These Recent IPOs Could be a Real Bargain</h1> <article> <h1>These Recent IPOs Could be a Real Bargain</h1> <p>David Sterman — Tue, 29 May 2012 05:00:00 +0000</p> <div style="float:left;" class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/article/these-recent-ipos-could-be-real-bargain"></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>If you were angling for a piece of the <strong>Facebook (NYSE: <a class="stock-link" href="http://www.streetauthority.com/stocks/FB">FB</a>) </strong><a href="http://www.investinganswers.com/financial-dictionary/stock-market/initial-public-offering-ipo-1076" class="definition-url" target="_blank"><span class="definition-url">IPO</span></a> -- only to see it quickly drop -- then know that it could have been worse. You could have invested in stocks like <strong>Brightcove (Nasdaq: <a class="stock-link" href="http://www.streetauthority.com/stocks/BCOV">BCOV</a>) </strong>or <strong>Millennial Media (NYSE: <a class="stock-link" href="http://www.streetauthority.com/stocks/MM">MM</a>)</strong>. These 2012 IPOs (and many others are off 30%, 40% or even 50% from their recent peaks), highlight the real peril of chasing a newly-issued stock.</p> <p>Sadly, it's to be expected whenever the <a href="http://www.investinganswers.com/financial-dictionary/economics/market-3609" class="definition-url" target="_blank"><span class="definition-url">market</span></a> hits rough sledding. These young companies are the first to be sold off because they have limited operating histories and a fairly short-lived investor base. In some instances, these sell-offs can be quite justified -- in hindsight. After all, many newly-public companies have a tendency to deliver a solid set of initial quarterly results as they pump up the numbers for the <a href="http://www.investinganswers.com/financial-dictionary/businesses-corporations/offering-3984" class="definition-url" target="_blank"><span class="definition-url">offering</span></a>, but just as often can deliver weak results in subsequent orders.</p> <p>That's why it's often wise to wait until after the IPO dust has settled. After a stock has fallen sharply from the post-IPO euphoria, you're likely to have a chance to buy in after others have exited the stock.</p> <p>I went through the list of all companies that have come public this year, focusing on those that trade at least 100,000 <a href="http://www.investinganswers.com/financial-dictionary/stock-market/shares-2011" class="definition-url" target="_blank"><span class="definition-url">shares</span></a> a day on average and have a <a href="http://www.investinganswers.com/financial-dictionary/investing/market-value-779" class="definition-url" target="_blank"><span class="definition-url">market value</span></a> of at least $200 million. A dozen of these companies are now at least 30% lower than the levels seen in the post-IPO euphoria phase. And a few of them look quite compelling at these now lower levels.</p> <p style="text-align: center; "></p> <p> Brightcove, which provides video delivery services to major media organizations, is a classic case of how an IPO can fail. The stock opened well above its $11 offering price in mid-February, and really built a head of steam into late March when the <a href="http://www.investinganswers.com/financial-dictionary/insurance/underwriting-1545" class="definition-url" target="_blank"><span class="definition-url">underwriting</span></a> analysts offered up their predictably glowing reports and <a href="http://www.investinganswers.com/financial-dictionary/stock-market/bull-1772" class="definition-url" target="_blank"><span class="definition-url">bullish</span></a> price targets. But reality set in by early May as the company issued its first quarterly press release. Forecasts that second quarter sales would be flat or even a bit lower sequentially is not what investors expected to hear, and shares have been sliding ever since. This is why I like to see at least a few quarters under a company's belt before wading in.</p> <p>In a lousy market like we're in right now, investors tend to flee from unprofitable companies. That's because the prospect of a still-weaker market ahead may make it hard for these companies to raise fresh cash if they burn through their existing funds. That's been an additional concern for Brightcove's investors, and it has also been weighing on shares of Millennial Media. The firm is a fast-growing provider of mobile advertising software, and unlike Brightcove, delivered a generally solid quarter.</p> <p>Kudos to analysts at Goldman Sachs on this stock, because they resisted the urge to glow about the stock simply because their firm was a leading <a href="http://www.investinganswers.com/financial-dictionary/insurance/underwriter-873" class="definition-url" target="_blank"><span class="definition-url">underwriter</span></a> for the IPO. These analysts picked up coverage on May 8 with a "Neutral" rating, noting that after a post-IPO spurt, the $19 stock price already reflected a "premium valuation." A week later, the company issued solid quarterly results and impressive forward guidance, but the tough market was dragging shares down anyway. A few days later, on May 17, Goldman boosted the rating to "Buy" (with an $18 <a href="http://www.investinganswers.com/financial-dictionary/stock-market/price-target-3195" class="definition-url" target="_blank"><span class="definition-url">price target</span></a>), noting that "mobile remains the fastest growing segment of both consumer media consumption and advertiser spending. Millennial's position as the leading independent mobile ad platform makes it a key beneficiary of this growth and a potentially important <a href="http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/asset-2278" class="definition-url" target="_blank"><span class="definition-url">asset</span></a> to larger companies struggling to adapt."</p> <p><strong>A sage veteran in the freshman class</strong><br /> Though most IPOs involve very young companies, <strong>U.S. Silica (Nasdaq: <a class="stock-link" href="http://www.streetauthority.com/stocks/SLCA">SLCA</a>)</strong> has been around for more than 100 years. The company makes a wide range of sand/silica products such as paint additives, glass and fracking solutions. Based on the company's long track record, underwriters figured $17 was an appropriate price for the January 2012 IPO. Shares quickly zoomed to $22, perhaps in a bit of misplaced euphoria, but have since crashed down to $12 in this challenging market.</p> <p>Yet this has all the makings of a growth stock, despite the lousy reception. The company expanded a key production site in Ottawa, Canada in late 2011 which should enable a steady rise in output. This is leading management to target new market niches such as resin-based coatings.</p> <p>U.S. Silica's sales are expected to grow roughly 40% this year to around $420 million before rising another 20-25% to around $515 million in 2013. Per-share profits are expected to grow at a similarly-fast clip, growing more than 50% this year to around $1.40 before hitting $2 in 2013. It's not clear what kind of price-to-earnings (P/E) multiple this stock deserves, but its current forward multiple of just six appears too low. </p> <p>Risks to Consider: <em>Further drops in the market could lead to even lower prices for these stocks because they lack the operating history to attract far-sighted investors. </em></p> <p><span style="color:#b22222;"><strong>Action to Take --> </strong></span>I've only discussed the first three stocks in the table above. The rest of these companies are surely worthy of further research. These stocks are in the penalty box right now, which makes this a good time to research them while others shun them. And if you find a stock worthy of buying, then you'll likely be ahead of the crowd.</p> <p>[<strong>Note:</strong> If you haven't heard about this unique opportunity, then I want to tell you about it now. StreetAuthority has staked me with <strong><a href="http://web.streetauthority.com/m/ds/sterman-lp-txt4.asp?" target="_blank">$100,000 of real money</a></strong> to invest in my absolute best ideas. For a limited time, you'll be able to follow along with me completely free. <strong><a href="http://web.streetauthority.com/m/ds/sterman-lp-txt4.asp?" target="_blank">Go here to learn more.</a></strong>.]