Can the Droid Carry Motorola?

Motorola Droid


motorola droid 150x150 Can the Droid Carry Motorola?Recent history has shown us that Motorola (NYSE: MOT) has been a laggard. Bad acquisitions and weak product lines have kept the stock in the single digits since 2008. Now it seems the sentiment is changing. The Schaumberg, Illinois based company is now viewed by some as extremely cheap. Some experts feel Motorola has a breakup/sum of parts value of at least $9. The company also has a whopping $3.60 per share in cash. Not too shabby for an $8 stock. These fundamentals are different from what you normally see in low priced stocks.

Co-CEO Sanjay Jha has made the company relevant again not only to Wall St. , but to smart phone buyers as well. In June for instance, Motorola’s sales were so strong that they couldn’t even meet the demand for the Droid. The success of the cellphone unit will possibly be highlighted even more if Motorola actually goes through with it’s spin off of the cell phone unit, Motorola Mobility. Motorola’s $1.2 billion sale of it’s wireless networking unit to Siemens seems to be the final piece of the breakup puzzle.

There are skeptics too. Many ask whether the Droid can compete with the iPhone or Blackberry. Many still view Motorola as dead money despite the recent developments and the pressure of billionaire investor, Carl Ichan, on management to unlock shareholder value. Ichan currently has a stake of just under 9% in shares of MOT, which are currently at a loss similar to a penny stock trade gone bad. Certainly not something you would expect out of one of the greatest stake buyers in Wall St. history.

Now is the time to watch the news closely on MOT. The anticipation of the tax free spinoff to shareholders may drive buyers in before the record date. Also watch for asset sales and Droid sales relative to the iPhone. These are all potential catalysts. While buying shares of MOT is less risky than buying shares in hot penny stocks, trading rules still apply. Always use a stop loss, scale out of the trade if you are profitable and always save some liquidity for other ideas.

 

12:23 pm | | Tags: , | 1 Comment »

Green Dot IPO Preview

Green Dot IPO News

green dot logo Green Dot IPO PreviewLast week we saw two Smart Technologies (NASDAQ:SMT) and Qlik Technologies (NASDAQ:QLIK) trade at first day premiums. While QLIK held it’s gain and traded even higher during the next trading session, SMT plummeted and hasn’t traded back to it’s issue price of $17. These recent results are just another example of how unpredictable the IPO listings have been lately. Some IPO investors will sell a new issue once it breaks it’s issue price, figuring the stock is broken on a short term basis. These sell orders often have a ripple effect and trigger stop loss orders which often bring a stock down to the point where it becomes oversold. Other IPO investors will step in and buy shares when this happens. They are looking for a quick retracement to the issue price. In some ways the tape action is similar to trading hot penny stocks. Many penny stocks that have been beaten up are often flipped by traders who forsake the potential of huge gains for frequent, fast, small profits. It’s a game that’s generally played by experienced investors and may be played again this week with Green Dot (NASDAQ:GDOT).

Green Dot is based in Monrovia, California and was founded in 1999. The company is a provider of prepaid MasterCard and Visa debit cards. As of the entry there is a lot of interest in this IPO. The offering size has been increased and most IPO services are anticipating a premium of 1-2 points. Green Dot also has corporate partnerships with companies like Walmart and Kmart. Walmart also happens to own 2 million shares of GDOT. Another big investor in Green Dot is Sequioa Capital which owns a 31.9% stake.

The fundamentals of Green Dot are better than most IPO’s. As of 3/31/2010, they earned $4.4 million on $92.8 in revenues. Now here’s the unpredictable part. The Green Dot IPO is a private equity deal and the shares offered are all from selling shareholders. Recently the street has not been too kind to these offerings. However, sentiment can change. This is just another example of why investors need to do research. The selling shareholders might be a non-event, but it doesn’t hurt to have this knowledge as an arrow in your quiver. Like penny stocks, finding information on IPO’s is sometimes difficult. So try to find out what you can before you invest or trade. It could be the difference between a massive gain or a loss.

 

1:31 pm | | Tags: , | 1 Comment »

Is Goldman Sachs too Cheap?

Goldman Sachs News


goldman sachs news Is Goldman Sachs too Cheap?Goldman Sachs (NYSE:GS) reports earning on Tuesday, which always brings substantial interest into the large cap financial name. To many, it seems that the sentiment surrounding GS has changed to mildy positive, while the sentiment of its peer Bank of America (NYSE: BAC) hasnt been as strong. The company was just removed from the GS conviction buy list.

Goldman Sachs has rallied from a bottom of 129.50 mainly on it’s $550 million civil fraud settlement and it’s price relative to it’s $128.33 book value. Now it seems like support could be there at the 50 DMA of 137.81.

