June 24, 2019
"Stocks in the Spotlight's"
A CURRENT UP-DATE
Nasdaq symbol in ( ) = Quote
-- News in ( ) = news
on each will take you there
Week's Closing Indices
Small Stocks With Too Many Shares
Are Bad News
The Markets Seem To Be Leaning Bearish!
My Best Guess would
be the brief drop to correction territory for about 5 of the indices
may have run its course, although 3 of them are still in correction
territory with 2 of them leaning to the big OTC stocks.
markets had a decent rally this past week, but three of the indices
remain in correction territory. The DJT, a narrow market, teaches us
little, but the Russell 2000 and the SPREAD are both quite broad
markets that tend to lean toward the big old OTC market.
positive is just a few days ago we had over 5 indices and correction
territory and now only 3 and with just a little bit of help in the near
term the other three will climb out soon.
rally this past week was blamed on the chance that the feds may decide
to lower interest rates. It just shows that the market was ready to go
up on just about any news although it had been showing some weakness
because of the tariffs on Mexico.
to many, the tariffs were supposed to be terrible for the market and
terrible for the US but it turns out that it looks like Mexico's going
the play the game. Apparently, when it comes to Mexico the tariffs were
worse for them.
markets seem to be moving on any kind of news having to do with
politics but I don't believe that's really the case. It is because of
the strong recovery over the last few weeks and credit for this goes to
a growing economy. When the markets fall on bad economic news, we have
to worry, but when there is no bad economic news the markets can't stay
week opened with an economy that grew 3 1/2% in the first quarter and
greater than all of the estimates. This is one big reason to remain
bullish and I don't see many reasons to change. At this point I just
don't see any poor economic news on the horizon.
The biggest problem right now is finding something that we can buy that has not already moved too far.
I have a rule that as long as corporate earnings are strong and interest rates are
low the markets cannot become bearish.
This only happens with poor corporate earnings and climbing interest rates.
would use this current sell off as a reason to pick up more of a
favorite or at least climb into the market so you can join the ride.
Pick up a quality company with the low PE of which I would recommend
Fonar Corp. FONR (PE is 6.35) or Intel Corp. INTC (PE is 9.94). I
believe having an opportunity to own stocks like this may not come
again for quite some time and I also feel there's little downside.
betting that the OTC stocks will outperform the blue chips once this
correction has run its course. I believe we are just starting to see
major benefits from corporate tax breaks and this should continue
throughout the year.
I believe the big OTC stocks tend to lead the markets, it would help if the RUT would pull back out of correction territory.
positive might be the economy is still moving forward and there are no
reasons to believe the recent sell off is anything more than a correction.
My rule is: The markets cannot rally very long without the big OTC stocks.
DOW 30 chart below is an average of all 30 of the Dow Jones industrials
and what percentage the total are away from the 52-week high. I use it as a
measure of when markets are undervalued, or overvalued, simply
because these 30 stocks are carried by just about every fund there is.
Keep in mind, since it is a discount, the percentage can never be in
The record for the
discount to the 52-week high is - 2.87% reached on 1.8.2010.
The maximum discount was -52.76 on 11.20.2008 showing just how far this index can move. Currently the discount rate is -10.87%,
meaning there is quite a bit of "wiggle" room to continue improvement, but the nearer the
average of all 30 stocks come to the 52-week high the more overvalued they become. In 2016 there were 24 that reached a new 52-week high, 25 reaching a new high in 2017 and 26 in 2018.
This discount had
been trading mostly between -9% and -22%
so far in the last 52 weeks, with a recent correction (5 indices fell
more than 10% from the 52 week high), then a breakout to the upside and
back to the -11% area where the markets stands now.
of losing profits will be the reason forcing the markets down
rapidly, which in an overvalued market is, and should be, expected.
Nothing goes up forever, however the new tax cuts for corporations will make a big difference in valuations and provide much
fuel for the bull to keep charging.
trend is our friend and it appears to be leading the markets on a roller
coaster ride but on the way to higher ground.
The markets could continue this way for a few more months, but too high to fast and they will correct again.
We need to keep our cautious shoes on and tread through the bargains.
Look for the deals and look at newer and start up
companies and do the homework.
A best bet might be a small stock that reads good and offers a
decent chance. Small stocks tend to trade on their own and are not as sensitive to the overall market. It needs to be trading near the low-end but with a
reason to climb. Again, they are out there. We just have to search hard
to find them.
