Stock Upside

Stocks Rise Despite Rough Week on Wall Street

noreply@blogger.com (Jonah Cetus) — Sat, 20 Sep 2008 17:16:00 +0000

It has been an amazing week on Wall Street. Lehman Brothers goes bankrupt, Merrill Lych gets acquired, AIG gets saved by the Feds and the Dow Jones Industrial Index drops 956 points (-8.4%) from an open of 11,416.37 on Monday 9/15 to a low of 10,459.77 on Thursday 9/18 before recovering to close at 11, 387.30 on Friday, 9/19 -- ending the week down just 0.03%.

The Dow Jones dropped a historical 500+ points on Monday and 300+ points on Wednesday before a huge turn around began on rumors that the government would come in to save the day with a bail out plan. On Friday morning, the Feds validated those rumors with an announcement to come up with a bail out plan with Congress to secure bad debt in financial market. With government acknowledgement to the seriousness of the crisis and a radical planned action to correct it, consumers suddenly gained confidence and the market soared back up with a huge rally on Friday.

The upside to all the crashing news this week, is that there were plenty of opportunities to buy low and increase one's investment. When the Dow Jones Industrial Index dropped more than 500 points on Monday, most Wall Street analysts said it was probably too late to sell by that point and holding shares for an inevitable recovery in the market was the best strategy. On Tuesday the market recovered by gaining more than 200 points suggesting consumers were ambivalent about the fall the previous day and took advantage of low prices. Then on Wednesday the Dow Jones dropped more than 300 points, only to nearly recover fully by Friday. Although I don't think the Wall Street experts foresaw the recovery to come so quickly, they turned out to be right in their prediction. In fact three stocks mentioned in this blog in the past (Ford, Starbucks & Solarfun) actually gained over 6% during the week --out-performing the Dow Jones, NASDAQ and the S&P 500.

From opening price on Monday 9/15 to closing price on Friday 9/19, Ford (F) gained +13.1% and Solarfun Power Holding Inc. (SOLF) gained +16.8% this week. Holding these two stocks during the turmoil would have made big returns on your investment. Buying at their low would have increased your returns even more. Another two stocks in my portfolio that gained 6% or more this week from opening price on Monday to closing price on Friday were Harmonics Inc (HLIT) +6.73% and Starbucks (SBUX) +6.5%.

Each week I also keep an eye on the schedule of Quarterly Earnings Report announcements. Usually there is a rally to purchase stocks before the quarterly earnings report is given on companies expected to show greater than expected earnings. This week Oracle (ORCL) was scheduled to annouce its 1stQ 09 Quarterly Earnings Report on Thursday, September 18th. The stock had outperformed its earnings estimates 3 out of the 4 quarters in 2008 and The Street.com, Standard & Poors and Jaywalk all gave it a Buy rating. Despite the anxiety in the market, Oracle was a sound stock to buy. Although Oracle dropped below $18 dollars on Thursday the stock still rose 4.9% for the week from a Monday 9/15 open of $19.13 to a Friday 9/19 close of $20.08 making it yet another stock to deliver a big gain during a wildly volatile week.

And that's the Stock Upside for this week.

-- Jonah

Solarfun Loses Its Shine

noreply@blogger.com (Jonah Cetus) — Fri, 12 Sep 2008 00:28:00 +0000

On August 25th I was gung-ho on Solarfun Power Holdings Inc (SOLF), which I predicted was about to release huge year-to-year sales growth figures for 2ndQ '08 based on the performance of its rival Suntech Power Holdings (STP). Although I knew Solarfun was a volatile stock subject to big dips and gains, I bought shares for (SOLF) on that day looking forward to a big gain.

My prediction on Solarfun 2ndQ revenues panned-out to be true (see post here). 2ndQ '08 revenues came in at $197.1 million for a nice increase of 12.7% from 1stQ '08 and a ginormous increase of 192.2% from 2ndQ '07. In essence everything went right. Solarfun average selling price for their product improved to $4.17 from $4.07 last quarter. Business in Europe remained strong with revenues in Germany up 56%, Spain up 33% and France up 5%.

