Brazil, EWZ Hot…Newbie BRF May Turn Even Hotter

I’ve been hot on Brazil for some time now, and the price of EWZ continues to sizzle. From our $35 entry point to today’s $57.28 close, those of you who bought EWZ hook, line and sinker are sitting on a 64% unrealized profit…not to mention the sweet 4.7% yield it’s delivering.

With $6.06 billion in assets, this large-cap value ETF has many admirers. I’m sure the newest small-cap Brazil-based ETF will be just as popular and profitable.

Just weeks old, trading volume on Market Vectors BRF zoomed from just 30,000 to 282,700 with $11.1 million in assets and an 18% gain since its May 14 inception.

The reason I’ll be keeping an eye on this one is mainly due to its broad, small-cap focus. Accounting for over half of the nation’s IPOs in 2006 and 2007, Brazil’s smallest stocks fell swiftly during the height of the global crisis and almost all newly listed companies fell below their offer price.

These depressed prices represent excellent value for investors who believe in Brazil’s long-term growth prospects…as I do.

Get this…Brazil just recently announced that it has enough money lying around that it would follow in other booming countries footsteps in setting up a sovereign-wealth fund, worth between $10 billion and $20 billion, to invest its excess cash.

Also, long considered a global power in agriculture and natural resources, Brazil has added a key ingredient that had eluded it: a currency with staying power (remember what that used to be like?). As a result, the greatest burst of prosperity the country has witnessed in three decades has been unleashed, attracting foreign investors by the score and providing a growth engine for a flagging global economy.

Finally, a little icing on the cake: Back on April 30, Standard & Poor’s upgraded Brazil’s debt to “investment grade” - making Brazil the last of the BRIC nations to have its creditworthiness win that coveted seal of approval.

Now, I don’t see BRF as a complement to EWZ, but as a possible replacement for it. My 2009 target price for BRF is $60, and we’re inching closer to that mark every day. As we know, small caps historically outperform large-caps coming out of a recession.

And, like here at home, Brazil struggled to pull itself through. It’s nowhere near the trouble the U.S. still wallows in, and signs of growth are abundant. As its economy continues to churn at record RPMs, those undervalued small-cap stocks that make up the BRF stand to blossom quite nicely.

Interestingly, just two stocks make up 50% of EWZ: Vale S.A. (NYSE: VALE), the world’s largest iron ore producer; and Petrobras (NYSE: PBR), an oil, gas and energy producer. Next come two major non-state owned banks, making up the next 11.5%. That’s nearly 60% of the ETF in four companies—a rarity in the ETF world.

BRF is comprised of 51 stocks with the following sector breakdown: Consumer Discretionary, 31.7%; Materials, 15.8%; Financials, 11.7%; Utilities, 10.7% and Industrials, 10.5%.

So, we’re looking at a broader piece of Brazil in BRF. I definitely have this small-cap ETF on my radar screen. I’ll let you know when it blips even louder.

OPMG Pullback Means A Great Buying Opportunity For You

Options Media (OPMG) certainly took a wild ride today. With one hour to go in the trading day, the stock had shed 26%. By close, it had recovered half of those losses.

The fact that it fought hard at the end is a good sign and a classic example of what I call a “Wash & Rinse.” It’s a phenomenon of a stock shaking out weak hands before heading for higher levels.
After trading at $.62 back in late April, the stock has fallen to $.33 with significant volatility through May. In many cases, this volatility is followed by a shift above its 50-day moving average in a matter of days and headed higher.

In fact, I want you to think of this as a great opportunity to buy a great stock on the cheap.
Besides, none of the above changes the fact that Q1 numbers for OBMG showed a gross margin of 70%, generating $1 million per month in revenues from zero just one year ago.

With $3.3 million in all of 2008 and $2.2 million in Q1 ’09, that’s an annualized growth rate of 166%.

One more thing: The digital advertising market is not going away, and Options Media has its feet firmly planted for future growth.

NVLX Inks Marketing Plan For Gentler Tattos-Stock Soars 37%

Say hello to an old friend, Nuvilex, Inc. (NVLX), a micro-cap stock we’ve been covering since 2007. Heading into trading today, shares of the emerging healthcare consumer products company sold for a ho-hum $.038.