However when earnings come, throw all of recent press releases out the window. Shares of GS have always remained favorites (Both long and short) of hedge funds and day traders. These investors have made GS especially volatile and that volatility should increase this week.

The question is which way does the stock go? Unlike penny stocks, large caps like GS are much more sensitive to earnings. As we all know many hot penny stocks have provided huge returns with extremely negative earnings. That won’t be the case with shares of GS. Many are predicting that the recent settlement will have minimal impact on earnings, and the street will focus on core banking.

No matter what the result is, Tuesday’s trading should be volatile. So if you are not long yet and are interested, pick a price. Some are saying buyers will come in at the $142 level, but that remains to be seen. Once again, if you happen to go long, use a stop loss. Trading opportunities like this happen frequently, so always save some liquidity for future trades. This is just another example of why investors need to be aware and form large cap and penny stocks lists. Being prepared is part of the battle in trying to book massive gains.

 

10:09 am | | Tags: | No Comments »

IPO Listing Dissapointments

IPO News


smart technologies smt IPO Listing DissapointmentsOnce again, IPO listings failed to follow through. The Canadian based company Smart Technologies (NASDAQ: SMT) was priced at $17 per share, which was at the midpoint of it’s range. The interactive whiteboard maker also happened to be the largest NASDAQ IPO of the year, and was anticipated by some to possibly to trade at a 2 dollar premium. Well, buyers were disappointed again. Smart Technologies was the latest IPO to trade at a smaller premium, and as of the entry, is trading below issue price. What does this tell you when a company that expecting 680 million in revenue and was seeded by Intel trades lower ? It tells us that this summer hasn’t been great for speculation. Imagine how a company with Smart Technologies‘ story would have traded back in the late 1990′s.

As we have said in prior blogs, the speculative money has been on the sidelines. These summer doldrums have led to very few hot penny stock success stories. While most expect OTCBB and NYSE volume to lighten up in the summer, the concern is when that volume comes back. So be selective with your speculative microcap selections. Watch for quality IPO‘s that are trading at discounts to their issue prices. Look at large cap stocks that are trading at low P/E multiples and form you penny stocks lists. The is value in every market and eventually sentiment will turn. Just don’t run out of bullets before it does.

 

1:00 am | | Tags: | No Comments »

Lithium Mining Companies

Lithium Stocks


There is little doubt that lithium could be the “mineral of the future.”  The demand for lithium is already high because of its use in cell phone batteries, laptops and most importantly car batteries for hybrids.

So how will this effect lithium penny stocks?

It is projected by the National Highway Traffic Safety Administration that hybrid cars will be 20% of the U.S. auto market by 2015 (keep in mind this is just the U.S.).

Deutsche Bank estimates that the lithium-ion battery market will hit $15 billion this year and $40 billion in the upcoming years.  This is all due to a surge in electric cars.

a123 systems Lithium Mining CompaniesA123 Systems plans to spend $2.4 billion to build factories to make enough lithium-ion batteries for approximately five million hybrid vehicles by 2013.lg chemical Lithium Mining Companies

LG Chemical will build 10,000 400 pound lithium-ion battery packs for the Chevy Volt in the first 12 months of production. The plant will eventually bang out 60,000 annually.

These are just a few car stories.  Mercedes, Nissan, Chrysler, BMW, Ford, Jeep and Chinese auto giant Hafei are all pumping out hybrids.  In total over 75 new hybrid makes will be available in the next year.

The demand for lithium is surging!!

“Going Green” seems to be trendy now.  Not only that, but people are getting turned off by high oil prices… especially in the summer driving season.  Economically hybrid cars are a no brainer.

Lithium made the news in a big way last month when there was a huge discovery by U.S. geologists in Afghanistan that could equal about $3 Trillion worth of what is being called the “new oil.”

The gas engine made petroleum the most in-demand commodity in the world.  Although it is going to be tough, the electric car definitely has the potential to do the same for Lithium.

Demand for Lithium is expected to grow 16 times with this surge in electric cars.  World Governments are investing billions into lithium production.

There are a few companies that are going to benefit from this boom.  We have profiled a few lithium penny stocks before and have seen decent gains.  Penny stocks are predominantly news driven.  Any one of these small cap companies has the potential to sign a huge contract that could potentially increase revenues by millions.  That could turn any junior miner into a force over night.

We are definitely going to see some speculative money going into small cap lithium companies.  We have seen penny stocks surge on huge contract signings.

Definitely keep lithium on your radar and watch for small cap companies that could benefit.

 

2:23 pm | | Tags: | No Comments »
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