Yet despite all the positive figures and results Solarfun stocks took a dive on the day it released its 2nd Quarter 2008 Earnings Report on Aug 27, 2008. Solarfun opened at $17.33 on 8/27 and closed at $16.33 dropping 6% on good news. Then the stock continued to drop in the weeks to follow with a bottom low of $11.54 a share reached on September 9th. The stock started to rise slowly on the tenth and finally closed at $12.42 today (9/11).

So what happened? What was it that drove the market to dump this stock fast on positive news? The future is all that matters in the market and apparently solar power pricing is expected to drop 10-20% in 2009 which in turn is predicted to hurt solar's profit margins. This news is what in my opinion led the market to "panic" and dump their shares in Solarfun Power along with other solar stocks.

Yet according to Solarfun Power's 2ndQ '08 conference call, the company is expecting stronger sales growth through the end of 2008 and although they acknowledged a 5-9% drop in average sales price for their products in 2009, they were quick point out that the company has already sold 50% of their annual volume for that year. Again all good news in my mind.

I think Solarfun Power along with other solar stocks still have a lot of growth potential. My prediction is Solarfun will continue to rise in the next couple of months and may even exceed the $19 share price it achieved in August before 3rdQ '08. With strong sales reports still expected in 2008, the market might have jump ship too early. On the upside, this could be a great opportunity to buy-in or purchase more shares for expected gains in 3rd and 4th quarter 2008. But as I've said before and I'll say again, this is volatile stock so expect ups and downs through the end of the year.

That's the Stock Upside for September 11, 2008.

-- Jonah

JAMBA JUICE RISES 25% IN ONE DAY

noreply@blogger.com (Jonah Cetus) — Fri, 29 Aug 2008 22:10:00 +0000

The expected jump in Jamba Juice (JMBA) shares occurred about a week late, but the results were still spectacular.

Originally Jamba Juice announced it would release its 2nd Quarter earnings on Thursday, August 21st. Then it delayed the release to Thursday, August 28th. The reason for the delay was due to a change in management that occurred on August 6, 2008, which naturally necessitated a little more time for the interim management to prepare the company's new direction (see also Jamba Jamba Update post made on 8/21/08).

Although the change in management and the entrance of an interim management team would naturally be cause for some concern. Jamba Juice already released very positive sales revenues in an unaudited preliminary quarterly earnings report published on July 24, 2008 (see Jamba Jamba Jamba post made on 8/4/08). It turns out, Jamba made true on that report with a 10% increase in sales rising from $89.6 million in 2nd Quarter '07 to $98.6 million in 2nd Quarter '08. Combine that news with its successful deal with Nestle which now distributes Jamba's bottled juices and smoothies to 8 west coast states in retail stores (including Safeway, Lucky's, Ralph's, 7-Eleven, Raley's, and Walgreens) and there was little reason not to jump on the buy.

Jamba Juice stocks rose 25.23% today gaining $0.27 a share from an opening price of $1.07 and a closing price of $1.34 while the market dropped with the S&P 500 down -1.37%. Jamba gains a total 35.3% from my Aug 4, 2008 post when the stock was trading at $0.99. a share

Based on yesterdays earnings release and the company's new business and sales strategy, Jamba's (JMBA) prospects still look good for more gains in the following weeks .

And that's the Stock Upside on Jamba Juice (JMBA)

SOLAR POWER SHINES

noreply@blogger.com (Jonah Cetus) — Tue, 26 Aug 2008 00:07:00 +0000

Revenues for solar power company have been growing quickly especially for two Chinese companies, Suntech Power Holdings Co (STP) and Solarfun Power Holdings Co (SOLF). Both of these solar companies manufacture and market a variety of photovoltaic cells and modules -- the main components for solar panels to convert sunlight into energy. To be honest the science is beyond me, but the numbers for these companies add-up and add-up big.