</p> </div></div></div><div class="field field-name-field-origin-is-native field-type-list-boolean field-label-hidden"><div class="field-items"><div class="field-item even"></div></div></div><br /> </article> <article> <h1>Forget Facebook: This Social Media Stock is Ready to Break out</h1> <p>Dave Goodboy — Tue, 29 May 2012 05:00:00 +0000</p> <div style="float:left;" class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/article/forget-facebook-social-media-stock-ready-break-out"></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>"They need to get rid of Zuckerberg. Facebook may have a chance if a talented leader is appointed; otherwise it's a no-go. The guy is a master at the start-up, but he needs to turn the reigns over to someone else to run the company", exclaimed an under-the-radar Internet insider I recently chatted with in South Florida. </p> <p>His words proved semi-prescient as the heavily anticipated <strong>Facebook (Nasdaq: <a class="stock-link" href="http://www.streetauthority.com/stocks/FB">FB</a>)</strong> <a href="http://www.investinganswers.com/financial-dictionary/stock-market/initial-public-offering-ipo-1076" class="definition-url" target="_blank"><span class="definition-url">IPO</span></a> has gone down in history as providing the worst return of any large IPO in the past decade. </p> <p style="text-align: center; "></p> <p>The massive $16 billion IPO was fraught with issues from its launch on May 18. A lack of communication at Nasdaq appears to be the initial trigger of the strife, causing the IPO to be delayed, and some investors complained that their orders weren't being filled or that they were getting <a href="http://www.investinganswers.com/financial-dictionary/stock-market/shares-2011" class="definition-url" target="_blank"><span class="definition-url">shares</span></a> at a much higher price than they wanted. </p> <p>The confusion resulted in about $115 million in losses for the four major market-makers in the IPO: Knight Capital Group, Citigroup's Automated Trading Desk, Citadel Securities and UBS AG.</p> <p>The exact steps taken by Nasdaq officials on the IPO's first day are still unclear. However, the losses suffered by investors and the market-makers are very real. This has triggered a rash of shareholder lawsuits against the social media behemoth. </p> <p>Obviously, it wasn't Zuckerberg who caused the initial confusion. But time will tell if he can help solve the problems or if a new leader needs to take over. </p> <p>Either way, it looks like it's going to be a long and revealing road to get to the bottom of exactly what went wrong with the IPO. But one thing is for certain: Facebook's flop pulled down the entire social media sector, potentially setting up a great buying opportunity for savvy investors.</p> <p><strong>The Facebook of China</strong><br /> While the lawyers are sorting out Facebook's troubles, otherwise successful social media companies have been knocked down into bargain territory. One of these is <strong>RenRen Inc. (Nasdaq: <a class="stock-link" href="http://www.streetauthority.com/stocks/RENN">RENN</a>)</strong>. </p> <p style="text-align: center; "></p> <p>The so called Facebook of China nearly doubled in 2012 prior to the Facebook flop. As you can see, shares plunged into the $4 range in sympathy with the Facebook sell-off. However, the price appears to have stabilized and may be beginning to climb higher. </p> <p>Since shares are below the 200-day simple <a href="http://www.investinganswers.com/financial-dictionary/technical-analysis/moving-average-2052" class="definition-url" target="_blank"><span class="definition-url">moving average</span></a>, this stock does not qualify for my value zone buying system. However, it is a classic break-out buy at $5. </p> <p>The fundamentals look solid. The company is sitting on $1.04 billion in net cash. This works out to be $2.65 per share. This cash can be used to start a stock buyback program, or pay a <a href="http://www.investinganswers.com/financial-dictionary/income-dividends/dividend-1304" class="definition-url" target="_blank"><span class="definition-url">dividend</span></a>, which would push the shares higher. It may also be used, as it has been previously, to buy out smaller social media start-ups in China. One never knows if one of these start-ups could have cracked the code, taking Renren down an entirely different and lucrative social media avenue.</p> <p>Another solid positive is that the company is aggressively pursuing partnerships with major technology companies. Renren will partner with<strong> Intel (Nasdaq: <a class="stock-link" href="http://www.streetauthority.com/stocks/INTC">INTC</a>)</strong> for network assistance, as well as Japan's popular photo app, SnapDish. This willingness to work with others unmistakably signals that further deals may be pending. And obviously, Renren could provide any large, western company the perfect marketing gateway to reach the Chinese masses. Partnerships of this sort could easily send shares into the stratosphere.</p> <p>Risks to Consider: <em>Although Renren looks appealing both technically and fundamentally, there are certain risks to investing in the Chinese <a href="http://www.investinganswers.com/financial-dictionary/stock-market/american-depositary-receipt-adr-843" class="definition-url" target="_blank"><span class="definition-url">ADR</span></a> (American depository receipt). Namely, political and macroeconomic risk factors are my primary concern. As you know, China is far different than the United States when it comes to politics, both corporate and national, not to mention contract law and disclosure. In addition, the latest economic numbers may be signaling a significant slowdown in Chinese economic growth. However, it's critical to note that the <a href="http://www.investinganswers.com/financial-dictionary/economics/economy-1517" class="definition-url" target="_blank"><span class="definition-url">economy</span></a> is still growing like gangbusters; the growth has just missed the consensus estimates. Due to these unknown factors, it is critical that investors position size accordingly and always use stop-loss orders.</em></p> <p><span style="color:#b22222;"><strong>Action to Take --> </strong></span>Renren has set up to be a classic break-out play. Start to build a position by buying on a break-out above the $5 level, and then add to the position on a break above the <a href="http://www.investinganswers.com/financial-dictionary/technical-analysis/200-day-moving-average-1222" class="definition-url" target="_blank"><span class="definition-url">200-day moving average</span></a>. Other knocked-down social media companies such as <strong>Quepasa (Nasdaq: <a class="stock-link" href="http://www.streetauthority.com/stocks/QPSA">QPSA</a>)</strong> and even micro-cap<strong> IZEA (IZEA.PK)</strong>, although not as appealing as Renren, should also be watched for potential momentum buy opportunities.</p> </div></div></div><div class="field field-name-field-origin-is-native field-type-list-boolean field-label-hidden"><div class="field-items"><div class="field-item even"></div></div></div><br /> </article> <article> <h1>If You Are Bearish On the Economy, Then You Need To Own This Stock</h1> <p>Dave Goodboy — Fri, 25 May 2012 05:00:00 +0000</p> <div style="float:left;" class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/article/if-you-are-bearish-economy-then-you-need-own-stock"></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>Trading is in my blood. I vividly remember, as an elementary school student, trading baseball cards with my classmates. My trading interest blossomed as I learned how to buy low and sell high via various part-time business endeavors. These businesses included selling produce I got for free from my grandparent's garden door-to-door and a <a href="http://www.investinganswers.com/financial-dictionary/real-estate/real-estate-2146" class="definition-url" target="_blank"><span class="definition-url">real estate</span></a> publishing/marketing company. This interest led me to major in business/economics in college. </p> <p> It was here where I learned about the stock and <a href="http://www.investinganswers.com/financial-dictionary/optionsderivatives/derivative-2202" class="definition-url" target="_blank"><span class="definition-url">derivative</span></a> markets. This knowledge set me on a life-long journey into the trading arena of the financial markets. I quickly realized that I was not alone in this pursuit. Everyone is a trader of one sort or another. Some trade their time, knowledge, talents and skills for a steady salary. Others decide to go at it alone by trading their and others abilities directly for monetary compensation via business. Still others decide to take a hands-on approach by directly interacting with the financial markets. No question about it, trading -- in one form or another -- is the world's oldest profession. </p> <p> A fascinating twist on the trading game is the pawn shop business. These companies make loans on and purchase items of value from people in need of fast cash. These loans are often at exuberant interest rates, and the prices paid directly for items are way below <a href="http://www.investinganswers.com/financial-dictionary/investing/market-value-779" class="definition-url" target="_blank"><span class="definition-url">market value</span></a>. The business works because the customers are in need of immediate cash, and thus are willing to pay nearly any price for the privilege. As you can imagine, the worse things get economically, the more people there will be that will be forced to pawn their valuables for cash. Therefore, this industry is not only recession-proof, but it's inversely correlated with the <a href="http://www.investinganswers.com/financial-dictionary/economics/economy-1517" class="definition-url" target="_blank"><span class="definition-url">economy</span></a>. So if you are an economic <a href="http://www.investinganswers.com/financial-dictionary/stock-market/bear-742" class="definition-url" target="_blank"><span class="definition-url">bear</span></a>, then investing in the pawn shop business is a no-brainer. </p> <p> These businesses were once relegated to the seedy section of