CPNE broke out yesterday on nearly a million shares of volume. So much for last week’s little bobble when the company announced major shareholders had sold two blocks to institutions at $1.90. Was it a good move on the company’s part? I believe that debate is over.
Unfortunately, the stock did not give a lot of ground and give investors an irresistible entry point. I believe pull backs are going to be shallow and short lived.
The stock is trading very well into Thursday’s big event- the company plans to issue Q4 guidance. The market clearly anticipates good numbers.
For those with a trading mentality, the current move in the stock could offer an opportunity to take some profits, and look for a more favorable entry point.
The stock seems to have resumed its pattern of trading up late in the day. Clearly, there isn’t a lot of supply.
Over the 20 years I have been trading stocks, certain patterns emerge which are fairly predictable. CPNE is behaving like any other stock where the market anticipates strong earnings. The stock trades very well up to the announcement, then sells off a bit, regardless of whether or not the earnings are strong.
If the company delivers good earnings and growth, the sell off is a buying opportunity. If it doesn’t, the sellers look smart.
If you are itching to take a profit in CPNE, today, and tomorrow pre news could prove to be your opportunity. This could be a trade able event.
Here’s the chart:
As you can see, the stock made another new all time high yesterday on a big surge. The company will announce Q4 numbers tomorrow. I don’t know if it will be pre open, or later in the day.
Nevertheless, if you like to trade, you should sell whatever percentage of your position you have in mind before the news comes out. Nine out of ten times, when a stock runs up into earnings, it temporarily sells off after the fact.
However- one word of caution- I definitely would not sell it all. There is no telling where this thing is going, but I believe north of $4 and a NASDAQ listing is a fait accompli at this point in time. Also- if you are simply a long term investor with no interest in short term trading, disregard this BLOG.
Comments and questions are welcome.
Today I re-read your blog dated November 7,2006 that highlights the very reason(s) to own this stock long term.
1) Revenues Consistency Growing Upward.
2) Cash On Hand Consistency Growing Upward
3) Long Term Debt: None
4) Profits: Consistently Growing Upward
Add the following:
1) 4th Quarter: Expect a Record Quarter
2) Two Institutional Buyers On-Board
3) Hired Two Banking Firms that specialize in
acquisitions + merges.
I have to believe that selling now is short term thinking for short term gain without looking at the long term picture.
Your blog has saved me $$ from seling way too soon!
Scott
Editor: Consider the following- $.18 per share for the year. However, it was break even Q1, and $.03 in Q2. That means they delivered $.15 in the second half of the year. That’s $.30 EPS annualized. I know they will have more growth in Q1 ’07. This stock is still cheap, and the market is starting to figure it out. Comments over the weekend.
So, were the earnings good? Stock certainly is tanking as I write – is this buy on rumour sell on news, or is the stock overvalued?
Editor: Yesterday’s prediction was half right. I thought the stock would run up for another day, then sell off no matter how good the news. It didn’t run up for a second day, but it did sell off post news just as I predicted. The numbers are excellent. More in a weekend BLOG. I believe it will be making new highs within a week or two.
DANG IT. it did it again.. great news and it drops like a rock… just like last time… lets hope its not as drastic.
Maybe the Conference coming up any minute will turn things around, but i doubt it.
just goes to show… nothings a sure thing.
Everyone was expecting fabulous numbers. And we got great numbers. Great wasnt as good as fabulous.
You see anything in the numbers i missed?
Editor: This is not the CPNE of old. I predicted this post news sell off, and it’s here. However, I also predict pullbacks will be shallow and short lived. Look for new highs in a week or two.
If I read the press release this a.m. correctly, CPNE expects about 10 cents in earnings this quarter. Does this change your target price on the stock? Also, at what levels should I consider buying more, and also, at what level should I consider the stock a sell?
Editor: Over $4 and going to NASDAQ. More tomorrow. Very good stuff.
I’m still a believer and still holding but wow! Down $0.57!
Editor: Check New BLOG.
Any insight into why pullbacks occur in the first place even if they are short-lived, I’m just interested in the phenomenon behind that.
Editor: When a stock runs up into an anticipated event, it nearly always sells off after the fact. This is because short term investors keep repeating the same mistake- they believe investors will see the number and buy their stock at a higher price. Those investors have already bought. Now they are watching the bozos sell, waiting to see how low it goes. I predicted this would happen in the Wednesday BLOG.