly intelligent comment. Typical near capitulation bottoms. If you are worried, follow his advice.
Comment by Anonymous — 9/10/2008 @ 1:36 pm
Hope your enjoying your gains.
Editor: I’m watching my gains erode quite dramatically, but I’m in this for the long term, so I’ll just hold my nose and wait it out.
Comment by Anonymous — 9/10/2008 @ 10:51 am
your not pumping this stock anymore how come? if Im right 2 store open this year one closed not very good what up with this company they have gone dead like all the rest
Editor: They might have some surprises in store for the market before too long. I guess I’m just waiting for anyone who is losing faith to thrown in the towel and get out.
Comment by Anonymous — 9/10/2008 @ 8:54 am
with money running out how much longer befor they sellout the company
Editor: I don’t know why you think money is running out. The high expense levels relative to last quarter are well chronicled. They’re not loaded with cash, but it will be sometime before funds run out.
Comment by Anonymous — 9/9/2008 @ 1:17 pm
OK, the brooklyn store is open. Any idea of what comes next?
Editor: I know what they are working on, but I can’t share any details.
Comment by IrvT — 9/8/2008 @ 4:18 pm
back in january I said you would have egg on your face regardind efsf spkl you call me a couple of names soming about my spelling but the fact is my grammer may be bad but you have egg on your face
Editor: I guess you could look at it that way. There’s another way to look at it. There are published SSLs on the home page of the web site, and I have written and produced videos on them to educate you. SSL stands for suggested stop loss. Anotherwords, if you don’t want to be really long term, sell them if they go to those levels. The published SSL for these stocks- $.16 for EFSF, and $.90 for SPKL. The suggestion was there for you to use- if you still own the stocks, you are long term and neither company is out of business or bankrupt. If you didn’t use the SSLs, that was your choice. Therefore, one could argue I gave you the tools to avoid this mess, otherwise known as a bear market. If you didn’t use them, once again, that was your choice. I still report and think both of them have a chance of coming back- especially SPKL, and I’ll let people know when I think it’s going to happen. I’m not happy about these valuations, but I don’t decide when we’re going to have a recession and a bear market.
Comment by jim — 9/5/2008 @ 11:06 am
Hey its our time of the year where are you?
Editor: On SPKL- I’m hoping for a major breakthrough this month. Monitoring the situation carefully.
Comment by Anonymous — 9/5/2008 @ 9:38 am
Took a trip to Vegas this weekend and managed to stop by the Pickle . I had the baked potato soup and the half Englishman sandwich and a medium re-fillable drink , total cost with tax was $ 8.60. The soup was excellent and the sandwich was even better . It was excellent food at a fair price . I was their from 11.40 am until noon and the food was delivered to me right away and the service was good in a very clean atmosphere. The place was busy the short time I was in their with no less than 30 people their at a time which is Mcdonalds like customer base . It wasn,t peak lunch time which I always consider too be between noon to 1.30 pm, so I presume it gets even busier . The Location was excellent with a lot of potential customers from all the stores around it Like Lowes and not too much other lunch places to eat which means they have a good retail business lunch, crowd and housing was close ready for residential customers base too. I was curious if you could find out how well that particular store is doing and let me know by e-mail just too see if they line up with what I was told . I,m not sure if this a company that could be big enough to become a successful stock for us but it certainly has potential .
Editor: The Vegas store is doing extremely well as I understand- closing in on $1 million in annual revs. It will be a much bigger chain someday, and look for some interesting developments over the next month. Like you, I was taken by the food from day one. Sometimes a little faith and longer term outlook can pay off. Intuitively, I see a much larger company in 2 years.
Comment by andy — 8/18/2008 @ 7:04 pm
Do you think we are starting the oil rally, I think it will run up to 119 - 120 (Resitance) and then retrace. As of yesterday, my two short psiotions on coal have formed a pivot low. What are your targets on a run up on oil?
Editor: I haven’t consider a target on a run up, but it’s a good question. I can’t give you a good answer at this point as my software is not enabled for oil futures- my technician has it, and I can’t reach him right at the moment. However, consider oil has only been able to rebound a couple of points with all the turmoil and violence going on in Russia/Georgia- an oil producing region. If oil were climbing, the event would have added $5 to the price. Oil has become 100% technical, and will continue to be that way until all these crazy positions unwind. Then, it will go back to trading on supply and demand. If $109 holds, we’ll probably have a moderate rebound. If $109 gives way, I have oil possibly as low as $87. Realistically, it probably will hang in between $100 to $120, but who knows. I wouldn’t have believed in a million years it could go to nearly $150 over 8 months, so why not go back to $87? We’ll see. Somebody should do a study and try to figure out at what point oil stopped trading on supply and demand, and started going up because it was going up. So much for the argument that it wasn’t speculators.
Comment by Bret — 8/14/2008 @ 6:25 am
Oil is headed to 102. Gold getting close to my target of 780/790.
(Go MMGW)
Editor: I like $109- but either is good for the economy and stocks. I’m not a fan of gold. In the $109 to $110 range I might consider going long oil or short the market, which is kind of the same trade. We’re due for a little relief rally in oil.
Comment by MP — 8/12/2008 @ 10:58 am
pltg spkl efsf all down market up over 300 now what is it, just bad companys
Editor: That’s just crap. Micros have been doing exactly what I said they would do, which is nothing over the summer. Stocks are decimated everywhere. Grow up.
Comment by Anonymous — 8/8/2008 @ 1:29 pm
why are they late with 10Q?
Editor: Their not late. It’s not due out until the 15th. I’m pretty sure it will be out on time.
Comment by Anonymous — 8/8/2008 @ 1:25 pm
I gree on oil, but I think it may go lower. I would also like to see a jump up before the decline so I can add to my already proffitable short possitions of ACI and MEE. I hope to ride these down to oils 100 - 110 mark then jump out. Like the new site.
Editor: I have read some technicians forecasting oil possibly going to $87- however, I think your targets are better. If oil were to rebound and surge a bit, I would use it to get long the market. Thanks on the new site.
Comment by Bret — 8/7/2008 @ 10:12 am