PSB Portfolio Update April 2011
April 19, 2011
More Volatility Ahead?
There’s a lot going on in the world these days.
Just look at the headlines…
The US is dealing with a massive budget deficit. Several European nations have their own debt crises to contend with. Fighting is still raging in the Middle East. And Japan’s nuclear disaster appears to be worsening.
So, it’s no surprise we’re seeing volatility in the market.
We may continue seeing some choppiness in the markets as the world’s major events get sorted out. There’s likely to be a lot of market-moving news hitting the wire over the next few weeks.
Don’t worry though… overall we’re still bullish on stocks.
You see, at the end of the day, rising corporate earnings send share prices higher. As long as earnings keep beating analysts’ estimates, stocks will go up.
So far, earnings have been strong. Several major companies have already reported better than expected results, including JP Morgan Chase (JPM), Mosaic (MOS), andAlcoa (AA).
And earnings season is just getting started.
Now, our portfolio of small companies isn’t directly impacted by these blue chip company results. However, overall market strength has a very strong indirect effect on our portfolio.
In other words, a rising tide lifts all boats.
Even though the world is dealing with its share of turmoil, we think the overall bullish trend in stocks should continue. Just don’t be surprised if there are a few bumps in the road.
Now, let’s move on to the position updates…
Position Updates
Please Note: We don’t necessarily update every open position each month. We focus on the positions experiencing significant news, notable price movement, or a change in recommendation. Please refer to the Performance page on our website for our current buy, sell, or hold recommendation for any positions not mentioned in the Update.
. . . . Web.com Group (NASDAQ: WWWW) – Sell
WWWW has been a huge winner for us. The shares hit a recent high of $15.50. That’s an astonishing 240% gain. Hard to beat that…
The shares have pulled back a bit on broad market weakness… and we feel it’s time to sell our remaining shares.
It looks like the stock is having trouble breaking through a key resistance level. And we’re concerned it could sell off quite a bit from here.
At these levels, we’ll be locking in nearly 215% profits. Remember, we already sold half our shares for over 115% gains. All in all, it’s been an amazing trade for us.
Sell your remaining shares of WWWW for gains of 215% or more.
. . . . Zoo Entertainment (NASDAQ: ZOOG) – Sell
Our short tenure in ZOOG has been… unfortunate.
We got off to a very promising start… hitting on a 32% gain right out of the gate. But alas, some things aren’t meant to be…
Management just announced that several of the company’s 2010 financial statements need to be restated. Apparently, certain transactions were recorded erroneously… and it could have a dramatic negative impact on the actual results.
Make no mistake, this was shocking news for investors. And it’s most likely the kiss of death.
The vast majority of investors don’t want to be involved with a company who can’t get their financial statements right. At best, management is incompetent… at worst, they’re engaging in fraud.
With that in mind, it’s time for us to sell ZOOG.
We don’t want to be a part of this mess either. Let’s sell our shares now and put our capital to better use elsewhere.
. . . . ZST Digital Networks (NASDAQ: ZSTN) – Sell
. . . . LJ International (NASDAQ: JADE) – Sell
. . . . L&L Energy (NASDAQ: LLEN) – Sell
Just in case you didn’t see, we exited these three positions in the Penny Stock Breakouts April issue. Check out the Portfolio Update section of the issue to see our reasons for selling.
. . . . Manitex (NASDAQ: MNTX) – Hold
MNTX continues to be a solid winner. The share price shot up to a high of $6.76 before pulling back on broad market selling. That’s an excellent 76% gain.
So what’s causing the big move up?
Excellent earnings.
Fourth quarter revenues jumped to $29.5 million… an outstanding 98% year over year increase. What’s more, the company’s order backlog jumped an impressive 80% to $40 million. Clearly, the company’s products are in demand.
Even better, MNTX is solidly profitable.
EBITDA jumped an eye-popping 625%, resulting in an $0.08 per share profit. The gains were based on a mix of improving revenues and new sales from acquisitions.
Here’s the best part…
Management expects double-digit sales gains in 2011.
We think MNTX is going to continue its impressive run higher. Hang on to your shares for bigger profits ahead.
. . . . Carriage Services (NYSE: CSV) – Buy up to $6.10
CSV is off to a good start.
The shares hit a recent high of $6.14. That’s a solid 12% gain in just two weeks. Not too shabby.
And that’s not all…
CSV just announced they’re acquiring Stanfill Funeral Homes. This key purchase provides the company access to the lucrative Miami-Dade County market.
And it shows management is serious about its long-term growth strategy through acquisitions.
We think this stock is just getting started on its way higher.
If you haven’t done so, grab your shares now while they’re still in our buy range.
. . . . Summer Infant (NASDAQ: SUMR) – Hold
SUMR is on the move. The shares have finally broken out of their trading range… and jumped to new highs. After a bit of a slow start, we’re up to 28% gains.
And it’s just getting started.
SUMR is acquiring BornFree, a leader in baby feeding products. BornFree is a popular brand with over $16 million in sales in 2010.
This acquisition allows the company to enter the $1 billion baby feeding industry. And with SUMR’s resources, the BornFree brand has huge potential for explosive growth… not to mention high margins.
We think it’s a great, strategic move by SUMR’s management.
Hang on to your shares of SUMR. This stock has big time upside potential.
. . . . SkyPeople Fruit Juice (NASDAQ: SPU) – Hold
Solid earnings news from SPU.
Fourth quarter revenues reached $43.9 million…. a stellar 22.6% year over year increase. New retail locations and strong customer reorders help drive the gains.
What’s more, net income climbed to a record $11.2 million. That’s up nearly 10% from a year ago.
More importantly, SPU saw triple digit growth in some of their key products.
And management expects the strong growth to continue.
The company’s introducing new products into rapidly growing markets. They believe these new drinks will provide significant opportunity for growth.
Let’s continue holding our shares of SPU for bigger upside potential.
Action To Take
- Sell Web.com Group (NASDAQ: WWWW)
- Sell Zoo Entertainment (NASDAQ: ZOOG)
Category: PSB Portfolio Updates
