USEI Cranking- Great Open On News

On the strength of the huge news release which came out over the weekend, USEI has opened with a very favorable trading pattern for investors. Here’s the chart.

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Here’s what I like about this chart. There is no huge gap. The stock closed Friday at $.18- a very oversold level. It reopened today at $.20, and is now powering higher on much higher volumes.

10 minutes into the trading day, the stock is now at $.24, and has traded 1.3 million shares. I like the fact that people were able to act early and get it before it started to climb.

A break above the July high in the $.25 would be bullish. I’m sticking with my guns from the weekend edition- picking this stock up in the $.22 to $.25 leaves plenty of upside, even if it wants to back and fill a little.

It’s a good thing there is stock for sale in this issue. It gives you a chance to own it while it is still at a reasonable level. If the stock can manage 5 million shares plus today, it will go a long ways towards cleaning up this mess.

Comments and questions are welcome.

9 thoughts on “USEI Cranking- Great Open On News

  1. Hi, any idea why USEI itself has not issued a press release? Thanks.

    Editor: Apparently, there was some delay seeing the news at Yahoo- but it was out everywhere else. 

  2. Volume will be way over 5M today – what do you mean “clean up this mess”? Absorbing insider sales? Stock price remaining in low 20s? Recognition as a real company?

    Editor: What’s your question- I don’t understand. What I meant was very clear. It’s a good company, but right now it is still a bad stock. Way too much supply. The company has had to issue to many shares to stay alive in order to get to the point where sales are picking. This stock price will continue to flounder until the market absorbs whatever massive supplies are for sale. Unfortunately, I can’t quantify it. 

  3. I own the stock at other levels, my concern is 130 mil. shares. Has some of those shares been sold or how long will it take to absorb them into the price, or will it continue to trade poorly even after good news until the excess is sold. Definity would like to see a reverse split to bring value to the stock.

    Editor: Your concern is well founded, and the proof was in yesterday’s trading. I appears there is unlimited supply over $.20 for the time being. Unfortunately, I can’t quantify how much it is. If the company remains on track, at some point demand will overwhelm supply. I agree that a reverse split would be healthy for this one, but not at this time. The company needs to get some real revenues in its rear view mirror. Perhaps sometime next year. If the company reverse splits this stock right now, it will go to the equivalent of $.10.

  4. Unbelievable, after the massive contract that they landed, the stock gained 5.56% !!

    Editor: In my edition over the weekend I stated that the stock had supply cancer. It’s much worse than I realized. It was unbelievable that the stock closed before the level it opened. It’s going to take some time for this patient to get healty. If you are not long term, sell the stock. 

  5. my god, what a dissapointmenting impact this insanely good piece of information had on the stock by end of day…….Up a lousy 5% on THAT news? Even if there is day trading and soaking up sold stocks from the .05 and .10 financing deals, one would think with that kind of news those guys would hang on to the stock for a while rather then sell……How do you explain the total return to start mentality of this stock?

    Editor: I can’t explain it, other than to say it does seem absurd. Unbelievable how poorly the stock is trading. However, I did warn everyone in my weekend edition that the stock, not the company, has cancer. It could take more time for this particular patient to get healthy. Apparently, the cancer is pretty bad. Good news like yesterday’s is like chemotherapy- it appears to be sick, but eventually it will get better. If you aren’t longer term, you should just sell this one and get out. It could take a while. 

  6. I don’t get it, more great news for USEI and it closes at $0.19, what is holding this stock back from $0.30?

    Editor: Exactly what I stated in the weekend edition- cancer- the stock has excess supply cancer, and based on yesterday’s trading activity, it is clear the stock has worse cancer than I realized. It is going to take more high volume days for this one to behave better. The cancer needs to be absorbed by the buy side of the market. I can’t gauge how much supply there is, but the way the stock is behaving it would appear to be virtually unlimited at this time.

  7. 55 million contract and the blast off was more like a dud! what happened?

    Editor: Just as I stated in the weekend edition- the stock has cancer, and the cancer is clearly far from cured. Unbelievable how much stock is for sale on this one. 

  8. Ive notice that you mention cancer in most of your response, I have a funny fealing that most of your pick as cancer, and if not they will, remember FMLY, they kept isuing more and more stock until its really absurd to own it, it is so common on the OTC, you hit it right one out of ten, thats a lot of loosing money.

    Editor: Good observation, but in this case there is no comparison with FMLY. With USEI the number of shares for sale will be finite. FMLY entered into a death spiral deal with a financier- with FMLY the financing was structured so that the lower the stock went, the more shares the company had to issue. The supply was virtually unlimited. Furthermore, on the fundamental side, there is very little comparison. USEI should headed towards at least $10 million, probably more, in revs in ’07. They will probably even be profitable at those levels. FMLY never got off the ground on the top line. While the supply is problematic and clearly prevents the stock from moving up, it’s a major benefit to investors who are trying to accumulate a decent position in the stock. 

  9. Given your analysis of the companies stated and projected revenues and taking into consideration all of the O/S shares, where do you feel a fair/average valuation would be? Say, 30 cents, for example? Thanks so much in advance.

    Lewis

    Editor: In my view, there is no reason why this stock shouldn’t trade at a minimum of 5 times 2007 sales. If I had to guess, 2007 sales will be in the $15 million range with all the contracts that have been announced. I’m assuming the 5 year deal for 50,000 buses in Thailand will be divided equally over 5 years. Five times 15 million is $75 million. Let’s err to the side of caution and assume somehow the company gets up to 150 million share I&O by then. This equates to a fairly conservative upside target of $.50. However, if the stock can get some momentum and break through these excess supplies, $.75 to $1 is certainly not out of the question. Their growth rate is going to be off the charts.