Some Possible Stock Ideas

Investing Strategies Technical Trader's Sanctuary
1

Take a look at TKC, GTEC, SBSW, LND, NGD, GLBS, LUMN, GLO. (I’ll comment after market close.)

With NGD, I was bottom-fishing and making a bet that precious metals (PMs) would go higher as the Fed’s programs fail to quell inflation and fail to restart the econmony. (For more on that, track down what Jim Rickards thinks is happening and will likely happen.) As I review NGD’s balance sheet, I see that I should never have bought the stock. But it’s just a $5 bet, and I’ll dump NGD Monday.

With LND, I got the fundamentals right enough, with ‘receivables’ nearly covering ‘payables’ and current assets (CA) being twice current liabilities (CL). My favorite fundie website, Simply Wall Street (SWS), likes the stock. “Trading at 50% below fair value (FV). Earnings forecast to grow 31%/yr.” Though they do warn that LND’s whopping 24% div (not a typo) isn’t well covered. Chart-wise, LND is trading in a sideways channel. LND’s country of origen, Brazil, is in a turmoil right now. But I like ADR’s, especially those having to do with ag.

With SBSW, a stock I’ve been in and out of before, I’m making a bet on PMs and trying to hedge inflation. SWS says SBSW is trading at 47% below fair value. Earnings growth is a weak 10%. Pays a 6% div. Receivables cover only half of payables. But the company has a ton of cash, and CA is 3x CL. Chart-wise, SBSW is trading sideways in a multi-month channel.

With GTEC, I’m making a bet on China’s reopening and recovery. SWS says of GTEC “high growth potential with an adequate balance sheet”. Chart-wise, yet another one trading in a sideways channel.

With LUMN, I’m bottom-fishing and making a speculative bet the company won’t crash. (I also own some of their bonds.) Payables are 150% of receivables. CA > CL. SWS says LUMN is trading at 65% below FV and earnings are forecast to grow 97%/yr. Very scary chart.

With GLO, I’m again bottom-fishing. Another sucky chart, but a projected fat div.

With GLBS, I’m again bottom-fishing, this time in the shipping industry, which I need to dig into more and in which I own some pfds that are doing well. GLBS’s receivable more than cover its payables, and CA is 6x CL. SWS says earnings are forecast to decline by 29%/yr, likely because analysts are factoring in the reality of a multi-year, global recession/depression. Sucky chart. Pays no div.

With TKC --a stock I’ve been in and out of before-- we come to the best of the bunch. (IMHO, natch.) SWS likes the stock. And I think a price chart offers promise that support won’t be broken. Also, receivables cover payables, and CA are almost 2x CL. Yeah, Turkey has been hard hit by the recent earthquake, but it’s finally figuring out that its real friends in the global economy are the rising Asian alliances, not the West.

TKC snowflake
TKC snowflake837×327 45.7 KB

TKC chart
TKC chart1375×498 78.5 KB

1 Like
2

I am curious to see your comments and understand what jumps out to you on these. I see a couple of gaps that are interesting, but not many clear buy signals. So I am interested to learn.

3

For TKC, I looked at it on a 1 year time frame as well. It looked to me like it has solid support at around 4.50, but is going to reverse and test the high again (even though no signal has been generated by SAR)? Maybe around 5.45? I see this as topping out (I think Weinstein calls it stage 2). Am I reading it correctly?

4

jhawk,

It’s always fun to look over someone else’s shoulder and to kibitz their stock picks. But you probably won’t learn a thing other than that I’ll bottom-fish some pretty risky stuff. And I’m willing to do so, because I’m making tiny, tiny bets, but with this goal in mind. Fidelity runs a ‘low-priced stocks’ fund, FLPSX, that I’d like to do a knock off of.

Arindam

5

If we are talking bottom feeding (always fun - except when the value really is not there) then I will throw a couple out:

BOIL - OK, not really a stock. But if nat gas has bottomed, this could really run. (UNG is the non-leveraged ETF that is in the same neighborhood…)

DMTK - interesting medical. I am thinking that it may be a buyout candidate for a provider as a cost savings approach. Would have been better to get in a month ago…

MARA - totally a crypto play. But not tied to FTX in any way that I can see…

VATE - They are into a little bit of everything. But it could reasonably go up 3X if they can remain liquid. You may want to look at their bonds and see what risk seems associated there. They do have an interesting mix of holdings, though.

I will take a closer look at what you listed now that you have posted your thoughts on them.

1 Like
6

MathGuy,

For Weinstein, the topping phase is Stage 3.

Pull a 25-year chart for TKC using monthly bars. That shows what’s going on. And yeah. I shouldn’t have been buying today, because a retracement is pretty obviously going to happen. But I also don’t care, for several reasons. #1. My bet was tiny, just a share or two. #2. Though I can build charts with the best of them and talk the talk, at heart, I really am an old-fashioned, Ben Graham-style value investor, and that’s how I made my money, and in the bond market at that. This stock investing/stock trading stuff is just “recreational investing” that gets nearly all of my attention --just because it is so engaging-- but no more than 5% of AUM. In other words, tiny money compared to most people’s stock portfolios, though I likely carry far more positions than they do, because that’s also my style: “Bet widely. Bet small.”