cities and didn't exactly have the best reputation. However, this perception is changing rapidly. </p> <p> As even the once wealthy are forced to sell items at pawn shops, the status of these once looked-down-upon alternative finance companies grows. In fact, the second most popular reality show of all time, Pawn Stars, is based on a family-owned, Las Vegas-based pawn shop. Even uber-rich enclaves like Palm Beach, Florida, and Beverly Hills, California, have their share of pawn shops. </p> <p> Obviously the high <a href="http://www.investinganswers.com/financial-dictionary/businesses-corporations/profit-2042" class="definition-url" target="_blank"><span class="definition-url">profit</span></a> margins and solid <a href="http://www.investinganswers.com/financial-dictionary/businesses-corporations/business-model-584" class="definition-url" target="_blank"><span class="definition-url">business model</span></a> of the pawn shop business has attracted major players. The largest pawn shop operator is <strong>EZCorp (Nasdaq: EZPW)</strong>. This Texas-based company runs more than 1,200 pawn shops in North America. About 80% of its revenue derives from the pawn business and the other 20% is from payday-type short-term lending. Pawn volumes are up and margins are improving, with a forecasted 30% growth this year. </p> <p> EZCorp has grown revenue by 23% during the past three years and has outpaced all of its competitors. In the second quarter of 2012, the company earned $0.73 per share, up by 10 cents a share from the same time last year. What I like most about this company is that it has recently expanded into Mexico and the United Kingdom via the purchase of Crediamigo and Cashgenie. These firms' organic loan balance is up 12%, creating a powerful opportunity for EZCorp Inc. In addition, the company is valued at slightly over seven times <a href="http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/forward-earnings-3101" class="definition-url" target="_blank"><span class="definition-url">forward earnings</span></a>, making it highly attractive for fundamentally-based investors. </p> <p> With these kinds of metrics, why has the stock recently been beat down to such a dramatic extent? The share price has plunged from a high of just over $33 to a recent $24.19 in the past month. </p> <p> The answer is twofold. First, stockholders are nervous about legislative risk to the company's business model. Secondly the company cut its guidance by 6%, due to lower gold prices, igniting the aggressive sell-off to the present level. The <a href="http://www.investinganswers.com/financial-dictionary/economics/market-3609" class="definition-url" target="_blank"><span class="definition-url">market</span></a> <em>always </em>overreacts to bad news, and this appears to be the case with EZCorp. </p> <p> Let's take a closer look at each of these risk factors. While buying gold was easy money for the company, it has other profit centers. And besides, gold could easily regain its uptrend and attract gold selling customers back into the shops. On the legislative front, it's the newly formed Consumer Financial Protection Bureau that has thrown an unknown into the mix. The large pawn companies are working directly with law makers to obtain federal charters. This means they will only be subject to one set of Federal regulations that will most likely be less stringent than those that may be created at the state and local levels. In addition, the company's move into Mexico and the United Kingdom assures longevity, even if the worst happens in the United States.</p> <p></p> <p> <br /> As mentioned earlier, the main risk factors in EZCorp Inc. are legislative risks and gold prices. I think the market has overreacted to both these factors, but it's impossible to know for certain. Remember, even when buying on upward momentum to always use comfortable stops and position size according to your risk tolerance. <br /> </p> <p>Although I love EZCorp on many levels, I cannot suggest buying it right now. The price has plunged through the 200-day simple <a href="http://www.investinganswers.com/financial-dictionary/technical-analysis/moving-average-2052" class="definition-url" target="_blank"><span class="definition-url">moving average</span></a>, creating an uncertain technical picture at the present time. My plan is to purchase <a href="http://www.investinganswers.com/financial-dictionary/stock-market/shares-2011" class="definition-url" target="_blank"><span class="definition-url">shares</span></a> once upward momentum is established. Right now, my buy level is at $26.27. Once this level is broken on the upside, I'll buy a small position and add to it as price moves in an upward direction.</p> </div></div></div><div class="field field-name-field-origin-is-native field-type-list-boolean field-label-hidden"><div class="field-items"><div class="field-item even"></div></div></div><br /> </article> <article> <h1>This High-Growth Tech Stock Could Gain 50%</h1> <p>David Sterman — Fri, 25 May 2012 05:00:00 +0000</p> <div style="float:left;" class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/article/high-growth-tech-stock-could-gain-50"></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p> </p> <p>Whenever you short a stock, there's always one huge risk: that your fellow short-sellers will get spooked, buy to cover their positions and unwittingly push the stock up. Indeed, that's what appears to have happened in the days after I predicted a big pullback (and shorting opportunity) in <a href="http://www.investinganswers.com/financial-dictionary/stock-market/shares-2011" class="definition-url" target="_blank"><span class="definition-url">shares</span></a> of data-storage firm <strong>Fusion-io (NYSE: <a class="stock-link" href="http://www.streetauthority.com/stocks/FIO">FIO</a>)</strong>. </p> <p>The stock had a huge surge, making my <span class="nolink">call</span> look pretty lame. But eventually, reality set in. </p> <p></p> <p>With shares now down more than a third since my <a href="http://www.investinganswers.com/financial-dictionary/stock-market/bear-742" class="definition-url" target="_blank"><span class="definition-url">bearish</span></a> take (while the S&P 500 has risen 5% since then), I've been looking at this stock again to see if even more downside lies ahead. Yet my research has revealed a different conclusion. At $20 a share, and with many of the early hurdles now behind this stock, I see a lot more upside than downside in the quarters ahead. </p> <p>As a quick recap, Fusion-io has developed state-of-the-art data-storage solutions using solid state devices, which are faster, more reliable and use less power than traditional hard-disk drives. Vast troves of data can be accessed very quickly, which is crucial for companies that want and need a fast website, for instance. That's why <strong>Facebook (NYSE: <a class="stock-link" href="http://www.streetauthority.com/stocks/FB">FB</a>)</strong>,<strong> Apple (Nasdaq: <a class="stock-link" href="http://www.streetauthority.com/stocks/AAPL">AAPL</a>)</strong>, <strong>Pandora (NYSE: <a class="stock-link" href="http://www.streetauthority.com/stocks/P">P</a>)</strong>, and <strong>Hewlett-Packard (NYSE: <a class="stock-link" href="http://www.streetauthority.com/stocks/HPQ">HPQ</a>)</strong> now rank among Fusion-io's top customers. The company has nearly a dozen patents and roughly 80 patents pending.</p> <p>For a company that has only been around since 2006, growth has been meteoric. Sales hit $82 million in 2010, surged to $297 million last year and could exceed $500 million by next year.</p> <p>But Fusion-io has a major problem, which is the key factor behind the stock pullback. Though the company had a considerable head start with its technology, competitors are fighting back fiercely. <strong>EMC (NYSE: <a class="stock-link" href="http://www.streetauthority.com/stocks/EMC">EMC</a>)</strong>, for example, has a made a series of acquisitions and is expected to eventually take some <a href="http://www.investinganswers.com/financial-dictionary/businesses-corporations/market-share-778" class="definition-url" target="_blank"><span class="definition-url">market share</span></a> in this space. </p> <p>Yet this industry opportunity is so large -- a few analysts say demand for these speedy storage devices could grow 50% annually in coming years -- that Fusion-io is bound to grow nicely, even as its total market share shrinks. The key difference between my bearish view last fall and my current more <a href="http://www.investinganswers.com/financial-dictionary/stock-market/bull-1772" class="definition-url" target="_blank"><span class="definition-url">bullish</span></a> view: I now think the competitive fears, while quite real, won't stop Fusion-io from retaining its status as one of the leading vendors in this space.</p> <p>For a stock like this, it's all about positive and negative catalysts. Let's review them, starting with the negatives:</p> <p><span class="nolink">• </span>This company went public in June 2011, and after the 180-day lock-up <a href="http://www.investinganswers.com/financial-dictionary/optionsderivatives/expiration-date-763" class="definition-url" target="_blank"><span class="definition-url">expiration date</span></a> arrived, massive amounts of new stock hit the <a href="http://www.investinganswers.com/financial-dictionary/economics/market-3609" class="definition-url" target="_blank"><span class="definition-url">market</span></a>. This negative <a href="http://www.investinganswers.com/financial-dictionary/investing/catalyst-2139" class="definition-url" target="_blank"><span class="definition-url">catalyst</span></a> is now out of the way.