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Wednesday, November 15, 2006

The market goes wild

CXTI (links) up 42.04% today
ETLT (links) up 28.27% today
Strathmore Minerals (links) up 6.85% today
My three largest holdings. All three are doing great in terms of value and now in terms of market price. [UPDATE: Note that 99% of the other days, these stocks did much, much worse. And I expect the future to be more like the other 99%.]

Strathmore announced that they might have found some uranium, which doesn't mean much until they get more work done on it. Also, the spot price of uranium jumped up another $2.50 to $62.50. UxC also put up two presentation pdf files (here and here) from the Quebec session recently, which are somewhat interesting. The best part is the color coded uranium market conditions similar to the terrorist threat color coding. They go from "RED - Supplies are so scarce that reactors are in danger of shutting down" to the very humorous "GREEN - There is no way a uranium salesman would beat you in a game of golf."

And CVU (links) released what I consider to be somewhat good news: press release, 10-Q. The results are bad, but not as bad as they've been. And things are looking up for the future.
Third quarter revenue, while down from the same period last year, was 80% ahead of the 2006 second quarter’s $2.5 million. Included in the third quarter revenue was approximately $1.0 million that we were unable to record in the preceding quarter due primarily to supplier delays. Gross margin has improved as compared to the second quarter of 2006. We expect that gross margin will continue to improve and return to our historically normal rate of approximately 30% during 2007. The staff reductions that we made at the end of the second quarter have helped to lower overhead and have contributed to our improved gross margin, and the supplier issues which caused us to incur significant overtime and rework costs are essentially behind us.
We are reporting 2007 guidance at this early stage because of the significant increase in revenue and net income that we project for 2007. We do not expect to report guidance this early in future years. Based upon the level of new and pending orders, we are anticipating 2007 revenue to be approximately $25 million, with a resulting net income of approximately $2.0 million.
I need to do a detailed post on their results, but the only things that matter are that they can get through the current slow period and that things will pick up significantly in the future.

UPDATE same day:
An anonymous person wrote a comment in the previous post which said,
"These results are very convincing.
It is just totally undiscovered I guess.
Agree that E sea was acquistion of the century. If they can repeat that then this really is a five buck stock on a low PE...not sure about turtles though

"Must be many shareholders who have held for months if not years and want out. Saw a very healthy volume today at close to 10% of freefloat shares not under control of management.....should go higher IMHO"

I think there's some interesting evidence supporting the "undiscovered" theory. While Yahoo automatically generated this news item Tuesday at 5:09 PM EST when the 10-Q was posted, the real trading volume today happened after ETLT issued the press release around noon today (the next day). Unfortunately, you can't see it easily because someone painted the tape with a 4 billion share trade just after 2:00 PM. Haha, very funny. But you can see the result in the price chart for the day. Nothing really happened until noon. Then, BANG! it took off.

If lots of people were following this very closely, they would have known about the results before the opening. I bought some more shares with some new extra cash just after the open, only the see the price deflate to under 50 cents during the morning.

I have no idea what the stock will do over the next weeks or months. But I'd be surprised if it just sinks back down again. The accounting issues are cleared up. The mysterious things are gone. Someone must have bought them a calculator. :-) The 10-Q was filed on time. And the results are outstanding. It's hard to believe the stock is under a dollar, but then I sat on ValueClick selling under net cash value (and making a profit) for what seemed like an amazing amount of time before people were willing to go back into the water when it was OK be own an Internet advertising stock again. (I stupidly bailed out at around $4.40 and it's $22.13 now, a missed 10-bagger)

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