Opportunities in smallcaps header image 2

Update on some of the stocks we follow

July 25th, 2008 · 2 Comments

Just a quick review. 

InterOil (IOC), is our special featured company. It has held up very, very well in the face of a bad general market and even worse natural gas market. We expect news any day now and we also think Elk4 is fairly close to being wrapped up. Perhaps a little bit of drilling, then we hope for an open hole test, which would show the full potential, and then if thigs turn out to be good (and there is every indication to think they will), numerous dominos will fall in place.

Trina Solar (TSL), had a bad week, very bad actually. The market sell-off, the relatively botched convertible offering (at unreasonably low prices), the threat of some cutbacks in generous Spanish incentives scaring the whole sector. Retreat in energy prices also didn’t help. It’s chart looks very, very close to being broken, TSL is hanging on by it’s fingernails. For the longer-term one could invest and we’re pretty sure you would get a nice return from these levels. In the immediate future, it might very well be another matter. We’re staying on the sideline for now.

eFuture (EFUT), the Chinese supply-chain softare and services producer. It had another big contract win. Long-term, this should be a very good stock, but here the same as for TSL, the short-term looks very uncertain still. The Chinese economy might very well cool off some more now the US and Europe are on the brink of recessions, and inflation might compel the central bank to be even more restrictive. On the other hand, Chinese shares have corrected with a vengence, the bottom cannot be far off. Perhaps the Olympics will produce some new impetus.

Sigma Design (SIGM), is rebounding somewhat, and Blue-ray players are apparently taking off. It’s bet on ultra-wideband might lose out in the future, although not terribly significant, it’s not good. We also have not seen much that suggests that IPTV, it’s main market, is accelerating. The stock is bumping up it’s 50 day moving average, it would be nice if we could break that.

Dry Ships Inc. (DRYS) is sitting once again at that $75 point where we first advised a buy. We hold off for the moment because three times in the last couple of weeks it tried to break $80, and it hasn’t, which isn’t terribly encouraging from a technical point of view. On the other hand, the last three little lows are increasing, which is good. We think the next week or so will show whether we will break out above or below. You can see the chart below:


2 responses so far ↓

  • 1 Jim Tate // Jul 26, 2008 at 2:04 pm

    I have been selling DRYS Jan $50 puts .Seems to be a good idea.
    Tobin of Change wave says buy solar in this correction.. I am not their yet. Waiting on slow poke IOC to pop. Geez guys.

  • 2 admin // Jul 27, 2008 at 8:27 am

    Yea, we would really be surprised if that put became in the money. On the other hand, there is this book called “The Black Swan”. Freak accidents happen, although somehow we cannot quite imagine it with this one.