</p> <p><span class="nolink">• </span>Investors anticipated product development announcements from rivals, which had pressured shares. But now that those plans have been disseminated in the market, fears are receding that Fusion-io's technology will be leapfrogged. As things stand now, this company is still the <a href="http://www.investinganswers.com/financial-dictionary/investing/benchmark-882" class="definition-url" target="_blank"><span class="definition-url">benchmark</span></a> others must follow.</p> <p>The positives:</p> <p><span class="nolink">• </span>Key partners such as Hewlett-Packard and<strong> IBM (NYSE: <a class="stock-link" href="http://www.streetauthority.com/stocks/IBM">IBM</a>)</strong> have been testing the company's new ioDrive2, which is considerably more robust than the prior version. "Demand for Fusion-io's products continues to exceed our expectations, and momentum could improve further, once OEMs qualify the new ioDrive2 late this quarter," note analysts at Goldman Sachs, who have a $30 <a href="http://www.investinganswers.com/financial-dictionary/stock-market/price-target-3195" class="definition-url" target="_blank"><span class="definition-url">price target</span></a>. This drive is expected to extend Fusion io's technology lead.</p> <p><span class="nolink">• </span>Key customers such as Facebook and Apple are still in the process of beefing up their server networks and are expected to keep placing fairly hefty orders with Fusion-io.</p> <p><span class="nolink">• </span>Funds raised in the <a href="http://www.investinganswers.com/financial-dictionary/stock-market/initial-public-offering-ipo-1076" class="definition-url" target="_blank"><span class="definition-url">IPO</span></a> are now fueling international expansion. China, for example, is shaping up to be a fast-growing market for the company.</p> <p><span class="nolink">• </span>This is the most rapidly-consolidating industry in high-tech. Young companies with solid technology and a well-regarded customer base have been continually snapped up by the likes of <strong>Dell (Nasdaq: <a class="stock-link" href="http://www.streetauthority.com/stocks/DELL">DELL</a>)</strong>, HP and others. With shares now more than 50% off the <a href="http://www.investinganswers.com/financial-dictionary/stock-valuation/52-week-high-3337" class="definition-url" target="_blank"><span class="definition-url">52-week high</span></a>, <a href="http://www.investinganswers.com/financial-dictionary/businesses-corporations/merger-1821" class="definition-url" target="_blank"><span class="definition-url">merger</span></a> and <a href="http://www.investinganswers.com/financial-dictionary/stock-valuation/acquisition-2224" class="definition-url" target="_blank"><span class="definition-url">acquisition</span></a> chatter may build.</p> <p>There are some concerns that a deeper economic slowdown in Europe and in the United States may lead to a pullback in tech spending, as chief information officers (CIOs) elect to save rather than spend their allotted budgets. </p> <p>Since touching $29 in late April, this stock is now below $20. With solid projected growth in the years ahead, such short sudden pullbacks are often a window for investors who like <a href="http://www.investinganswers.com/financial-dictionary/stock-market/growth-reasonable-price-garp-2024" class="definition-url" target="_blank"><span class="definition-url">GARP</span></a> (growth at a reasonable price) stocks. And Fusion-io has swiftly moved into this category. Once the positive catalysts kick in, shares could move back toward the $30 mark (a 50% gain), though it would take a scorching <a href="http://www.investinganswers.com/financial-dictionary/stock-market/bull-market-922" class="definition-url" target="_blank"><span class="definition-url">bull market</span></a> for this stock to re-visit the 52-week high of $41.</p> </div></div></div><div class="field field-name-field-origin-is-native field-type-list-boolean field-label-hidden"><div class="field-items"><div class="field-item even"></div></div></div><br /> </article> <article> <h1>Mobile Wallet Technology: The Giant Killers in the Weeds</h1> <p>Shah Gilani — Fri, 25 May 2012 05:00:00 +0000</p> <div style="float:left;" class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/article/mobile-wallet-technology-giant-killers-weeds"></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>When it comes to the revolution in mobile wallet technology, Isis Mobile Wallet is a collaboration between some super-heavyweights. </p> <p>Its founders and main partners are AT&T Mobility, T-Mobile, Visa (NYSE: V), Discover (NYSE: DFS), American Express (NYSE: AXP) and Verizon Wireless. </p> <p>This is a monster worth watching. </p> <p>The idea behind Isis is to allow users to pay with "preferred" credit or debit resources available through their Isis-enabled phones by tapping or waving their devices at NFC (near field communications) terminals in participating merchant outlets. </p> <p><strong></strong>Isis-enabled phones are being manufactured by additional partners Research in Motion, Samsung and Sony Ericsson.</p> <p>Card.io is a mobile phone application (available at the Apple App Store and as a Google Android app) that allows users to receive and make payments by letting them (in the case of making a payment) enter an amount they want to charge on their app, for what they want to buy, and holding the card they want to use up to the phone's camera lens, which logs the card and processes the transaction. </p> <p>Received payments can be channeled directly into the user's checking account, <a href="http://www.investinganswers.com/financial-dictionary/personal-finance/savings-account-892" class="definition-url" target="_blank"><span class="definition-url">savings account</span></a>, or PayPal account. Card.io charges a hefty 3.5% (of the transaction amount) fee and 15 cents per transaction. </p> <p>Another mobile solution to not having a credit swiping machine in your pocket is offered by Square. </p> <p>Square, named after the small square magnetic tape data reader that you plug into your phone's audio jack to convert encoded data from the tape on the back of cards to an electronic file, was started by Jack Dorsey, creator of Twitter. </p> <p>Electronic data from the magnetic strips on the backs of cards is encrypted automatically, sent to Square's servers and rerouted through the Global Payments Network. You sign the electronic receipt with your finger, which is then sent to you via SMS or email. Now anyone can accept credit cards for anything.</p> <p>There are lots of start-ups and up-and-comers wading aggressively into the exploding mobile wallet space. Some of these companies will become giants and some will go the way of the dodo. </p> <p>But, one thing's for sure, the winners will be worth investing in.</p> <p><strong>Hardware Won't Be Hard to Make a Lot of Money On</strong></p> <p>Of course software is sexy, but hardware is where the nuts and bolts come together.</p> <p>And there are plenty of hardware manufacturers to build a mobile wallet portfolio on.</p> <p>Device makers like Research in Motion (Nasdaq: RIMM) and Nokia (NYSE: NOK) will not only be saved by the mobile wallet future, they could end up as polished and shiny as Apple stock has been lately.</p> <p>RIMM, for example, may be having its problems, but investors don't realize that the enterprise servers that give Blackberries their corporate go-to status can't be utilized by other devices. </p> <p>And as RIMM gets its act together in the mobile wallet game, its enterprise systems will be a powerful pull on commerce-minded corporate customers. </p> <p>Sure there has been a push to "bring your own device" to work, but here again corporations are going to tire of security issues inherent in crossing different devices through internal servers housing critical data. </p> <p>The eventual backlash against allowing multiple devices into the workspace will be a boost for RIMM and Nokia, which is still the world's largest phone manufacturer.</p> <p>But it's not just smartphone hardware manufacturers that will make you money.</p> <p>Connecting the dots between mobile buyers and sellers will be the device makers who provide the terminals and technology against which mobile wallets are swiped, waved, tapped and talked into.</p> <p>Companies like VeriFone (NYSE: PAY), Ingenico, TNS Inc. (NYSE: TNS), and ViVOtech, to name some of the big players, are major stakeholders in the digital wallet's future.</p> <p>And it's not just merchant terminals that these device makers <span class="nolink">offer</span>. </p> <p>The technology and hardware in unattended point-of-sale locations like vending machines and remote location kiosks will all rely on connectivity made possible between buyers and sellers through the magic of NFC devices.</p> <p><strong>Mobile Wallets <span class="nolink">Mean</span> More Power to Merchants</strong></p> <p>Merchandising and marketing is changing, rapidly.