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Thursday, August 26, 2010

Smart Stock Pick - GPRE

Shares of Green Plains Renewable Energy(GPRE) have been on a long downtrend since February of this year. The stock went from $17 down to just $8 recently. The market still still very weak and no one knows exactly when and which stock is a good time to jump in. Based on recent movement it looks like investors should take a shot at GPRE.

The insider transactions show very bullish sign as all transactions in August have been buys with price ranging from $8.26 to $9.19. The total amount purchased is around $85,000 which show strong support of the company. The August buy reverse the insider sell trend in July.

The company's financial is strong as the recent financial report show strong result with net income jumping from $0.6 million to $8.7 million while revenue almost doubled from $284 million to $453 million. Despite weak margin for ethanol players, the company is focusing on maintain margin and reduce cost and should remain profitable - a great sign for long term play.

The technical chart shows the stock has reverse the downtrend in mid August and is now on an uptrend. The stock has plenty of upside and shouldn't go down much further as it established a support at $8.

Wednesday, August 18, 2010

Smart Stock - PLAB

Between August 10 and August 13, shares of Photronics(PLAB)dropped almost 20% from $4.85 per share to $3.95 per share right before the earning announcement on August 17. Although all the major indices all sufferred loss at the same time, the rapid and huge drop still gave investor impression that the earning announcement could be disappointing.

As investors have all gave up hope and ran away for safety on August 13, two huge buy came late on that day with 1 million shares each. Panic sellers didn't seen to see the spike in volumn and continue to flee the stock.

Fast forward to the following Monday the stock began to bounce back ahead of the earning. For three days the stock regained almost all the loss and is back at $4.49 per share today. And speaking of the earning which came yesterday, the third quarter simply blew pass analyst estimate by a wide margin of 45%.

The lesson learned here is don't sell in panic. I actually owned the stock before the drop and when the sell-off began, the first thing I did was not to panic and do a little DD. The insider transaction still reflect bullish signal as the most recent activities in August was a buy. Then I checked the income statement and it reveals that the company has been on a turn-around for the past three quarters and the current quarter should reflect the same trend.

So I concluded that it must be a false-alarm and actually add more shares during the plunge. By today not only I recovered my loss I also end up gaining overall.

Saturday, August 14, 2010

Where is the Market Heading

The performance of the market last month almost made us forget about the big sell-off in May. In just one month, Dow Jones average rose 700 points from 9732 on July 1 to 10465 on July 30. During the same period, S&P 500 surged almost 10% from 1027 to 1101.

Just when people are ready for the welcome back party of the bull market with another 200 points surge in Dow in the first week of August, this week's 400 points drop again reminded people how fragile the market and the investor's confidence are.

The technical chart shows the Dow is close to 50 day moving average of 10266 points and should have support at that level. S&P 500 however has dropped below 50 day moving average although there is support at 1064 and 1069.

Based on the chart the market should stabilize next week and may even see bounce back. If the market continue to drop sharply though, it's probably better to stay on the side line.

Monday, August 9, 2010

Pacer International Oversold?

Last Thursday shares of Pacer International (PACR), a Concord California based transportation and logistics provider, plunged 25% as an analyst had concern about the company's ability to meet its earning goals in the future on rising freight rate. The drop continue the next day and the stock ends last week losing 35% in value in last two days, wiping out all the gains for the past 5 months.

Today bargain hunters took the opportunity and send the stock up 5.28% to $5.98 per share. Looking at the technical chart, it shows the stock touched the 200 day moving average during the two day sell-off. Today's buying activities are positive sign that there is support and if the stock can stay above the 200 day MA this could be a great time to buy.

Thursday, August 5, 2010

Today Result, GAP, ATPG

Two of the recent covered stocks are going opposite ways today. GAP went up another 8.13% to $3.99 per share while ATPG lost steam and dropped 4.54%.

The pull back of ATPG is nothing to panic about as investors were doing profit taking after the stock went up 40% in just two weeks. Wait for few more days and there could be buying opportunities coming.

The recovery ride for GAP has not end yet as the stock has been up 60% since it hit 52 weeks low not so long ago. The stock is still less than a quarter of the 52 week high of $13 per share. For the long run this stock still has plenty of spaces to go.

Wednesday, August 4, 2010

A Big 0 Mistake

Shares of ATPG Oil & Gas Corporation (ATPG) skyrocketed 10% to $13.2 per share, continuing the strong uptrend for the third straight day. The stock has already gained more than 30% in just two weeks. However just last month JPMorgan analyst was bearish on the stock while another analyst cut the price target by 41% to $10 per share. At that time ATPG was trading at as low as $9.14 per share and it was probably the best time to buy the stock.

insider transactions of the stock shows the directors have been bullish on the stock recently and have been buying around $9.17 per share. There is no selling even after the negative comments from the analysts. So do you believe the insiders? Or do you believe the analysts?

Well it turned out that the analyst actually made a huge mistake as the analyst thought ATPG would need $500 million of funding. The mistake is that extra 0 at the end and that extra 0 at the end change the valuation of the stock completely. At the moment $13 per share for ATPG may even seem cheap.

So again do you believe the insiders? Or do you believe the analysts? The lesson learned here is to always do your homework and check multiple resources. And the golden rule applies "When everybody is fleeing, it is the best time to buy".