In over two years, I’ve watched the stock start at $.18, hit a high of $.45, and sink to a recent low of $.03. By mid-day, shares rose 13% and finished up 37% higher ($.13) on some promising news.

Formerly, Inc., Nuvlex reported today that one of its products, Infinitink (the world’s first permanent tattoo ink designed for easier removal) will be marketed, promoted, distributed and sold by Jayhur Enterprises in tatto-heavy Australia and New Zealand for the next five years.

So now we’ve got something to talk about. Nuvilex estimates that if Jayhur Enterprises
captures 30% of today’s market by the end of the agreement, the annual revenue could be as high as $3.75 million.

Get this…15% of Australia’s population over 15 years of age is considering a tattoo. Apparently, though, the permanent aspect of having “Mom” carved into an arm isn’t that appealing. These ‘fence sitters’ are excellent candidates for artists offering Infinitink tattoos. That group represents 25% of the over 18-year-old U.S. populatiJayhur Enterprises joins with MT.Derm, GmbH, Berlin, Germany as
Infinitink international distributors. MT.Derm owns Infinitink European distribution rights and since 2006 has been a development partner with Freedom2. Nuvilex is seeking a distributor for Latin and South America.

Infinitink was selected as one of Time Magazine’s ‘Products of the Year’ in its November 12, 2007 issue. Since then, Infinitink has undergone further testing and development and now some serious marketing efforts.

I don’t know how much higher the stock will go from here, but this could be the kickstart it needed to take off.

FAS On Fire After BAC Upgraded To “Buy”

After taking a quick three-day $8,000 profit off the tables back on March 30 shorting financials using FAZ, the triple leveraged short ETF, today’s banking news tells me we were right on by maintaining a contrary position in its longer cousin FAS.

Today’s nearly 18% gain in FAS lifted its performance more than 200% over the past two months, currently trading at $10.31.
Basically Goldman Sachs urging clients to buy Bank of America (BAC) shares with conviction boosted the entire financial sector.

bank1.jpgWarren Buffet’s bet on Wells Fargo and US Bancorp and subsequent increase of both companies’ shares during the first quarter lifted the sector as well. Buffett made bullish comments about both banks during Berkshire’s annual meeting in early May.

I still see tremendous upside in the financial sector, possibly continuing its run to the $20 level if the following three events occur: if we experience the restoration of the uptick rule, the SEC eliminates the rampant naked short selling, and more changes are made with respect to the Market to Market rules.
If you took the FAS trade back in March you’ve enjoyed a good ride and remain a good way from our suggested stop loss of $3.50. If you didn’t and are looking to participate, I’m looking for a good entry level around $4.50.

Keep in mind that being a triple leveraged ETF it can move swiftly on the upside and even swifter on the downside. This one needs to be monitored closely.

Your comments are welcome.

Bad Economic News Good For GLD, DGP


The Commerce Department released a rash of lousy economic reports this week, the kind that drives up the price of gold. Considering that we have positions in GLD and DGP (a leveraged ETF), the news isn’t necessarily bad.

First, retail sales dropped for the eight time in the past 10 months. Sales were 9.4% lower than in April 2008, down 10% compared with the same period a year ago.

Then, the U.S. trade gap increased in March for the first time in eight months as exports declined faster than imports. The trade deficit - the difference between exports and imports - increased by 5.5% to $27.6 billion in March from $26.1 billion in February.

Plus, that four-letter word the government hates to talk about, D-E-B-T has been rearing its ugly head in the media lately. Government public debt totals $11 trillion and counting (there’s actually A National Debt Clock in Manhattan that keeps a running tab). Debt climbs at a rate of almost $4 billion per day.

If you consider the government’s future obligations such as social security, health care and other contractual items, the total skyrockets to $71 trillion.

To pay back this debt at $1,000,000 per day would take 191,780 years! Instead of reducing the amount, the government just prints more money, making dollars worth less and less.

That’s when gold becomes alluring, valuable and very popular. While worries continue to mount about the economy, here’s what gold is up to:

The price rose $2 to $925.90 an ounce while the S&P 500 fell over 2%. In fact, it even gained in the face of the dollar’s rise. The type of demand seen in the morning sessions suggested that buyers of ETFs were catalysts for the strength.