Last week Suntech Power Holdings Co (STP) released its 2ndQ Earnings report with spectacular revenue growth figures. On August 20, 2008 Suntech reported a gain of 53% in revenues vs. 2ndQ '07 with its $480.2 million in sales reported for 2ndQ '08. The previous quarter in 1stQ '08 Suntech also gave very strong revenue growth figures with an intake of $434.51 million which represented a 76% increase vs. its 1stQ '07 revenues the year before. That's quite impressive and the market agreed. On that day, Suntech (STP) stocks rose $4.62 from $37.13 at open to $41.75 at close to gain 12.4% in just one day. Suntech continued to rise in the following days and closed today (8/25) at $45.97. I don't think it's too late to get in for Suntech, but I did want to mention the other opportunity which might be a little more tantalizing.

On August 27, 2008 Solarfun Power Holding Co (SOLF) will release its 2ndQ '08 Earnings report which will likely be quite similar to Suntech's success. The latest figures available show that Solarfun (SOLF) reported $135.23 million in revenue for 4thQ '07 which represented a whopping increase of 322% vs. 4thQ '06. During 4thQ '07 Solarfun's shares quickly rose from $10 to a near $40 by Jan '08. Since then the stock had dropped and is now currently trading at about $19.99 (close on 8/25). Solarfun and Suntech tend to follow the same trend in share price. When Suntech stock prices rise, Solarfun's prices rise shortly after. Below is a chart comparing the share pricese for both stocks in the past year. I think it clearly shows a mirror trend in price increases and drops.

In short you might want to keep an eye on Solarfun (SOLF) on August 27th. I predict the price will jump a good 10% on that day. But also be aware that these can be some very volatile stocks that can fall as quickly as they rise (see Jan-Apr '08 trend in charts above). If you like some risk in your portfolio -- SOLF might be a good one to grab.

And that's the Stock Upside on solar.

-- Jonah

JAMBA JAMBA UPDATE

noreply@blogger.com (Jonah Cetus) — Thu, 21 Aug 2008 23:09:00 +0000

Just wanted to add a quick update since my last Jamba Juice post on August 4, 2008.

At that time Jamba Juice had originally announced they would release their 2ndQ 08 Earnings report on August 21, 2008. On Aug 19, 2008 Jamba revised the release of its 2ndQ 08 Earnings report to August 28, 2008.

Mmm... Why the delay? Well, on Aug 6, 2008 Jamba Inc's CEO Paul E. Clayton and CFO Donald D. Breen resigned. Breen's explanation was to pursue another opportunity. No explanation was given for Mr. Clayton. The company is currently running under an interim management who naturally would need a little more time to complete its initial strategic review.

To be honest, I'm not too concerned about the news on the change of management or the delay of the 2ndQ 08 Earnings release. I am still bullish on Jamba mainly based on the positive preliminary unaudited 2ndQ '08 Earnings report which suggest a 10% increase in sales. I be holding my position with Jamba with an optimistic outlook on next week's release. Jamba closed yesterday (8/20/08) at $1.06 -- up from $0.99 from my previous post on 8/4/06.

Going Forward with Ford

noreply@blogger.com (Jonah Cetus) — Fri, 08 Aug 2008 23:27:00 +0000

Ford Motors (F) along with the other US auto companies -- Chrysler and General Motors (GM) -- had one of the worst US summer sales results in recent history. Much of it due to the lagging economy and the high gas prices at the pump. The gas guzzling american trucks and SUV's which used to be good sellers couldn't compete against the gas sipping foreign car options this year. Getting more miles on the gallon made all the difference in consumers' choices this summer and unfortunately Ford, GM and Chrysler were slow to react to fickle consumer minds which led to huge losses in 2ndQ '08.

