Crash this week.. may be on Monday

Expecting a major correction this week. I mean a big crash. Most likely on Monday. Just a strong gut feeling.

Call volume for $35 July calls

Check out the volume on the July calls for VRTX (28.51)

$30 strike price trader 1995 calls.
$35 Strike price traded 5285 calls. - Some one bet $26,000 that VRTX price will go higher than $35 before EOD July 20th.

I checked almost all the other expiry dates for the $35 strike price and the volume is high only on July. This means it's not like someone is moving the calls to a later date. A sure way to tell is if the Open Interest in the $35 strike price goes up to about 14700 tomorrow.

VRTX - Vertex Pharmaceuticals is a buy

VRTX which is currently at 52 week low is a strong buy based on technicals, valuation and a probablility of the drug coming to market before 2010.

Look at the trading in the stock and the volume. It's at a great place technically. See the strong volume on up days. Today it picked up in the last 45 minutes or so on very heavy volume. There might be a rumor of a buy out but surely don't trade based on that.

Reliant Financial Networks ticker has changed from RHWC to RFNS

Do take a look at this article. http://www.reliantfsc.com/news/Reliant%20Press%20Release%20-%20Reliant%20Now%20Fully%20Accessible%20under%20the%20Filogix%20System%20and%20an%20Increase%20in%20Mortgage%20Origination%20is%20Anticipated%20-%20May%208,%202007.pdf

" When the system was activated May 4, 2007, the Filogix system had archived 109 mortgage applications that had been submitted for Reliant's underwriting for a total of $33,170,471.77 in mortgage applications submitted. "

This is for a company that has 8 Million in Market cap. They expect to turn a profit by the 3rd quarter.

Take a look at this article. http://www.investorshub.com/boards/board.asp?board_id=5251 and look at the ludlow report. It paints a very rosy picture and expects an 8 cent stock to potentially go up to 12 bucks if they meet targets. Take it with a pinch of salt because everything they talk about is yet to be proven from an earnings perspective.

I think the train has started just based on the new mortgage apps it's processing and it certainly is good news for those of us trying to get in at this point.

Cheers,
Ahu

Blackstone (BX) Opportunity

Does anyone here remember the GOOG IPO and how the IPO price came down from $115 - $120 to $85. GOOG opened at about 100 went to 113 and then back to 98. No one can claim Blackstone to be another GOOG but the way it's trading is almost remeniscent of the Google IPO.

A few things to keep in mind: BX has given a Investment Return of 25% - 30% over the last 20 years. That is right - 20 years. It means that it has legs to ride out any so called debt crunch that the market is imposing. Money Managers in every area are aflush with funds and leveraging (leverage is required for every private equity deal) has become expensive. Markets are overly concerned with the debt leveraging that has been done.

Two things will affect BX. The tax rate issue (15% vs 35%) and they are lobbying against it. The other one would be earnings. In my humble opinion investors will be shocked by how good the earnings will be. Read their prospectus and look at their growth.

BX has fallen from their IPO price. If you buy now, you get a better deal than the Chinese goverment (they bought 3 Bil dollars worth BX). Buy BX.

Buy GILD

GILD - Gilead Sciences.

Financial Amalysis: The company had 1.32 Bil, 2.03 Bil and 3.03 Bil in revenues for 2004 - 2006. Current estimates for the year are extremely low (3.95 to 4 Bil). The company has exceeded revenues quarter over quarter every time. current estimates are for no Quarter over Quarter growth. They have beaten estimates conprehensively and for a 40% growth rate, their Future P/E is only 23 (given current low estimates). The technicals for the stock are great and they are hovering around 50 day EMA. Look for the stock to climb over 81.5 for a continued run and over 84.47 for a real unabated run. If stock rises into earnings then sell options prior to earnings (high premium) and sell stock after earnings. Option activity today is definitely favorable and in anticipation of a positive earnings surprise.

The stock has an excellent pipeline of drugs and just recently got approved for ambrisentan for treatment of pulmonary arterial hypertension, to be marketed as Letairis. This one feels like it's going to a 100.

Cheers,
Ahu

Penny stocks anyone?

I've been researching RHWC for the last few days and this one is a strong speculative buy.

This is one of those stocks that can multiply your return. I am quite tired today and so I won't be writing a long piece on this. It just got into the most feared business of sub-prime mortgage lending but in Canada. When the market expects the worst in a business area is when you find great deals.