Like we said when we first suggested adding a little gold to your portfolio, since bottoming at about $700 per ounce last October, GLD has been in a nice uptrend. I also said a break above $930 would be very bullish. At $925.90, it’s closing in fast.

We welcome your questions and comments.

No Need To Worry About Procera’s (PKT) Dip Today

You may have noticed that shares of Procera (PKT) stock fell by 5% today. Don’t worry, there’s no reason for concern about the company’s health or future outlook.

The decrease in price is most likely due to Procera’s notification to the SEC that it intends to sell approximately 4.5 million shares of stock at $0.40 per share to raise cash in order to fill current orders. They total $1.8 million and will not be eligible for free trading for six months.

Procera is a software company in the business of helping ISPs (internet service providers) save money by routing their traffice more efficiently based on importance.

It will place the $1.8 million in convertible promissory notes, and expects to realize net proceeds of approximately $4 million after the completion of the sale and notes conversion.

Most likely, the share prices will roll right back up boosted by the fact that three global tier one service providers have purchased its PacketLogic systems in the first quarter of 2009. This could easily put $28 million in revenue in PKT’s pocket and earn $0.5 per share in 2009.

Despite today’s move, with Procera trading at $0.87, those who took our suggestion to buy back on April 20 are still sitting on gains of nearly 9%.

Jackson Spears, analyst at Robbins Group and personal acquaintance, has set his short-term price target at $2.

New UFood (UFFC) Partners Make Shares Even Juicier

A joint effort with Healthy Dining and has made shares of UFood Grill (UFFC) even more appetizing.

While UFood has already earned a reputation for serving wholesome food that’s only grilled or steamed, this move shows its ongoing commitment toward keeping America healthy.

The fact that we have 58 million overweight people in the United States is behind the push toward eating healthier and the reason the Centers for Disease Control and Prevention (CDC) partially funded the launch of

This go-to-guide for health-conscious consumers who love to eat out takes the guesswork out of identifying healthy choices on restaurant menus and nutrition information for each featured menu item is provided on the website.

UFood Grill is teaming up with Healthy Dining’s nutrition experts to offer guests a selection of better-for-you menus options and corresponding nutrition information.

Since 1990, Healthy Dining’s culinary nutrition experts have been guiding and inspiring chefs and restaurateurs to create and serve a selection of healthier dishes that emphasize lean protein, fruits and vegetables and whole grains.

A leader in restaurant nutrition, the company has worked with hundreds of restaurants and analyzed more than 15,000 menu items.

We first recommended UFFC when its shares sold for a lowly and attractive price of $.13. They have since risen 76% to $.23, including a 15% gain on Thursday-still attractive considering this new partnership and the $2.8 million in financing that it secured in late March.

With a growing, hungry and loyal customer base, we think UFFC has a great future and offers an opportunity to profit from the trend of eating healthier.

China’s GDP Forecasts Upgraded; FXI Poised For More Profits

More good news popped up on the China front today, boding well for FXI  (our China ETF). GDP forecasts for 2009 and 2010 have been lifted from 6% and 9% to 8.3% and 10.9%.

These updated figures should go a long way toward impressing economists who questioned whether 6% growth could support the 25 million people migrating from rural areas to cities in search of employment.

Since we first suggested buying FXI-and turning a deaf ear to disbelievers-FXI has soared 40%. There’s no telling how high it may go now that the possibility of double-digit growth is back in the picture.

Could you imagine how any U.S. index would react even with the potential of 6% growth in the GNP? The bull would chase out the bear quicker than you can say, “I love America.”

Interestingly, the adjustment in China’s GDP is attributed to the global crisis triggered by the financial mess on our turf.  Like most global markets, China came tumbling down; although it had its own share of problems to work out.

However, it seems that the Chinese don’t stay down for long. They responded quickly to minimize damage from the Asian crisis in 1997, and they’re bouncing back quickly today with a very successful $600 billion stimulus package of their own.

Chinese officials have earmarked a good chunk of the money for an infrastructure overhaul and full medical insurance policies for its population, 90% of which should be implemented by 2011.