</p> <p>Every time you buy something electronically, whether you like it or not, you're being watched. </p> <p>Not by Big Brother, although he's out there too, but by the data capture and collection technology inherent in all electronic transactions. </p> <p>The subject of <a href="http://www.investinganswers.com/financial-dictionary/businesses-corporations/data-mining-1563" class="definition-url" target="_blank"><span class="definition-url">data mining</span></a>, and who owns what data, and who can use what data for what purposes, is a huge conundrum.</p> <p>Whether consumer profiling, which is essentially what's being done, is a "black art" or some kind of eHarmony love-in where groping buyers and sellers are married through adaptive matching technology at the altar of high consumerism, remains to be weighed by the public, and probably eventually the Supreme Court. </p> <p>But, it's happening and it's changing merchandising, marketing, advertising and buying habits. And once again, it is the mobile wallet that's paving the way for these changes.</p> <p>When it comes to data mining, faster is better, but real-time is best. </p> <p>In the not-too-distant future (the technology is already here and being tested) every electronic transaction we make will be mined, sliced and diced and used to target <span class="nolink">market</span> to us.</p> <p>Think of it as a magic potion for merchants. Adaptive matching technologies, eventually in just about real-time, will alert us on our smartphones to merchant specials, promotions and discounts.</p> <p>We will get messages on our phones after we just purchased something at Sears to go to Macy's, which may be <span class="nolink">offering</span> a deal on a similar product or a related product we may be considering as our next purchase. </p> <p>We'll be targeted by event-based marketing, dynamically and seamlessly. We'll be tempted with coupons and "statement credits" and we'll be tempted with what's out there for us to buy in ways we can't even imagine now.</p> <p>Mobile wallets will make merchants more efficient in merchants' purchasing, stocking, <span class="definition-url"><span class="definition-url"><a href="http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/inventory-2474" class="definition-url" target="_blank"><span class="definition-url">inventory</span></a></span></span> control, sales and cross-selling. </p> <p>We will be rewarded with elaborate loyalty programs tailored to our buying habits, better shopping experiences, and more stuff than we probably need or can afford. </p> <p>But that's the point. Having all of this constantly at your fingertips with your mobile wallet changes everything for everyone.</p> </div></div></div><div class="field field-name-field-origin-is-native field-type-list-boolean field-label-hidden"><div class="field-items"><div class="field-item even"></div></div></div><br /> </article> <article> <h1>FLIR Systems: Grow Your Portfolio With The "Eye in the Sky"</h1> <p>G.S. Early — Fri, 25 May 2012 05:00:00 +0000</p> <div style="float:left;" class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/article/flir-systems-grow-your-portfolio-eye-sky"></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>Smile.... you're on the 21st century's version of Candid Camera.</p> <p>Whether you're an Islamic troublemaker in North Waziristan, a rowdy football fan, or a hopeful immigrant trying to slip across the border, the eye in the sky sees everything. </p> <p>In the halls of power, there's a term for this. It's called the surveillance society. And it is one of the biggest trends inside and outside the military industrial complex. </p> <p> Also known as ISR - intelligence, surveillance and reconnaissance-it's an outgrowth of more than a decade of war in Iraq and Afghanistan. It's a place where everyone has heard of unmanned aerial vehicles or UAVs.</p> <p>But while UAVs are an amazing technology in themselves, they aren't very effective unless they can report on what they see -that's the ISR piece of the puzzle.</p> <p>And that's precisely where a company like <strong>FLIR Systems Inc. (Nasdaq: FLIR)</strong> comes in. FLIR provides the optics and equipment to make it all happen both in the air and on the ground.</p> <p><strong>What Analysts are Missing About FLIR Systems</strong></p> <p>Founded in 1978, FLIR has developed a reputation for building world-class equipment.</p> <p>And now that these systems have proven themselves in some of the harshest conditions on Earth, the company is expanding to a broad number of other applications in <a href="http://www.investinganswers.com/financial-dictionary/economics/market-3609" class="definition-url" target="_blank"><span class="definition-url">market</span></a> sectors outside the military.</p> <p>However, looking at FLIR's chart, it's an understatement to say that this specialty defense imaging stock has been hit hard by the budget cuts and the winding down of our presence in Iraq and Afghanistan.<br /><br />But there's one thing the analysts are missing. The commercial applications beyond the military are where the money is at this point. </p> <p>It's like when the same analysts blew the <span class="nolink">call</span> in the opposite direction years ago with<strong> iRobot (Nasdaq: IRBT)</strong> when they pinned the entire business on its retail products, like the Roomba vacuum.</p> <p>The real money was its burgeoning defense contracts. The military started to buy its robots, or unmanned ground vehicles (UGVs), and the stock took off. </p> <p>Here it's the opposite story -- FLIR's stock is being discounted because its military work is slowing. It's a sucker's bet.</p> <p>Here's why....</p> <p><strong>FLIR Takes a Licking, But Keeps on Ticking<br /></strong><br />FLIR develops and makes forward looking infrared (FLIR) cameras, or in tech-speak, thermal imaging systems. </p> <p>These cameras can see at night, through rain, fog, or snow-- you name it. These <span class="nolink">IR</span> systems are also very good at picking out heat signatures and FLIR's system is top of the line. </p> <p>The military uses them on the wildly popular unmanned vehicles as well as for base camp security cameras. The plastics industry also uses the equipment for making specialty plastics.</p> <p>Sailors even use them 24/7 to see through the pea soup at sea.</p> <p><strong></strong>FLIR started selling these cameras to home and business security companies as well as other commercial industries a few years ago. It's become the fastest-growing division of the company. Sales in its commercial division were up 3% last quarter. </p> <p>What makes FLIR's cameras such a hit in the private sector is that they're built to military specifications, which means they can take a licking and keep on ticking. </p> <p>FLIR's systems are made of steel and heavy duty optical-quality glass lenses, bolted into cases that can take winters in the mountains of Afghanistan, summers in the Iraqi desert or wind and weather at 30,000 feet. </p> <p>On the other hand, its competitors have plastic boxes snapped together with plastic lenses.</p> <p>First responders, law enforcement, fire and rescue, homeland security as well as shipping, chemical, refining and commercial/residential security companies are all very viable new and developing markets for FLIR. Companies and organizations will pay up when they need reliable, accurate and robust equipment.<br /><strong><br />Spending Cuts? Not For FLIR</strong></p> <p>What's more, even though the government is cutting back, it's not cutting back on ISR, UAVs, or battlefield technology. The fewer soldiers we need to put in harm's way and the more persistent we can make ISR, the cheaper it is to operate the largest fighting force on the planet.</p> <p>And if you want to save money in the Department of Defense, it's a lot easier to start with cutting the fuel bill. </p> <p>Case in point: General George Patton's Third Army of 400,000 men used about a gallon per man per day advancing across Europe in World War II. Today, with about a third of that number, our troops in Iraq were using four times as much fuel.</p> <p>Some estimate that to keep ships sailing, tanks rolling, Humvees humming and bases operational, the military uses about one-third the nation's oil supply.</p> <p>Imagine how you could cut those costs by not having to fly sorties with fuel-guzzling planes over hostile territory to gather intel. To make a dent in that consumption would have quite an impact. </p> <p>With the use of UAVs and the optics systems that FLIR builds, there's no doubt FLIR will have a long and profitable relationship with the military and intelligence sector, regardless of tighter budgets, because it's in strategic sectors that it will continue to grow. </p> <p>In fact, just this week FLIR announced it had been awarded an indefinite delivery, indefinite quantity contract (the best type of military contract) from the U.S. Army to support the MEDEVAC program. </p> <p>The contract is valued at $38 million, and is for spare components for Star SAFIRE II stabilized multi-sensor systems installed on the Army's fielded MEDEVAC Blackhawk helicopters.