On July 24th Ford (F) reported a whopping 8.7 BILLION DOLLAR LOSS on its 2ndQ 08 earnings report. A huge let down among investor who began purchasing Ford shares in the weeks leading to the release of Ford's earnings and on reasonably good news of gas prices going down. In the month of July before the earnings report was released (July 1-23) Ford share prices rose from $4.71 to $6.03 -- a gain of 28% in approximately three weeks. Then Ford released its report on July 24th and to no surprise the stock went down. What I found telling, however, is that the stock only dropped to $5.05 when the market closed on July 25th, which was still a reasonable increase of 7% from July 1, 2008 prices -- not bad considering a huge $9 billion loss.

The market's seemingly casual reaction to Ford's huge losses basically told me there was still a lot of faith in the company's value moving forward. In recent news, analyst always seem to ask whether the market has bottomed out and although I don't have the answer to that question, I do feel that Ford's share prices have reached the bottom of the barrel based on investors loyalty to hold shares despite some very discouraging big losses. And although your not likely to find many analyst out there giving Ford the buy signal, I feel confident that its shares prices are safe and more likely to rise in the months to follow. If you ask me, it's time to purchase this stock while it's at its low and look forward to gains in the long run.

I base my move to buy this stock on Fords announcement to change its direction in the coming months -- namely investing more on fuel sipping cars in the very near future. By year's end Ford announced it will start converting 3 large truck and SUV plants to make small cars such as its popular Ford Focus, Ford Fiesta and two other models yet to be announced. Ford also said it would double its hybrid line from 2 to 4 models in 2009. And although Ford will still continue to manufacture its SUV and Truck pick-up lines -- fuel economy is very much kept in mind for future designs. In short, I believe Ford is headed in the right direction and investors seem to agree. Ford closed the market this week at $5.26 a share (8/8/08). My target price for this stock is set for a modest $8.50 by 2010 (+ 61.5%) but I wouldn't be too surprised if Ford exceeds that.

And that's the Stock Upside on Ford Motors (F).

Jamba Jamba Jamba

noreply@blogger.com (Jonah Cetus) — Tue, 05 Aug 2008 00:08:00 +0000

This summer drink specialty has come up against a lot of competition this summer. Starbucks releases its own fruit smoothies Vivanno, Jack in the Box follows suit with its own smoothie offers and just yesterday, I saw Peet's Coffee with new health smoothies on its menu. It just shows to prove that Jamba smoothies are a popular drink during the summer and the rise of competition only seems to justify Jamba's main product line.

First Quarter '08 news didn't help Jamba's stocks in the past three months. Share price dropped from $2.50 in May '08 when the earnings report was released to a current $0.99 per share today. That's a whopping 60% drop. The drive down in price was not due to its positive revenue sales of $101.55 million which represented a 13.7% increase vs. 1stQ '07's $89.4 million, but rather due to its high liabilities which drove reports to a net loss of $6.4 million. Not exactly great news. Jamba reacted with plans to close ten of its stores, eliminating 53 team members and making other costs cuts along the way.

Since then Jamba has been promoting its products with new outdoor and TV ads targeted for a morning breakfast audience. Early reports suggest the campaign is working and prospects are looking very positive for its anticipated 2ndQ '08 earnings report to be released on August 21, 2008.

Preliminary data on Jamba's 2ndQ earnings suggest a 10% gain in sales with $98.6 million vs. 89.6 million in 2ndQ '07. But we need to be careful here. Jamba still has some large liabilities to overcome which is typical for some rapidly growing and expanding companies. Jamba could still come out with a net loss and its price now entering the penny stocks could slide a bit more. But despite this gloom and doom I can't help but look at the positive long term prospects for this company.

First Jamba has been increasing its year-to-year sales revenue since it went public. Jamba continues to expand its corporate stores now with 726 stores nationwide. Jamba has been effectively reducing its current liabilities quarter-to-quarter. Plus Jamba's products will soon be hitting grocery shelves with its Nestle distribution deal soon to fruition in 2008 -- a move aimed to popularize its brand name nationwide. All of this for company with no short term debt and a minimal long-term debt makes its $1.00 share price seem ripe for the picking.