Many believe that China will leap ahead of Japan to become the second largest economy in the world. I’m not sure where that will leave the U.S., but maybe we ought to take a few pages from their book on growth.

Currently trading around $35, we believe this ETF could trade into the $60 to $80 range next year.

Comments and Questions are welcome.

China Energy: In the Middle of $3.4 Billion in Spending

CGYV is giving it the old college try to bust through the $2 level today on the heels of news concerning the delivery of nearly $5 million in orders for mining concerns in New Guinea.

However, as far as I am concerned, that is not the really big story. Aside from recent evidence the economy is going gangbusters in China, there’s some really big news about how China is planning to deploy the funds for their stimulus plan.

According to a recently published article on a China devoted web site, in the last three months the Chinese government has decided to allocate 23 billion yuan (3.37billion U.S. dollars) for energy saving, anti-pollution, ecological and environmental protection projects.

CGYV is planted firmly in the middle of all this new money with the best solution for factories, and stands to grow quite dramatically over the next two years from this funding.

To read the article, simply click here.
Technically, the stock is trying.  $2 continues to be resistance, and in light of recent news I simply don’t understand why anyone would sell this stock at $2.

This is the fifth trip to $2 in the last month, and higher levels are inevitable for this stock. Based on the chart, there’s almost no doubt. It’s simply a question of when. Forces are building behind the scenes every day for a breakout. Stand by, and stay engaged.
Comments and questions are welcome.

Procera Networks (PKT): Surging to New Multi Month High

Procera Networks(PKT) on the AMEX is my most current trade idea. The stock is clearly gaining momentum. I provided a Live Chart strong buy recommendation on the stock at $.80 just a few days ago, and the stock surged through $1 yesterday for the first time since October and looking like it wants to work a lot higher.

It’s a software company- they’re in the business of helping ISPs (internet service providers) save money by routing their traffic more efficiently based on importance.

Jackson Spears, analyst at Robbins Group and personal acquitance, has a strong speculative buy recommendation on the stock. He believes their losses on $12 million in revenues in CY ’08 will convert to EPS of $.05 on $28 million in revs in CY ’09. His short term price target is $2.

The stock clearly is entitled to honorable mention for its chart this past week. As you can see, just since I posted the buy recommendation on the stock at $.80 on the 20th, the stock has already provided a 25% return. Volume and price are surging simultaneously.

People, things are starting to happen fast and furious. These absurdly oversold stocks are coming off the canvas and gaining ground. Don’t sit on the sidelines and watch these stocks start to trade back up. Act quickly and decisively when you read something you like. We’re going to start making money on a more consistent basis again.

It’s long overdue as we are a year into this Bear Market, and if you’re like me, it’s worn you out a bit. Time to get back to our former winning ways.

Comments and questions are welcome.

Options Media Group (OPMG) Being Reeled In a Little, No Big Deal

No big surprise to see Options Media Group Holdings, Inc. (OPMG) shares taking the day off. The run from the April 16th close of 51 cents to yesterday’s peak of 76 cents - on the stock’s highest volume ever no less - is just a little too much heat to sustain. Looks like there’s some profit-taking going on today, which is fine. It may not be a bad idea to do the same yourself, at least with a small portion of your shares.

In the bigger picture, I can’t ignore that the dip today is on minimal volume; it looks like most of last week’s buyers are staying in with the bulk of their trade. I think that’s a smart move too.

OPMG had been in a long-term rut…  a problem with a lack of volume more than performance. Last week’s volume surge had to get the market’s attention though, so I’m expecting more liquidity going forward. That’s good for the buyers and the sellers, but it will also let the stock start moving based on its value rather than volatility.

Anyway, Options Media is going to at least be an interesting story to watch unfold. The growth and opportunity is there - I just hope the market “gets it”. Digital advertising can be a tough arena to grasp and fully appreciate. The growth in the dollars should help though.

What do you think?

Nighthawk Systems Inc. (NIHK) Posts Glass Half-Full/Half Empty Numbers

There haven’t been a lot of bright spots in owning bulletin board company Nighthawk Systems Inc. (NIHK) lately, at least not until this week. We’ve had to watch shares slide lower (or continue to watch them slide lower) since 2007 despite a much better 2008. Maybe, just maybe, the latest round of news will start to pull NIHK out if its funk….. though at 2 cents, how much more downside is there to go?