</p> <p>The company also announced it has received a $17.9 million delivery order from the U.S. Navy Expeditionary Combat Command (NECC) for its SeaFLIR maritime imaging systems. The systems are expected to be deployed on U.S. Navy Patrol Boats.</p> <p>But with FLIR that's only a small part of the greater story... </p> <p><strong>FLIR is a great long-term buy up to $26 per share.</strong></p> </div></div></div><div class="field field-name-field-origin-is-native field-type-list-boolean field-label-hidden"><div class="field-items"><div class="field-item even"></div></div></div><br /> </article> <article> <h1>How to Know When to Buy or Sell</h1> <p>Greg Guenthner — Wed, 23 May 2012 05:00:00 +0000</p> <div style="float:left;" class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/article/how-know-when-buy-or-sell"></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>If you add basic charting techniques to your fundamental toolbox, you will instantly improve your investing returns.</p> <p>Finding support and resistance on a stock chart takes just a couple of minutes. You can make the annotations on your computer, or you can print out the charts and mark them with a pencil and ruler.</p> <p>Three minutes of work can save you from making a mistake that would potentially cost you thousands of dollars.</p> <p>Today, I’m going to make a few quick annotations to some of the charts you’ve sent in this week. I’ll then tell you whether I would buy or sell the stock in question.</p> <p>Let’s get to it…</p> <p><strong>I purchased the Canadian stock Enerplus which is now down almost 50%…I know that natural gas is deeply depressed, probably resulting in the terrible drop of Enerplus. What I want to know is whether the stock has any possibility of recovering? Also, is it worth buying in more <a href="http://www.investinganswers.com/financial-dictionary/stock-market/shares-2011" class="definition-url" target="_blank"><span class="definition-url">shares</span></a> at this very depressed level?</strong></p> <p><strong>— M.J.</strong></p> <p>Here’s a look at <strong>Enerplus Corp. (NYSE:ERF):</strong></p> <p></p> <p>Sure, there’s a possibility that the stock will recover — at some point. But at this point, it’s important to get defensive. The <a href="http://www.investinganswers.com/financial-dictionary/economics/market-3609" class="definition-url" target="_blank"><span class="definition-url">market</span></a> is falling, commodities are out of favor and this chart is terrifying. The breakdown in price accelerated in early April when ERF broke below horizontal support (blue line).</p> <p>Also, I never recommend buying more shares just because a stock has dropped in price. It’s a dangerous tactic that’s more trouble than it’s worth. Don’t do it. The red line is resistance in this powerful downtrend. Even if the share price recovers to $16 from here, the downtrend remains in force. Yes, the stock is technically oversold. But it has been oversold since $21. It can easily move lower from here.</p> <p><em><strong>I’m thinking of buying 500 shares of Prospect Strategy Group (NASDAQ:PSEC). It’s a <a href="http://www.investinganswers.com/financial-dictionary/businesses-corporations/business-development-company-bdc-925" class="definition-url" target="_blank"><span class="definition-url">BDC</span></a>. I believe this is a strong buy for at least the next 24 months. Could you give me your advice on this stock?</strong></em></p> <p><strong>— J.P.</strong></p> <p>Prospect Capital has held up well during the recent market turmoil:</p> <p></p> <p>The stock has consolidated just below $11 since late February. On the chart, you can see how PSEC has registered a series of higher lows, indicating that buyers are stepping in at higher and higher prices every time the stock dips.</p> <p>I can see why you’re interested in this stock. Judging by a quick look at the fundamentals, PSEC looks dirt cheap. It’s trading right at <a href="http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/book-value-1080" class="definition-url" target="_blank"><span class="definition-url">book value</span></a>, its multiple is less than seven and I see plenty of insider buying recently.</p> <p>In this case, the technical can provide a solid backstop to your fundamental research. Buying shares between $10.50 and $11 is not a bad price for a longer-term timeframe (you mentioned a 2-year holding time). I would also look to add a stop loss between $10 and $10.25. Look for this stock to break out if it can close above $11.25 on strong relative <a href="http://www.investinganswers.com/financial-dictionary/stock-market/volume-2319" class="definition-url" target="_blank"><span class="definition-url">volume</span></a>.</p> </div></div></div><div class="field field-name-field-origin-is-native field-type-list-boolean field-label-hidden"><div class="field-items"><div class="field-item even"></div></div></div><br /> </article> <article> <h1>Seabridge Gold is at $13! What to Do About Gold Stocks...</h1> <p>Steve Sjuggerud — Wed, 23 May 2012 05:00:00 +0000</p> <div style="float:left;" class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/article/seabridge-gold-13-what-do-about-gold-stocks"></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>Seabridge Gold has over $200 billion worth of gold and other metals in the ground at just one project...</p> <p>Yet as I write, at $13 a share, Seabridge's stock <a href="http://www.investinganswers.com/financial-dictionary/investing/market-value-779" class="definition-url" target="_blank"><span class="definition-url">market value</span></a> is only $580 million.</p> <p>Seabridge <a href="http://www.investinganswers.com/financial-dictionary/stock-market/shares-2011" class="definition-url" target="_blank"><span class="definition-url">shares</span></a> have fallen by nearly two-thirds since their highs last April (13 months ago). The crazy part of this fall is... the price of gold today is actually higher than it was last April, when Seabridge shares were in the mid-$30s...</p> <p>It's not just Seabridge – the whole universe of gold stocks has been decimated.</p> <p>The story at Seabridge hasn't changed... The company is simply sitting on one of the biggest undeveloped piles of gold in the world, looking for the right "suitor" to put it into production.</p> <p>Since Seabridge does not produce any gold, it has been hit particularly hard by the <a href="http://www.investinganswers.com/financial-dictionary/stock-market/bear-market-878" class="definition-url" target="_blank"><span class="definition-url">bear market</span></a> in gold stocks (as have other non-producers). </p> <p>At this price – and with 80 million ounces of gold in the ground at just one project (called KSM) </p> <p>– you are paying just $6 per ounce of gold in the ground at KSM... and getting all its other metals and projects for free.</p> <p>Gold stocks – particularly non-producers like Seabridge – are CHEAP! </p> <p>So... is it time to be buying gold stocks?<em> Gold Stock Analyst</em> editor John Doody thinks so...</p> <p>In an interview with our sister site <em><a href="http://www.dailycrux.com">The Daily Crux</a> </em>earlier this month, John said: </p> <p><em>We don't know exactly where the bottom is, but every indicator is telling us that we're either near the bottom or at it. It would be a huge mistake not to be invested now.</em></p> <p><em>As of May 1, gold stocks were on average trading 29% below where they should trade with gold in the $1,600s. The only time they have ever traded at a greater discount to gold was in the October 2008 crash, when they traded at a 34% discount. Investors buying at that bottom saw a 237% gain in the next 15 months.</em></p> <p>The Daily Crux asked John for his favorite way to get into gold stocks now...</p> <p><em>If I had to choose, the area I would probably favor most right now is the royalty companies. They're the safest... They have the broadest geographic distributions and portfolios... Royal Gold and Franco-Nevada are the cream of the crop in that group.</em></p> <p>I'm a believer in Royal Gold too... I explained the full story of how it works <a href="http://www.dailywealth.com/1798/Triple-Digit-Returns-Likely-in-Two-Years-with-Golden-Paychecks">last year in <em>DailyWealth</em>.</a> I urge you to read it.</p> <p>So should you buy either Royal Gold or Seabridge Gold now? Or should you do nothing? </p> <p>I can tell you what we're doing... Right now, in my True Wealth newsletter, Royal Gold is a "hold." We hit our <a href="http://www.investinganswers.com/financial-dictionary/stock-market/trailing-stop-1183" class="definition-url" target="_blank"><span class="definition-url">trailing stop</span></a> on Seabridge Gold a while ago, which was definitely the right move in hindsight.</p> <p>We believe John Doody is right about gold stocks being cheap. We know that gold stocks soared by 237% in 15 months the last time they were this cheap. And gold stocks may have found a toehold, <a href="http://www.dailywealth.com/2087/Seabridge-Gold-is-at-13-What-to-Do-About-Gold-Stocks-#MN">as Editor in Chief Brian Hunt points out below</a>... <strong>But we are still waiting on the uptrend before we buy.</strong></p> <p>John Doody is bolder than me... He says to buy: <em>"It would be a huge mistake to NOT be invested now." </em></p> <p>Conservative investors could buy Royal Gold. You could possibly see a double within a year simply if sentiment goes from negative to positive on gold. Royal Gold is currently on both my recommended list and John Doody's.