But I am cautious investor and Jamba still has a lot of challenges to overcome -- such as how to compete with new smoothie competitors and possibly the need to expand its product line. Nevertheless I think Jamba's on the right track and I would hold my shares on Jamba for the long run. Some aggressive investors might consider doubling down on this stock before the Aug 21 earnings report release. Either way, I believe Jamba would make a good investment and would dare to predict gains revenues and in share price for this company within the next 12 months.

And that's the Stock Upside for Jamba Juice (JMBA)

Starbucks July Ups and Downs

noreply@blogger.com (Jonah Cetus) — Wed, 30 Jul 2008 00:41:00 +0000

Starbucks July Ups and Downs

July's been a wild ride for Starbucks (SBUX) as it announced cutbacks, premiered new health products and prepared its 3rd Quarter fiscal earnings report to be released later this week. Here's a quick recap.

On July 1st, Starbucks announced plans to close 600 underperforming stores in the USA by year's end. That equates to about 5% of all US Starbucks stores currently open. The shutdowns are expected to affect approximately 12,000 employees. Most news reports suggest the reason for the mass closing is due to the US lagging economy but there are also suggestions that the huge coffee chain might have simply expanded too quickly.

On July 8th, Starbucks offers a new healthy product to its consumers -- Vivanno nourishing fruit smoothie blends. Plus plans for more new health and energy products on the way.

On July 13th, Starbucks stayed true to its promise and announced the locations of the first 50 stores to be closed. Some may have expected the first stores to be located in major cities where Starbucks is so ubiquitous that one may actually pass as many as 3 Starbucks stores in two block radius. In my hometown of San Francisco, one could find over 70 Starbucks within a 1 mile radius of any point in downtown S.F. But it turns out none of the first 50 stores Starbucks plans to close will be located in a major city.

On July 28th, analysts from Thompson Financial expect the soon to be released 3rd Quarter fiscal earnings to deliver profits of 18 cents per share which is slightly down from the same period last year.

Today, July 29th, Starbucks announced it will close 61 of its 84 stores in Australia -- showing for the first time a reduction in expansion to its international business. Plus it also announced cuts to 1,000 non-store jobs again as part of its plans to overhaul its business to cut costs and increase profits.

Yet amid all this news, Starbucks stock (SBUX) rose 5.34% to close at $14.99 this afternoon. So why a surge in price for Starbucks? Well all these changes might just be the move Starbucks needs to make. Maybe -- just maybe -- a Starbucks on every corner is a little too much and adding new product lines to existing stores might just be the ticket to inject added sales. Those may all be good reasons, but I can't help but think that Starbucks is primed for a buy at its current low share price. Over the past 52 weeks, Starbucks stocks plunged nearly 50% in price. In the month of July it maintained a price within the $14-$15 range. Has this stock hit bottom? Maybe not. Maybe it will drop to $12 after the lower than expected 3rd Quarter profits are annouced after the closing bell on Wednesday. My reaction, however, is to buy now and keep a close eye on Starbucks balance sheets over the next few quarters. If revenues begin to rise due to its recent overhauls then the stock price will follow and there is a lot of room still left for Starbucks to grow especially internationally. Before years end Starbucks is expected to open over 900 stores overseas. And rather than expand its already ubiquitous stores in the US, Starbucks appears to be focusing on expanding its products and its service. For a stock that used to trade in the high $30 range (just barely hitting $40 a share), at less than $15 a share, SBUX should be considered a steal. Its most recent big news in July are signs the company is looking to make big changes and I think it will lead to an uptrend in the stock. I am looking for SBUX to increase its shares to be priced in the low $20 range by years end. Sure the stock may go through some bouts of ups and downs. But in the long run Starbucks looks ready to launch upward with new leadership and new product offers to its consumers.

That's the Upside on Starbucks