Enough rant - on with 2008′s full year numbers:

  • Revenue, up to $3.3 million from $1.7 million…almost a double
  • Gross profit, up to $889,150 (from 23% to 27%)
  • EBITDA improved from a loss of -$2.1 million to ‘only’ -$1.2 million
  • The cash (operating) loss fell from -$2.1 million to a loss of $925K
  • Net loss came in at $4.1 million versus $3.3 million a year earlier. Subtracting out a one-time impairment charge though, the net loss would have been $2.5 million.

That’s it - the numbers don’t lie. Nighthawk isn’t where anybody wants ‘em to be, but they’re at least not heading in the wrong direction.

I don’t know if profitablity is in the cards for 2009, though I do get the feeling investor patience is running thin. The company said 2009′s pace already fell from the pace set in 200, though a deal with ESPN could be expanded. Talk about a company on the fence.

What say you?

China Energy’s Chart Brought to Life On Your Screen - A New Era Has Begun

OK, I don’t know that my short clip is going to win any academy awards for ‘Best Picture of 2009′, but I think you’re going to like it if you haven’t seen it yet.

Yes, that’s right - the OTC Journal has taken another step towards making this site more engaging, entertaining, and informative. We’ve made a web movie of our thoughts and observations regarding China Energy’s (CGYV) chart. Now you can see what we think with a lot of live-action detail. We hope it’s the first of many site enhancements we’ll be adding in the near future.

Anyway, here’s the link to the appropriate page: 

What do you think? Chime in below, as always.

Single Touch - SITO - Bulls Taking a Back Seat For Now

The bulls were in control in the early going on Single Touch, but the stock has made a round trip back to its starting point, and the bulls are now in the back seat.

I’ve heard both sides to this story.  Trailing revenues are minimal, and the balance sheet is not particularly strong. Then, there’s the issue how to value the AT&T and WalMart relationships in the early going, and the stock might seem to be a bargain.

Nevertheless, SITO is providing a ride- $2 to $2.50, now $1.70 over a period of two short weeks.

If you have a trading mentality, now is the time to jump in or add to your position. Now is certainly not the time to sell.

The company is going to take some time to really ramp up on the revenue side.

They are just getting their campaign started with WalMart. Nextel Mexico goes in June. AT&T is still their marketing arm. This could really ramp up over the course of this year.

SITO could continue to be a real rodeo ride. More news will be out with huge players. Look to accumulate on dips.

The Bulls Are Winning the SITO War So Far

It’s not been a bad start at all for our Single Touch (SITO) position. We first mentioned it on March 30th, and saw the stock move from the prior day’s close of 2.00 to 2.20. We got on the soapbox again on April 2nd following the Mexico news, and the stock reached as high as 2.55 the next day. Certainly we’d all love to see an overnight quadruple, but all things considered we have something to celebrate so far.

As far as today goes, the dip all the way back to 1.80 - in retrospect - seems to have served two purposes. One, it shook out all the nervous-Nellies who probably shouldn’t have been in a trade in the first place, and two, the rebound back up to the current level of 2.39 verifies that traders are buying on the dip. You could still do the same even at 2.39 though… this is really a compelling stock, and the numbers truly could make this stock worth 5.00 in the foreseeable future.

What’s not quite as obvious with the whole “pullback-n-rebound” theory was the growing bullish volume on the way up, and minimal volume behind the temporary dip. That’s the subtle clue that most people stayed in the trade.

It’s still a little too soon to call it a trend - more like a curious nuance. It’s a good start though. I just hope the trek to 5.00 from here is a little more well-paced than the last couple of days have been.

Got a thought or a comment? Leave ‘em below.