This is a penny stock at 11 cents. Returns will multiply quickly if they can pull it of. Canadian real estate has done very well over the last year and expected to continue to do well. Big Canadian banks are washing their hands of the sub-prime business after watching the US debacle. Sub-prime is a valid business model and this is the perfect way to benefit from it. Look at how you can avoid high risks by going through this analyst report.

http://www.beaconequityresearch.com/report/RHWC.pdf

The company is projecting a net income of 15 million for 2007 and expects profits in the third quarter. Hmm.. I think it's a difficult ask. Having said that, their Market cap is 9.6 mil. Surely, if it makes even a fourth of their expected income, the stock is way underpriced.

And you thought I'd never recommend a penny stock :)

2 Buys and Equal weight rating in 2 days

Yesterday
Lehman started VRAZ with a Equal Weight rating.
Jefferies started VRAZ with a Buy and a price target of 8.

Today
Credit Suisse started them with a Buy and a price target of 10.

I am not sure who is selling at these levels. Almost feel like ECI or someone big is selling out. I can't imagine this being shorted at this level.

Long time people! How about a new stock tip :)

It's been ages since I posted anything last. Work got a little busy!!


Here's a new company to think of - Veraz Networks (VRAZ) - Strong Buy

Disclaimer: I own this stock.

The company just went IPO around April 10 or so. What do they do - in their own words.
"Veraz Networks, Inc. provides Internet protocol (IP), softswitches, media gateways, and digital compression products to wireline, wireless, and broadband service providers worldwide."

In short, they provide ways and means Veraz products allow service providers to quickly and efficiently migrate from traditional voice networks to all-IP without making expensive hardware purchases.

The company reported earning yesterday. Keep in mind Veraz was in a different business a few years back. They sold Digital Circuit Multiplication Equipment to Telecom providers. They had hundreds of customers. Today they are selling their IP softswitches to the same Telecom providers.

Let's break down the numbers -
Revenues = 27.45 Mil

• 17.65 Mil IP softswitches revenues
• 5.134 Mil DCME products
• 4.671 Mil Services

Okay - IP softswitches revenues and the Services revenue are what matter and they both grew year over year by 98% and 84% respectively. DCME product revenues are going to keep reducing as stated in their prospectus. They are obviously executing well on the IP softswitches sales to the telecom providers.

Last year they made about 99.6 Mil in revenue and lost 15 mil and that's about 4 mil a quarter. This quarter they lost only 1.2 Mil. With revenues growing a 100% in their core area this is peanuts and easily controllable. Revs for the year are expected to be 120 Mil. Again don't get fooled by the growth year over year which is only 20%. Keep in mind that their core product's revenues are growing at a 100% and that has been the case for the last 2 years (look at the IPO prospectus). Even if the growth this year is only 20% as DCME revenues ultimately become really small, next year will be at a 100% if you just look at the revenue trend and the fact that they have sold to only to about 60 IP customers.

Again, let's break down the numbers. Stock is at 6.75, market cap 270 mil. 72 mil in cash and so we are saying that the company is valued at about 200 mil for 120 mil in revenues that will grow at about 100% in 2008. I hope someone understands the absurdity of this situation. Compare this with other companies that just went public and are growing

The market makers scam: Hmm the interesting stuff. This stock's volume is extremely low even for it's low market cap. You have a daily volume of about 41000 stocks and if you follow this stock closely there is absolutely no liquidity on this stock. The stock is showing no interest because retail investors don't understand the company or if they do, they don't have any conviction in their understanding. If I am a market maker, all I have to do is sell about 40,000 stock on the day after earnings and make sure there is no momentum from traders in the stock. Why? Because the stock went up 6% yesterday on a volume of 100,000. Imagine what it could do if momentum trader's volume get's added to it. The price will go up a buck. Traders catch a stock that is moving up after earnings. They don't try to understand an earnings statement. So a market maker can sell say 40,000 stocks today and keep the price low and the momentum traders out. This in turn gives them a chance to accumulate at a low cost basis over the next 3 months until earnings are announced. They keep the cost price low and retail investors will sell thinking this stock isn't going anywhere. No wonder it's low today.

I feel as confident about this company's prospects as I've felt about my call on NFLX at 10 bucks and just like UAUA at 30.