</p> <p>Aggressive investors could consider Seabridge, which has the potential to make you a few times your money. But note that Seabridge is not currently on my recommended list... or John's.</p> <p>(When I say you could make a few times your money on a gold stock like Seabridge, I am serious... Subscribers pocketed a 900%-plus <a href="http://www.investinganswers.com/financial-dictionary/businesses-corporations/profit-2042" class="definition-url" target="_blank"><span class="definition-url">profit</span></a> on my initial recommendation of Seabridge shares. Yes, the stock rose over 900% while we owned it. And yes, we sold it and banked that profit.) </p> <p>The point today is simple...</p> <p>Gold stocks are near-record cheap. Investors have given up on them. The last time gold stocks were this cheap and hated, they soared 237% in 15 months. Riskier non-producers (like Seabridge) will go up more than the big names when the uptrend returns.</p> <p>The thing is, we don't have our uptrend yet... So we're not backing up the truck to buy.</p> <p>We may have just hit bottom this month in gold stocks. The time to buy gold stocks is coming very soon... I'm sure of it.</p> <p>Trade accordingly...</p> </div></div></div><div class="field field-name-field-origin-is-native field-type-list-boolean field-label-hidden"><div class="field-items"><div class="field-item even"></div></div></div><br /> </article> <article> <h1>3 Small-Cap Stocks With Heavy Insider Buying</h1> <p>David Sterman — Wed, 23 May 2012 05:00:00 +0000</p> <div style="float:left;" class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/article/3-small-cap-stocks-heavy-insider-buying-0"></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>As the <a href="http://www.investinganswers.com/financial-dictionary/economics/market-3609" class="definition-url" target="_blank"><span class="definition-url">market</span></a> moved steadily higher throughout the fourth quarter of 2011 and the first quarter of 2012, insider buying slowed to a crawl and eventually ground to a halt. That's just how insiders operate. They like a bargain just like everyone else, and frankly, by the end of the first quarter, it was getting harder to <a href="http://www.investinganswers.com/financial-dictionary/stock-market/spot-price-2007" class="definition-url" target="_blank"><span class="definition-url">spot</span></a> verifiable bargains.</p> <p>Of course, a slumping market is a sure-fire magnet to get these insiders to open up their checkbooks. And that's precisely what's going on. Since the start of May, roughly a month after the market began to pull back, insider-buying has surged. Right now, it's common to find a half-dozen or more daily instances of at least $100,000 in fresh insider buying by a key executive. </p> <p>Yet you shouldn't necessarily follow their lead and take their actions as a buy signal. After all, insiders are notoriously bad market-timers, and their buying often comes before even deeper drops ahead. Instead, I use insider-buying signals for long-term investment ideas, but almost never as a short-term trade. </p> <p>I do look to insider-buying signals when I'm <a href="http://www.investinganswers.com/financial-dictionary/stock-market/bear-742" class="definition-url" target="_blank"><span class="definition-url">bearish</span></a> on a stock. Fresh buying, after a stock has fallen substantially, may signal that the opportunity on the short side has already been fulfilled. For example, <strong>Netflix's (Nasdaq: <a class="stock-link" href="http://www.streetauthority.com/stocks/NFLX">NFLX</a>)</strong> Jay Hoag, a company director, has bought a hefty $25 million in company stock in recent days at an average price of around $73 a share. </p> <p>I thought Netflix was <a href="http://www.investinganswers.com/financial-dictionary/investing/overvalued-837" class="definition-url" target="_blank"><span class="definition-url">overvalued</span></a> <a href="http://www.streetauthority.com/growth-investing/netflix-headed-another-pullback-459007" target="_blank">in early March</a> when it traded for $113 a share, and I still thought it was overvalued <a href="http://www.streetauthority.com/growth-investing/why-netflix-could-keep-plunging-459166" target="_blank">in late April</a> when it had plunged to $86. I still think this company's upcoming challenges have yet to be factored into the stock price, but a move down to $70 -- along with that inside buying -- would make me cover a short position if I had one in place.</p> <p>Here are three other stocks with recent insider buying that are worthy of more research:</p> <p><strong>1. Merge Healthcare (Nasdaq: <a class="stock-link" href="http://www.streetauthority.com/stocks/MRGE">MRGE</a>)</strong><br /> This provider of digitized medical-imaging services has fallen by two-thirds from its <a href="http://www.investinganswers.com/financial-dictionary/stock-valuation/52-week-high-3337" class="definition-url" target="_blank"><span class="definition-url">52-week high</span></a>, taking a final sharp blow in early May when management announced that sales growth would slow this year. In response, six insiders have recently bought nearly $1 million in stock (on a collective basis), and this move could pay off handsomely because this stock looks quite oversold. </p> <p>Merge is well-positioned to handle the ongoing shift in the health care sector away from written medical records to electronic medical records. The company's software works with all of the major health care information technology (IT) providers' systems, and by all indications, sales should again be rising at a sustained double-digit pace in 2013 and beyond.</p> <p><strong>2. Geeknet (Nasdaq: <a class="stock-link" href="http://www.streetauthority.com/stocks/GKNT">GKNT</a>)</strong><br /> Straight away, I'd caution that this is a thinly-traded micro-cap, so it comes with its own set of risks. Geeknet recently decided to shed one of its two business lines, which could unlock real value. For a number of years, Geeknet worked to be a major player in the world of tech websites, operating sites such as Slashdot (an IT newsblog) and Freecode (which distributes Linux code and other software). Trouble is, there were never really big profits to be made from these sites. Now, management wants to unload those sites to better focus on a burgeoning e-commerce business.</p> <p>This company's eponymously-named website, thinkgeek.com, carries a wide range of unique tech gadgets, many of which are exclusive to the company and are often hot-selling gifts during the holidays. Sales in this business rose 50% in 2010, another 30% in 2011 and could rise another 15% to 20% this year to about $140 million. </p> <p>Insiders, led by Chairman Ken Langone (who co-founded <strong>Home Depot NYSE: <a class="stock-link" href="http://www.streetauthority.com/stocks/HD">HD</a>)</strong>), have been steadily buying small clusters of stock since February, picking up more stock late last week after the company announced plans to seek a buyer for the various websites. </p> <p>Beyond the growth metrics noted above, this is also a value play. Net cash of $32 million accounts for more than one-third if the stock price. If you back that out, then the price-to-sales ratio for this e-commerce play is less than 0.5 (said another way, every dollar of stock you pay for gets you 50 cents in sales).</p> <p><strong>3. Vocus (Nasdaq: <a class="stock-link" href="http://www.streetauthority.com/stocks/VOCS">VOCS</a>)</strong><br /> Vocus helps corporate clients manage their online marketing efforts using search, social media and other tools. In late February, this company made a bold <a href="http://www.investinganswers.com/financial-dictionary/stock-valuation/acquisition-2224" class="definition-url" target="_blank"><span class="definition-url">acquisition</span></a> -- and <a href="http://www.investinganswers.com/financial-dictionary/stock-market/shares-2011" class="definition-url" target="_blank"><span class="definition-url">shares</span></a> got crushed as investors realized the deal would hurt profits now but boost them later. A decision to buy iContact, an e-mail marketing firm, for $169 million is expected to help Vocus <a href="http://www.investinganswers.com/financial-dictionary/economics/offer-3909" class="definition-url" target="_blank"><span class="definition-url">offer</span></a> an even wider array of integrated marketing tools. </p> <p>[block:block=16]</p> <p>Still, management conceded that the deal would lead to much lower near-term profits as expenses build in support of a larger sales force. Full-year <a href="http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/earnings-1514" class="definition-url" target="_blank"><span class="definition-url">earnings</span></a> forecasts fell by half or more, and Vocus is now expected to earn roughly $0.40 a share this year (down from $0.81 in 2010) and about $0.65 in 2013. Though shares have fallen from $34 to $15 during the past year, they may not look like a deep bargain on a price to earnings (P/E) basis, but a group of five insiders recently bought more than $1 million in stock (collectively) at an average price of around $16. That surely makes this stock worthy of further research. </p> <p>Risks to Consider: <em>As noted above, insiders are notoriously poor market-timers, and these stocks could fall even more if the market stumbles badly. Don't confuse insider stocks with value stocks.