China Energy Recovery Posts Knock Out Numbers

Of the 8 small companies I have on my current menu of ideas, China Energy continues to be the one I believe offers the most upside potential with the least amount of risk. Why- check out today’s earnings release for 2008. Here are their achievements:

  • Revenues up a mere 95.6% - $23.18 million in 2008 up from $11.85 million in 2007
  • Gross profit increased to $5.07 million, a 138.2% increase from $2.13 million in 2007
  • Gross profit margins improved to 21.9%, as compared to 18.0% in 2007
  • Profits increased by 110.6% to $1.61 million in 2008 from $0.76 million in 2007
  • Without the aforementioned non-cash expenses of $0.72 million, net income would have been $1.83 million, an increase of 185.9% over that of 2007.

Total shareholders’ equity improved to $7,623,445, up from a negative $213,989 in 2007
EPS came in a $.041. Without the one time, non cash pub co expenses, EPS would have been about $.086 per share

Ok- anyone you spin this, these are simply great numbers. When analysts finally catch on to this company, they will love the increase in gross margins. So, not only are their sales numbers rising quite dramatically, the percentage of gross profits CGYV enjoys from the sales is going up as well. This means the company will be able to generate higher profits on the same revenues.

Now, let’s look at the 4th quarter to help us figure out what’s going to happen in 2009. CGYV delivered $7.2 million in Q4, which suggest they are
on an annual revenue run rate of $28 million.

CGYV delivered $6.1 million in Q3- quarter over quarter growth was 18%. If they can keep up at that clip, let’s look at ’09 numbers. CGYV should deliver $8.4 million in Q1, $9.9 million in Q2, 11.66 million in Q3, and 13.76 million in Q4.

CGYV could deliver $43.72 million in revs in 2009- another whopping increase of 88%. If gross margins stay the same, gross profits would come in at $9.6 million. Margins will increase as it won’t cost them any more money to be a public company. In fact, a bunch of one time, non cash expenses would no longer apply- I’d look for about $5 million in net profits, or $.17 in EPS.

If you still like the good old fashioned idea of PE ratios, in any normal market environment a company with a growth rate of 80% should trade at a minimum 40 times earnings.

So, if all this forecasting comes to pass, 40 times .17 would give us a stock price of $6.80.

All this perfect math can give you a guideline, but it rarely follows the play book. They are upside surprises and disappointments along the way. Nevertheless, the numbers are the numbers, and based on the numbers there is no recession going on at China Energy Recovery.

In fact, there is an enormous amount of chatter in the media about the $680 billion China stimulus plan, and a lot of chatter about a substantial amount of those funds going towards energy efficiency and cleaning up the environment.

Manufacturing is down in China in 2009, but what’s being done is going to the most efficient factories. Therefore, in order to compete, these factories need to retool, and what better way than with government subsidy money.

The chart is that of a stock just looking to break out on some sort of volume increase. I don’t know when that’s going to come. The volume has dried up, and there’s virtually no downside pressure at these levels. This stock is easy to hold when one simply looks at the corporate performance. Sooner or later the buyers will come, and this stock will be ready to surge.

It’s simply a no brainer. Sometime this year China Energy will go nuts, and I hope you are along for the ride.

Ufood Technical Update

Well, we’re off to just a fantastic start with my latest offering- UFood Grill- UFFC. I launched last week when the stock was trading at the absurdly oversold level of $.12, and now that investors understand the company is cashed up again, the stock has been nearly a triple in a few short trading days.

As you can see, from the $.12 start, the stock has now appreciated 166%- from $.12 to a high of $.32.

It’s done better than even I thought it would in the short term. I don’t think having a 500 point up day in the DOW hurt one bit.

If you’re watching this, and think you missed the boat, you’re probably right if you want the absolute bottom.

From a common sense point of view, I would not suggest buying now. In fact, if you were an early buyer, it might make some sense to limit your risk and take some money off the table.

If you’re looking to get in or add more, here’s a chart with FIB retracements. Your first level to look at is $.25- a buy there. at $.19 it’s a strong buy.

Comments and questions are welcome.

FAS Entry Level

Lately I’ve been trading the FAS and the FAZ with some success, and I want to share my trading strategies with those looking for some fast action.

The financial sector has been extremely volatile of late, and lends itself to trading, especially when you use the triple leveraged ETFs to do so.

Here are the symbols- FAS and FAZ- FAS is the triple leveraged long, and FAZ and is the triple leveraged short. Last week I notched about a $5k gain going long FAZ (which is betting the sector will go down) at about $29. I sold at about $34 on Friday.

