Solar...Solar
Monday, February 26, 2007 at 05:59PM Now only if our entire portfolio is made up of these solar plays, then we wouldn't be worrying about the choppiness of this market. The truth of the matter is, when you have become a mature trader, it's just hard to dedicate a meaningful percentage of your portfolio to plays like these. We have been playing these solar plays for a while now but results are definitely not the same as the stock's performance suggests. Well, this is part of the game and we just have to weigh in and balance out different plays with different kind of risk/reward ratios. The market looked a little worrisome intraday and despite a late pick up in the market indices, many of the most recent strong stocks we follow still ended up in red. Unfortunately, when the only group of stocks you are trading are the ones that are near 52 week high, this sort of behaviour is common when they lose a little steam. We reduced some exposure today and we are still going home with a cautionary note. At this point, we have no bias on the overall market and we are certainly not sticking our necks out to see which way the wind is blowing. We are taking some of the trading opportunities from some hot sector and some story stocks to make our trading days a little more meaningful.
TSL, yes it looks like one of our members gave it a royal pom pom blessing and it closed at the high today. The momentum certainly looks strong and it feels like there is more upside to come. Right now, this play is really beyond the eps/outlook but rather it's more momentum based as we've said before. What you see is what you get and it's a little pointless taking the fundamental into the account when the daily swing is 10%+. We have been busy trading this one on the long side but we are taking this play as is. We do want to caution that when this one does pull back, don't expect just a one or two point pullback, be prepared for some dramatic movement. In the meantime, even a technical newsletter bull on SOLF can bring the others into play once again. It could also work the other way, so be on guard and don't get carried away.
FSLR, we don't know if this one is following TSL or the other way around but the end result is similar. This one also closed pretty good and pace seems a bit controlled compare to TSL. Even though FSLR's gain is conservative compare to TSL, we feel it's also way less risky when it comes to actual trading. Again, it's really up to an individual to decide which one he/she is more comfortable with. But as we said yesterday, we are more concerned with the strongest at a particular time...hitching a ride and not asking for names.
EML, yes volume is really laughable in this one today but it's only a buck or two off the all time high. Keep an eye on this one as this is back in play in our book and watch for further volume increase to look for trading opportunities.
MFW, nice rebound so far. The best way to trade this is go with the flow as the institutions will do the calculating on the debt of one part of the company and the value of the licorice biz etc.. We are not about to crunch the numbers, it's easier to go with the flow. If this continues it should top the recent top going into MFW's full earnings which appear to be in mid March. Plenty of time to catch on, if we get a continuation of the big run recently.
UEIC, we added this one to our watchlist on Friday and bought a starter. We liked its earning number but more importantly its earning reaction. This one is actually an institution's favourite too as 75% of the float is held by them. We are definitely keeping a close eye on it to see any further development.
Briefingcom bit, Barron's reports Universal Electronics (UEIC) shareholder Neal Goldman, who runs Goldman Capital, believes shares could appreciate by up to another 50% in 12 to 18 months, based on increasing penetration of the markets for HD TV and digital-video recorders. He's also enthused about new products like Universal's Nevo SL controller that orchestrates everything from HDTV to music stored on a computer and routed through a home-stereo system. "If you take away the $4.50 a share in cash from the [roughly] $25 stock, you are looking at a stock that's trading at a very low multiple of 16 and that can grow at a rate nearly twice that," Goldman maintains. The co's sales and earnings, reported late Thursday, topped Wall Street's consensus estimate, lifting the shares more than 23% Friday alone. Universal also raised its Q1 guidance. DirecTV (DTV) and Comcast (CMCSA), which utilize Universal's technology for their set-top control boxes on an OEM basis, are its biggest customers, providing 19% and 11% of revenue, respectively. The co's technology is also used in DVRs that TiVo (TIVO) and the cable/satellite operators supply to their customers. The real allures, according to Avondale Partners are its intellectual property -- a portfolio of patent-protected technology -- and market position, with 75% market share in providing remote controls to U.S. cable operators," director of research John Bright says. Their library includes more than 260,000 device codes, which allow its devices to plug into more than 2,400 brands worldwide.
We like Avondale..past success with their money
BTJ, IBD's "New America" section gave this one a pop today and this is definitely one of the most interesting oil service plays out there. Maybe this one is getting the kind of exposure it needs to price it at a relatively higher valuation. We think once the IBD fever dies down, it'll go back to the old "track the crude price" behaviour. It's just at this point, it's hard to say how much higher of a price it's going to sustain with this new found IBD exposure. Day to Day with these as before.
All in all, this is mostly a "do nothing" day for us other than a few selective plays. We are sticking to "play with the flow" strategy and not to lean either way until every signal we see points heavily in one direction.