Tulvio, I've been trying forever, and can't email you. At the risk of getting flamed by everyone else, I am going to post my newsletter to you here (everyone else you is going to be upset about this, please do NOT read further).
There are also many other people who I can't seem to send mail to:
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All:
First off, let me apologize for the "quiet" period I seemed to have been in. I wanted to send-out several reports in the last few weeks, but my Email software would not allow the Blind Carbon Copying (BCc:) necessary to distribute the newsletter in a bulk-mail fashion. Without the BCc:, everyone's email address would have been exposed-I know that many of you have requested confidentiality, so I didn't want to infringe on anyone's privacy. I would have liked to have sent-out the newsletter to you individually, but with well-over 800 "subscribers," that would have been impossible.
I have been leaving comments in various threads around Silicon Investor, and I hope that many of you have seen them. If anyone wants to keep tabs on me, be sure to use SI's "People Marks" feature.
DISCLAIMER--PLEASE NOTE!!!: Some of the stocks I am about to mention here, are small, highly speculative companies. They might have thin floats, and could be subject to manipulation and/or hype--which I do not want to be responsible for. As always, please follow with your own research and try to make educated investment decisions. Also, be advised that I already own most of the stocks mentioned here (As per the email problem, I haven't been able to highlight each company as I began to like them). Finally, I will not be held liable for any of the picks I make in this, or any subsequent newsletters.
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*THE MARKET: I'm very uncertain about the overall market at this time. However, I see two possible scenarios unfolding, and I believe that the next week or so will be very telling. As things become clearer, I will reassess my stance over that time.
1) BULLISH: It is possible, that in the next couple of months (but not necessarily starting until more than a week from now), we are going to witness a dazzling runup in the technology sector. The primary reason for this bullishness, stems from the fact that we have seen practically NO EARNINGS WARNINGS for this quarter. As you know, a couple of weeks ahead of each earnings-reports season, we hear hundreds of warnings from companies of all tiers and sizes. However, for this quarter, it simply is not the case. Even companies like MOT, AAPL, CRUS, AMD, DIGI, etc., whom have developed a "tradition" with their now-customary warnings haven't said anything negative. If those weakest players are doing OK, just image how well the strongest companies are doing!
This could be the one of the most blow-out quarters in recent memory. You can thank Microsoft for the massive corporate upgrade cycle motivated with the release of Windows NT 4.0, which is driving sales throughout the entire technology sector. Obviously, the direct beneficiaries of the Windows NT boom are the stocks to buy (among others, this includes computer hardware, software, and networking companies). I just hope that the market welcomes great earnings with buying--not selling on the news (as was the case in October).
People also ask about the January effect. I think that this year, we will actually have one!!! I believe this, because the 1996 market rally has been quite volatile and narrow; with larger caps posting strong gains, and many secondary issues displaying incredible "boom and bust" action. Because of this, many investors have BOTH huge gains AND huge losses. Further, year-end tax-loss selling was more evident in 1996, than in the past, and many of the biggest losers have not even attempted to bounce (as they normally do). It is also important to note that the "January Effect" did not actually come in November/December, as had become the trend. With this being said, bottom-fishing in some fallen angels should be profitable this time.
2) BEARISH: Most companies are doing pretty well. In turn, that indicates that the economy is robust-to the point where it is possible that the economy gets too strong, which will further aggravate inflation fears. In such a case, the bond market will get hurt, which should cause problems for the stock markets. Of course, the Federal Reserve could raise interest rates at any point, which would be another bullet to the heart of our bull market.
Valuations, especially for large cap issues, are another concern. Although bears have been arguing this problem for a long (really long) time, they might finally be proven correct (as the saying goes, "a broken clock is correct twice a day.").
Whether you are bullish or bearish, however, I have compiled a list of stocks that should do well, barring a serious downfall of the market. In my opinion, if the bearish situation unfolds, it won't adversely these companies within my time outlook. At this point, I would not recommend putting new money into any mid to large cap companies--especially those that have been performing well (for these stocks have the most to lose). In fact, in the accounts I manage, I've been cutting back on my positions, and will continue to "dance close to the exits."
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*H&Q HEALTHCARE CONFERENCE STOCKS: Overall, I especially like [smaller] biotech/medical-related issues for about the next two weeks in particular. With the H&Q Healthcare Conference from January 6-9, a lot of these stocks have already begun to move in anticipation of their [hopefully] bullish presentations. ***PERSONALLY I WOULD NOT EXPOSE MYSELF TO JUST ONE OR TWO OF THESE ISSUES. IDEALLY, I WOULD RECOMMEND THAT A "BASKET" OF SEVERAL OF THESE STOCKS ARE PURCHASED.*** That way, you won't be overexposed to any single company, and diversification also increases the chances of owning a big winner or two. Keep in mind, that the ones that might not perform as well, probably have very little downside risk.
BZET ($16 1/4 ask): I've been touting this stock for a few months, now, and with Monday came the first of two major announcements. Biofield has been a huge mover this week. While I'm more cautious about a purchase at these prices, I am still bullish on the stock because they haven't yet released the data from their findings, which is hoped to be extremely impressive. It appears that the data disclosure will take place at H&Q. For much more information, visit Silicon Investor's Biofield thread at: techstocks.com . Most of the posts aren't very long, and I'd recommend that you carefully read through each of them, in order to understand fantastic story behind BZET. By the way, I'm really upset about this stock, because it was my #1 pick before the conference. I wish I would have been able to say that ahead of Monday's run-up.