Another obscure, Middle East, digital services provider/telecom/social-networking platform I’ve traded in and out of is YALA. I would have bought shares today, but its chart really is topping out (daily bars, a 2-month lookback), just I also backed away from a dozen really solid companies whose prices had recently run up more than I wanted to chase.

So my takeaway and longer-term goal is this. Low-priced stocks, especially biotech penny stocks, make fabulous moves. Most of them have very sucky financials that could be totally ignored in favor of trading the whole tranche technically. But that requires that four things be in place:

#1. A scanner that can slam though a hundred stocks a second to find the few that seem to be breaking out. (I’ve got the scanner, a legacy program no longer sold or supported.)

#2. A means to vet the candidates suggested by the scanner. (HA Smoothed or similar does a good job of that, which is why I’ve been working hard on its development.)

#3. A disciplined means to size positions so that all bets are equal-sized according to their risk. (I generally work with three risks tranches, which is easy to do with bonds. I’m going to have to develop a similar scale for stocks.)

#4. Enough back-testing so I can establish what a reasonable risk-reward ratio might be and estimate whether the game has a positive-expectancy.

In other words, if low-priced stocks are considered to be OTM puts; their purchase-price, the prem; and the strike is whatever price the stock might jump to, how many trades in a row can I lose and still turn a profit, on average and over the long haul? Here’s a simple example. If I’m trading a $5 stock, but getting stopped out with -10% losses, how many whipsaws can I sustain while waiting for the 30% to 60% payoff? If the payoff is 40%, then I scratch if I suffer four -10% stops. But with 3 or less, I make money. If left-hand tails could be chopped even tighter than -10%, then the tolerable loss ratio can be lowered even further. But until I run real-time, real-money trades, I can’t know what sort of losses I’m likely to suffer. Hence, today’s buying was just “dipping a toe”.

I ran a very similar game with bonds for 20 plus years, buying across the yield-curve and up and down the credit-spectrum, letting my wins cover my losses, and the numbers I put up were the same as the top 5% of bond fund managers in this country using the same, multi-sector, total-gains strategy. So I’m curious to see if the same thing can be done with penny/nickel/dime stocks, which would give me a universe of roughly 2,500 tradables to work with that might have might enough volume --and narrow enough spreads-- to be able to get in and out of.

Arindam

7

jhawk,

I’m long nat gas using a different ETF, as well as some tanker company pfds.

1 Like
8

How are you investing in GLO? I was holding some for the excellent dividends but the downward price action offset the gains…doc

1 Like
9

“How are you investing in GLO? I was holding some for the excellent dividends but the downward price action offset the gains”

Doc,

The reason I bought GLO is the same that the younger Soros used to advocate. “Invest, and then investigate”. Until I’ve got some “skin in the game”, every investing choice is just flashing lights on a ticker board. But once I own a piece of the company, the asset, or whatever, I’ve got reasons to dig into it, to track it. and to manage it.

I stumbled onto GLO by asking FinViz to show me all stocks under $5 ranked by descending yld. GLO shows up early in the list. Hovering a mouse cursor over the ticker pulled up a 4-month chart that showed GLO was crashing and --therefore-- of huge potential interest to me as a value investor, as well as paying a fat div. Whereupon I went to Yahoo Finance and pulled the historical data to see the amounts and frequency of past div payments, which were monthly and had recently been cut in half, a likely explanation for the price crash.

By and large, you never, ever want to find yourself betting against the way “the market” is pricing an asset. But that doesn’t mean that they don’t get it wrong a lotta times, or at least often enough to occasionally capture an inefficiency. A promised --and likely-- monthly div of $0.0483 cents is roughly $0.58/yr, and on a $4.95 stock, that’s a yld of roughly 11.7%yr, or what both FinViz and Yahoo were saying, and good enough for the girls I go dancing with.

The next vetting step, of course, was to go to the company’s website, read their fact sheet on the fund, and to pull the list of holdings, which were widely disbursed --in keeping with the fund’s professed objective-- and no holding was bigger than 3.5%. In other words, the managers weren’t cowboys or wildcatters, hoping to score big on just a few holdings.

Those two vetting steps took me maybe 3 minutes. (When market are open and I’m shopping, I work fast.) But I had learned enough that I could make a bet that, if I bought shares, I wouldn’t be getting myself into trouble I couldn’t get out of if later if I had to. So I bid for shares and got a fill. Whether I add to my position in the coming days, and by how much, will depend on further research wherein I do a lot shopping to see how GLO compares to its alternatives. (That’s the ‘investigate’ part of the Soros process.)

Arindam

2 Likes