I believe there is enormous upside in the financial sector. I have written extensively about mark to the market on the balance sheets of the banks, and Congress is even poking it’s unwelcome nose into this situation.

The banks are being forced to mark their mortgage portfolios down to absurd levels, and this is creating a hidden asset and a lot of upside in this beaten down sector.

There are three events that could take FAS (the triple leveraged ETF) from the current $5 level to about $20-

The three events would be a modification of the Mark to the Market accounting standards, the restoration of the uptick rule, and the SEC eliminating the rampant naked short selling.

After a big run up in the financials, I’m looking for a good entry level to get long again. I believe it will be about $4.50 on the FAS.

Here’s the chart. As you can see, in only nine trading days, this thing motored from $2.20 to $7.80- that’s some big action.

Last week the financials gave back some of these gains.

When I see this particular ETF back in the mid 4′s, I’m going to get very interested, and probably load up.

The correction was overdue. You should be aware this ETF is extremely volatile, so this idea is not for those without a strong stomach and a disciplined ability to keep the emotions out of it.

$4.25 to $4.50 is your entry level on a pullback next week. Stay tuned and we’ll see what happens.

Comments and questions are welcome.

UFood Off To Reasonably Good Start

UFFC- Ufood Grill- is another idea of mine to match my long term belief in Spicy Pickle. These fast casual concept companies can be huge as their reach spreads, but the recession has derailed both of them from the rapid expansion they would normally be on.

I feel both stocks, while still highly risky, have had all of the possible bad news priced into them, and had reached levels that assumed the companies were going into bankruptcy.

Friday’s news put UFFC on solid footing for at least another year financially, and their ability to raise capital in this dismal environment was a bit of a testament to people’s belief in their future.

I thought $.12 was an absurdly low price for the stock, and the market bore me out in Friday’s action. It was the highest volume day in the stock’s history- it traded nearly three times as many shares as it ever has in the past.

The stock made a high of $.25, and closed at $.20. A one day Fibonacci retracment is not a perfect barometer, but it’s a good starting point.

If you’re looking to be a buyer, I believe the $.16 to $.19 range would be prudent- more towards the bottom of the range if anything.

A break through the $.25 level would give us some new upside levels to look at. We’ll see what happens next week. More news would be grand.

Comments and questions are welcome. You won’t see your question answered right away. Give me a day to respond.

PhotoChannel’s Q1- A Closer Look As Promised

PNWIF- long a following in the OTC Journal, finally delivered a strong quarterly performance. Can you spell “too little too late” as far as the stock price goes. We needed this a year ago.
In case you’ve forgotten, PhotoChannel provides and ecommerce solution to retailers for photo finishing. You upload your digital images to a web site, then go into the store and pick up your prints in one hour.

They landed Costco in 2008, and spent about 9 months implementing the infrastructure to handle the volume, along with CVS pharmacies, WaMart Canada, parts of China, and other large retail chains.

PNWIF only provides the web interface, and make a few cents for every print. Q1 of their ’09 was the 4th calender quarter of the year, and their first profitable quarter in some time.

Revenues came in over $7 million at nearly $7.2. Profits were about $300k, which doesn’t represent a great margin. However, the company netted an additional $700k in foreign exchange gains, which shouldn’t be considered part of the business model.

On the other side of that coin is $1.4 million in amortization expense, which you can add back in to the cash flow picture. Therefore, the company really netted about $1.7 million on operations, which is pretty good in my view.

They spent $1.8 million on software development, which is too high in my view. They need to spend less.

At quarter’s end they had $8.4 million in cash and receivables, which is not so good against  $8.7 million in payables.

In short, a very satisfactory earnings report, but not a blockbuster once you take the balance sheet into account.

Their $.03 in EPS is really closer to $.06 per share in positive cash flow, which suggest the stock would be very fairly priced around $3 to $5, but not in today’s market.

The chart shows a stock that is doing far better than the major indexes, so we’ll take that as a victory.

For long term investors, this one is a gem. If you’re wondering where it will be in the next few months, impossible to call.

Comments and questions are welcome.