</em></p> <p><span style="color:#b22222;"><strong>Action to Take --></strong></span> Insiders have a much better track record if you have a one to two-year time horizon. Their buying often comes at a time when a company is in transition, as is the case with these four stocks noted above, and it often takes several quarters for that transition to play out. Still, they could turn out to be great pickups for your portfolio.</p> <p>[<strong>Note:</strong> If you haven't heard about this unique opportunity, then I want to tell you about it now. StreetAuthority has staked me with <strong><a href="http://web.streetauthority.com/m/ds/sterman-lp-txt4.asp?" target="_blank">$100,000 of real money </a></strong>to invest in my absolute best ideas. For a limited time, you'll be able to follow along with me completely free. <strong><a href="http://web.streetauthority.com/m/ds/sterman-lp-txt4.asp?" target="_blank">Go here to learn more</a></strong>.]</p> </div></div></div><div class="field field-name-field-origin-is-native field-type-list-boolean field-label-hidden"><div class="field-items"><div class="field-item even"></div></div></div><br /> </article> <article> <h1>Forget the Innovators, Buy This Well-Funded Copycat Instead</h1> <p>Dave Goodboy — Wed, 23 May 2012 05:00:00 +0000</p> <div style="float:left;" class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/article/forget-innovators-buy-well-funded-copycat-instead"></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>The business world is full of examples of innovators being left in the dust by imitators. Think <strong>Apple (Nasdaq: <a class="stock-link" href="http://www.streetauthority.com/stocks/AAPL">AAPL</a>)</strong> was the first company to think of the tablet PC? <strong>Microsoft (Nasdaq: <a class="stock-link" href="http://www.streetauthority.com/stocks/MSFT">MSFT</a>)</strong> first developed the idea a decade prior to the advent of the iPad. Think Mark Zuckerberg came up with the idea for <strong>Facebook (Nasdaq: <a class="stock-link" href="http://www.streetauthority.com/stocks/FB">FB</a>)</strong> all on his own? As anyone who's seen The Social Network (the movie loosely based on Facebook's early days) can tell you, that isn't quite the case.</p> <p>The point is, many, many times, the person or company who is first to the <a href="http://www.investinganswers.com/financial-dictionary/economics/market-3609" class="definition-url" target="_blank"><span class="definition-url">market</span></a> with a new concept doesn't even approach obtaining the full value of the idea. In fact, many creative innovative companies fail, whereas the companies that copy the idea go onto great success.</p> <p>In other words, being first to market isn't a criterion to successfully implementing the service, idea or product. Often it is the second or third generation of the innovation that changes the industry forever. Steve Jobs understood this. So did Mark Zukerberg and countless others before him.</p> <p>It appears that this phenomenon of a copy cat company beating the innovator may be starting to play out in the highly competitive automobile rental industry.</p> <p>There is no question that the traditional car rental model is outdated, cumbersome and makes things way more difficult for the consumer than they need to be. If you have ever rented a car, you know what a serious pain in the butt it can be. Not only do you have to get to the rental agency to pick up the vehicle, you need to fill out the same contract every time, have a large hold placed on your creedit card, basically get interrogated by the rental agent, and return the vehicle to the same location you rented it from or face extra fees and costs.</p> <p>Sensing this disconnect from what the market demands and the traditional car rental model, an innovative upstart named <strong>ZipCar (NYSE: <a class="stock-link" href="http://www.streetauthority.com/stocks/ZIP">ZIP</a>)</strong> launched an on-demand car rental service. This model does not rely on a central location, but rather has cars scattered about in garages, parking lots and basically anywhere one can be squeezed in urban areas. Users pay a one-time membership fee and then are provided access to any of the vehicles in the program, which are then rented by the hour.</p> <p>This is absolute brilliance, in my book. No more multiple forms to fill out, no more traveling to the rental agency and dealing with snooty clerks, no more being forced to rent for an entire 24-hour period if you only need the vehicle for an hour or two. Basically, ZipCar met the needs of the car-renting public in a way not done by the major rental agencies.</p> <p>The upstart company has more than 500,000 dues-paying members, and sales grew by 25% last year with analysts calling for a 21% sales increase this year. Sounds great, right? Well, truth be told, ZipCar disappointed the market, plummeting more than 10%, as first quarter metrics showed only modest growth and a revised <a href="http://www.investinganswers.com/financial-dictionary/businesses-corporations/profit-2042" class="definition-url" target="_blank"><span class="definition-url">profit</span></a> outlook. In addition, the company seems to be losing control of its expansion. Long-time users of the service have told me, in confidence, that the vehicles have become dirtier and sometimes even run-down feeling. Combine this apparent growth struggle with the barrage of upstart competitors in the space, and it paints a not-so-rosy picture for this innovative, original company.</p> <p>Now, the large, traditional rental chains are getting into the hourly car rental business. This is where ZipCar faces its greatest threat. <strong>Hertz (NYSE: <a class="stock-link" href="http://www.streetauthority.com/stocks/HTZ">HTZ</a>)</strong>, which dipped its toe into the hourly rental business in 2008, has plans for a massive ramp-up of this division. Named Hertz On Demand, this new service will not require customers to pay an annual membership fee, and has plans to equip its entire U.S. fleet of 375,000 cars with on-demand technology by the middle of 2013.</p> <p>The size of Hertz's plan dwarfs ZipCar. This type of competition has attracted short sellers to ZipCar's <a href="http://www.investinganswers.com/financial-dictionary/stock-market/shares-2011" class="definition-url" target="_blank"><span class="definition-url">shares</span></a>, with the number of shares held short increasing by 15% since January. Adding to the questionable outlook for ZipCar, only two major institutions, Greylock XII LLC and Yale University <a href="http://www.investinganswers.com/financial-dictionary/businesses-corporations/endowment-761" class="definition-url" target="_blank"><span class="definition-url">endowment</span></a> fund, have substantial holdings in the stock. To me, that's a warning flag. Hertz, on the other hand, has 28 institutional holders, with only six decreasing their position size during the last quarter. Obviously, this has something to do with the size and history of the companies, but it still tells a story.</p> <p style="text-align: center; "></p> <p>Looking technically at Hertz, shares have sold off during the past 12 days. This is mainly due to profit takers and weaker than expected consumer economic numbers in the United States spooking investors. However, shares remain within my trademarked value buy zone, signalling that the odds favor a long position right now.</p> <p>Risks to Consider: <em>While Hertz has a proven core <a href="http://www.investinganswers.com/financial-dictionary/businesses-corporations/business-model-584" class="definition-url" target="_blank"><span class="definition-url">business model</span></a> and is moving into the future with its On Demand service, it will still be affected by competitors and the <a href="http://www.investinganswers.com/financial-dictionary/economics/economy-1517" class="definition-url" target="_blank"><span class="definition-url">economy</span></a> as a whole. Although Hertz appears to have the competitive advantage over any upstart because of its sheer size, other entrenched rental agencies are eyeing the hourly rental market. When Hertz's new roll-out meets success, expect a rapid increase in competition.</em></p> <p><span style="color:#b22222;"><strong>Action to Take --></strong></span> My pull-back system has clearly triggered a buy signal for Hertz. The buy signal stays valid as long as price remains above the <a href="http://www.investinganswers.com/financial-dictionary/technical-analysis/200-day-moving-average-1222" class="definition-url" target="_blank"><span class="definition-url">200-day moving average</span></a>, in the value zone. Should the price drop below the 200-day moving average, my strategy will switch to buying break outs above that level.</p> </div></div></div><div class="field field-name-field-origin-is-native field-type-list-boolean field-label-hidden"><div class="field-items"><div class="field-item even"></div></div></div><br /> </article> </main></body></html>