*AV* -- Tidbits #4 (incomplete due to PC work today)
Tidbits #4
A list of 12 stocks that have underperformed or were subject to a great deal of tax loss selling. We feel that these stocks should have a good percentage move up in price due to what is known as the January Effect. The stocks we have listed below have the potential for 10-25% or more moves in the month of January. We have 12 stocks in the $5-20 range that we refer to as the "Dirty Dozen".
With the DJIA down 500 points in the past week, seven of the
stocks listed below have either hit the target price or have come within $.50 of the target in the first six trading days of 1998. We feel that next week we will see a resumption of the upside move, as soon as the Asian problems subside a bit.
We will be updating our "Dirty Dozen" along with our regular
updates of both services. We have our picks, purchase prices and the price targets listed below as of 12-30-97
.NAME SYMBOL EXCHANGE BUY PRICE HIGH TRADE TARGET
Sandisk SNDK NASDAQ $19.50 $25.25 $5.75
Oxford Health OXHP NASDAQ $15.25 $18.75 $19-20
Fore Systems FORE NASDAQ $15.25 $17.50 $18-19
Western Digital WDC NYSE $16.25 $18.38 $20+
Applied Magnetics APM NYSE $11.25 $14.00 $15-16
Integrated Proc. IPEC NASDAQ $15.00 $17.88 $18-19
Aames Financial AAM NYSE $13.00 $14.13 $16-17
Cirrus Logic CRUS NASDAQ $10.50 $11.38 $14-15
Zitel ZITL NASDAQ $9.50 $11.13 $12-13+
Metromedia MMG ASE $9.25 $10.50 $12-13
Shiva SHVA NASDAQ $8.38 $11.00 $11-12
Informix IFMX NASDAQ $4.50 $6.13 $7-8+
Friday, January 9
going into effect this year. Low priced stocks stuck under a dollar are
going to be in trouble.
Losing the NASDAQ status will hurt many small stocks. Many will be forced to reverse the stock. The problem with that is if they are not doing any good now what makes these companies think they will do any better after the reverse.
A stock might be at 3/4. A reverse of 1 for 2 would make the stock price 1 1/2. If the stock is not worth 11/2 it will fall back down to 3/4 and be in trouble again. This is going to create a problem for the investor in finding the real deals.
One possible way of looking at a small company is to see if it has
already had a reverse in the past. In our opinion, companies that have reversed have already been failures. All the shareholders got fried once already. Avoid any company that has reversed before. Don't go near it until a total new management team is in power.
Another thing to look at is the stock growth. Look back over the last few years and see how fast new shares have been issued. Some companies support themselves by constantly issuing stock. Under the new rules these companies are destined for the junk yard. Under 1, don't buy it!
The low priced arena may hold promise for the best returns in 98. Use caution when bargain hunting!
AMAT is an issue we have traded many times in the past with great
success. This is an extremely tough environment for Semiconductor Equipment firms. Continued weakness in the Far East increases the likelihood announced contract will be delayed or canceled. We expect a decline to 26.
[J. Michael Pinson's Investment Digest]
Western Digital (WDC) 16 3/8 down 7/8, provides information storage products and services. The common shares have declined from 52 last Sep to currently around the 15 area. The reason the stock has crashed it because the earning have been reduced to a mere $0.50 per share forF98 (ending Jun 97), compared to $2.86 for the previous year. Earnings per share forecasts are $2.00 for FY98(ending 6/30/99).
It did not take very long for attorneys to file a class action lawsuit
against WDC alleging investment fraud, just after management stated that they would not meet the12/31/97 earnings forecasts. This caused the stock to drop from 30 in Nov to the current 15 area.
I have seen this type of legal issue before. The only individuals who are going to get rich from this type of activity are the lawyers. Michael Dell of Dell Computer(DELL), found himself in the same position when he overstated his earnings forecasts in 93, and DELL's common shares plunged over 70%.
The resulting class action lawsuit paid individual shareholders only
pennies, and the lawyers gained million of dollars in fees. The following 4 years DELL's common share rallied from 7 to 105 per share (adjusted for stock splits to date).
As mentioned in the Nov issue, WDC will continue to have short-term product pricing pressures, and common share price weakness as well. Frankly, this issue will remain one of the dogs of technology stocks for the first half of the year.
The Asian Flu will continue to affect the entire technology sector.
However, this is a great buying opportunity for investors who are willing to hold this issue for 18 - 24 months.