ATCI ($4 ask): Autonomous Tech is the lesser-known competitor to Summit Technology (BEAM). Both of these companies make opthalmic lasers to correct vision disorders. I hear that ATCI has better technology coming, and will present some very impressive data at H&Q. With this, the stock should rally nicely.
EVTI ($9 3/4 ask): I really don't have very much information on this company, but I'm hearing that Endovascular Technologies is the "stock to own" ahead of H&Q. For this, I must stress that everyone carefully looks-into the stock before considering purchase. From a technical perspective though, the stock broke above its 50 day moving average recently, and I think it should go to the ~$11+ area, without fundamental news. Of course, I'm hoping for much more than just that..
CBMI ($10 1/4 ask): On December 10, Creative BioMolecules announced a pact with Biogen to jointly develop novel drugs for the treatment of some kidney disorders. With the deal, Biogen will invest ~122.5 Million in CBMI. In my opinion, the significance of this news has not been totally reflected in CBMI's share price-making the stock fundamentally undervalued. I believe that they (along with their partner, Biogen) will tell a very good story during their H&Q presentation, which should lift the stock. For some newslinks to CBMI, go to: biz.yahoo.com .
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*"JANUARY EFFECT" STOCKS:
VRTY ($15 1/4 ask): I think Verity should at least make a run to around $21 within the next few weeks. This search engine maker's stock is down from $53.5. Although VRTY could very-well be out of business sometime in the future, they are finally starting to make some money-a MAJOR positive for the short-term stock price, in my opinion. While market conditions were a little better a few weeks ago, the stock peaked at around $21. With all the tax-loss selling out of the way, it should be able to rebound back to those levels. As for downside risk, the stock has technical support at $14 1/4, which is where it's 50 day moving average lies.
GANDF ($4 1/16 ask): A favorite many retail investors, Gandalph Technologies has had major problems in the last year. The stock is down from $19.5, because frankly, they stand a very good chance of going out of business. Before that, though, I think the stock could pose a significant rally (on a percentage basis) with all of the tax-loss selling out of the way, and new money coming in for a turn-around in 1997.
LGWX ($5 3/4 ask): Logic Works makes client/server database and business process modeling software. Sure, they're losing money and face many "challenges," but the stock is practically sold-out at this time. I'd look for a nice percentage gain from this stock within the next few weeks. While I like the stock for purchase at these prices, on a technical note, if the stock can close about $6 1/8, I'll be even more confident in this issue.
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*OTHER STOCKS I LIKE:
UIS ($7 1/4 ask): I've heard indications that Unisys (the company that has been a "turn-around" story for many years now-doh!) might start being associated with the infamous "Year-2000 Date-Change Problem." If so, you can all image the potential for this stock. There are also some other positives that I feel I must point-out: 1) UIS doesn't have much downside risk in the stock, since it isn't far from its lows. 2) Another positive for the company, is that after all these years, UIS might actually make some money this quarter-this will be welcome news on Wall Street. The possibilities of this stock are phenomenal....very little downside, and tremendous upside potential make UIS differ from the traditional risk/reward equation. It is probably a good company to speculate on, because the stock is near its bottom, and it doesn't seem like there is much to lose from here (I mean over the next few weeks/months, not the long term). With the collapse of the other y2k plays on Monday, the bubble may (may) have burst for that group. Because of that, I don't expect UIS to perform as well as a Zitel or Viasoft. Still, I'm quite confident that UIS will score several points from here, at least.
MOT ($60 ask): I've been anti-Motorola for as long as I've been investing. Each and every quarter, Wall Street would become more optimistic about their businesses turning-around, and each and every quarter, MOT would come-out with an earnings warning..Well, MOT broke their "tradition" this quarter, and released no earnings warning!!! This is great news, not only for MOT, but for the entire technology sector (also, notice that MOT's partners in earnings-warnings fellowship, AMD, CRUS, DIGI, etc., haven't preannounced anything either). In my opinion, this is going to be a great upside surprise quarter for the entire technology sector. And with MOT, a positive surprise (but most importantly, a positive conference call) will send the stock much higher.
To me, MOT not preannouncing a dismal quarter is very significant. Sure, everyone knows that earnings aren't going to be good (they will be down from the year-ago period), but all of that negative information is already reflected in the stock price. In the previous quarters, Wall Street was expecting things to be bad, and was pricing the shares accordingly. Then, MOT would tell us that things are not only bad, but far worse than our lowest expectations--and the stock would get hit even more. Currently, things are expected to be depressing (which is priced into the stock)--and MOT hasn't felt the need to lower our expectations further. In my opinion, this is bullish. And notice that the stock has been rallying of late..
I think the most important thing to look for is the company's statements in the conference call afterwards. Even if the quarter was bad, it is probable that MOT makes some positive forward-looking statements, which will ignite a major rally in the stock. I'd liken it to what happened with AMAT and the semi-equipment makers last month....
Good luck to all.
Sal Habash
P.S. I'm still working through a few bugs, so if any of you have any problems (for instance, I suspect that some of you will get double-mailings), please contact me. |