Long-term aggressive buy.
UTILITY STOCKS
With AEP, its shares have risen 27% since early May 97.And for the
others: CPL shares, 28%; NCE shares, 23%; NSP shares, 28%; and SCG shares, 23%. Therefore, we suggest that profits be taken these issues.
It is, of course, almost an investment truism that when long-term
interest rates decline, electric utility share prices rise. And this has
been the case from late Apr 97to the present. Since early spring of last year, bond prices have rallied considerably, with the yield on the 30-year US Treasury bond falling from a high of around 7.05%in late Apr 97 down to a current trading range of 5.75% -5.80%.
Be that as it may, and even though it appears that over the short-term ahead a favorable interest rate environment is in store for electric utilities - with electric utility share multiples currently being quite lofty, we still recommend that investors continue to take a
conservative point of view when considering an investment in the shares of an electric utility.
In short, we encourage potential buyers to select only the highest
quality utilities: i.e., those companies with strong coverage ratios,
steadily growing cash flows, and well defined prospects for something
slightly better than just an average rate of growth in kilowatt-hour sales.
So, in connection with our above use of the term "conservative," the prices of the above cited stocks have gone considerably beyond our forecasted levels of earnings support. And should the economy and its strong connection with kilowatt-hour sales demand prove to be more sluggish in 98 than is currently anticipated, earnings at the electric utilities could fall sharply.
We rate AEP, CPL, NCE, NSP and SCG a sell.
* ATMEL CORP said its directors authorized the buy-back of up to 5
million or common stock. The shares represent approximately five
percent of the 102 million shares outstanding, the company said in
a press release. The buyback program is in addition to the
5,000,000 shares authorized by the Company's Board of Directors in
January 1996. (Reuters 06:40 AM ET 01/08/98)
* Bankers Trust Alex. Brown said it lowered its rating on ATMEL
CORP to market perform from buy. Atmel on Tuesday said it would
report a fourth-quarter loss, mostly due to the inability of some
of its Asian customers to get credit for purchases. (Reuters 10:21
AM ET 01/08/98)
SPAM HIGHLIGHTS
1-8-98 STOCKS FOR TOMORROW
AUXER INDUSTRIES (AXGI) $.43 on 65,000 shares. The stock continues to stay strong during the last 200+ points to the downside in the broader market. Something is going on and we should see the results of it fairly soon. Trading above $.40 now sets the stock on course for the $.75 area and then $1.00. The vibes I am getting tell me that something should be out in the very near future.
NEW BUY SIGNALS:
USBL (US Basketball League -- $2.125): a new buy signal (71/100) was generated from a Stochastic Divergence. Signal reliability is 80%.
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CONFIRMING BUY SIGNALS:
Stock Close Current Signal Signal Active Trading Systems
Symb. Price Signal Streng. Reliab. Generating the Signal
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ATCO $3.71 Buy 94/100 71% Money Flow RSI Crossover,
Kirshenbaum Band
CHIF $0.812 Buy 94/100 87% Money Flow RSI Divergence, Volume Accumulation Percentage Divergence, Stochastic Peak
MRVC $21.812 Buy 83/100 75% Two Moving Average Crossover
______________________________________________________
CAUTION-YELLOW LIGHT: The following stocks had confirming sell signals and signs of technical weakness from Friday's trading....
DPAC (96/100, 78%);
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CAUTION-YELLOW LIGHT: The following stocks had confirming sell signals and signs of technical weakness from Friday's trading....
BIPN (90/100, 90%)
_____________________________________________________
RED LIGHT: Caution - The following stock(s) had new sell signals on
01/12/98...
MVISW (Microvision Warrants) (98/100, 67%)
END SPAM HIGHLIGHTS
PR Newswire - January 09, 1998 16:37
HOUSTON, Jan. 9 /PRNewswire/ -- OILEX, INC. (OTC Bulletin Board: OLEX) announced today that the Board of Directors has effected a 20 to 1 reverse stock split. Management's decision to enact the reverse split was based upon its desire to accelerate the Company's transition from the OTC Bulletin Board to Nasdaq Small Cap. The Company currently meets the asset and shareholder
requirements to be listed on the Nasdaq Small Cap Exchange. Management believes that the reverse stock split will benefit the Company by attracting institutional investors, investment banking houses and foreign investors.
Hmmm!!!!
Mixed signals I guess
Andrew |