"NEW PENNY STOCKS"
A Young Growing Company
We Do Not Want To Buy The Stock
The company has issued millions of shares at the low!
ago I was searching for a new stock and I came across one that I had
felt, at the time, would be a great investment, but the tide turned
against me and I decided to jump ship before I was dragged out to sea.
I found a young company in Canada that has it's own APP, which allows
the shopping member to receive a refund on purchases from member
retailer's. The company already had over a $million in revenue.
When I first found the company it had (if I remember correctly) about
25 million shares outstanding. At the end of 2018, after a (cheap) private placement it had about 40 million cheap shares out.
So far the story still has potential, but the total number of low-priced
shares had approached my limit. Walla! Along comes another private
placement at c.105 per share and the lowest price so far.
That last private placement (at that time) succeeded in removing any
idea I might have of buying, but out of nowhere comes
another private placement (just announced) at about c08.5.
The point is: There is so much dilution of new cheap shares, and more
on the way, and millions of shares have traded under c0.12 that "lower"
will be only direction the stock can go. It is called supply &
demand and it will be quite hard to keep the demand high enough to eat
up so much supply.
When speaking of low-priced stock it matters little what the
fundamentals are but only the sellers versus the buyers. Market Makers,
or in some cases Floor Specialist, do not read the news and do not care
about what the company is doing. They only care about how the stock is
When a company issues to many shares too low. This technically is cheating
every shareholder that had already owned the stock at higher prices.
When a new company does a private offering we should give them an
opportunity to see how they use the money, but when they constantly do
more private offerings they know they're cheating the shareholders
and that's what bothers me about Penny stocks that continue to offer
shares in their pursuit of cheap money.
When you have millions and millions of shares all at the same price,
pretty much the bottom, you are making the market makers day. They can
short the stock as long as they feel like it because there will always
be a supply and this is why we want to avoid this kind of a company.
If they really have a future look at them again in a year and see if
they've clean their act up but odds are they've gotten so much of a
habit of spending the cheap money that they're going the more which
just dig the hole deeper in every issue is lower than the one before.
Remember, not only do the shares outstanding tell us a lot about how
the stock will trade, but any new shares that have been issued and at
what price teaches us much more and allows us to make a better decision.
Remember, when supply and demand is the rule and you see too much supply look somewhere else.
problem with this one is that they eat money. Their wages cost to do
business are exorbitant and this is why they constantly do private
offerings. Like I said wait about a year.
In case you want to follow this company to see what I've been talking about the name of the company is Datable technology Corporation (DAC.V), a Canadian corporation currently trading between 6 and nine 9 Canadian.
this a lesson to remember. With low priced stocks it is is very
important to know when shares were issued, how often and at what price.
As far as the above example the stock is doomed to trade near the low
for quite awhile. It's called supply and demand!
have never seen a market so strong with so many big stocks trading so
high as the current one. This is where "trickle down" economics comes
into play as we trickle down to smaller stocks.
am currently looking at several small stocks, but finding it hard to
find a "winner" and as soon as I come up with what I think is a "real
deal" I will let you know
From $1.75 to over $21.18
Advanced Micro Devices (AMD) (52 week range 9.04 - 34.14 ), now at $29.10. AMD
has been a big winner from our original buy at $1.75 to over $34 last September The $9+ low was in April/18.
estimates for the Q and the stock has been trending higher. Strong news combined with a strong
economy could keep this one to climbing. We could see over $35 this time up. Continue to hold with a best entry under $22.
From $0.27 (4.16.2007) to over $33
BUY THIS STOCK NOW
Fonar Corp. ( FONR ) (52 week range 18.85 - 28.80),
now at $22.06. I first started following
Fonar in 1982 and have followed it every day since. Great products would
be the reason to own this stock. I recommended the stock at$0.63 a few years back and it climbed to over $30. The current PE is only $6.44.
-Total Revenues – Net increased 9% to $22.8 million, for the third
quarter and 7% to $64.7 million for the nine-month period ended March
31, 2019, versus same period during prior year.
Income from Operations increased 50% to $6.6 million, for the third
quarter and 21% to $18.1 million for the nine-month period ended March
31, 2019, versus same period during prior year.
Net Income increased 22% to $5.2 million, for the third quarter and 3%
to $14.6 million for the nine-month period ended March 31, 2019, versus
same period during prior year.
has been a favorite of mine for over 30 years. A strong growing company
with an unusually low P/E in the medical product industry makes
this company OK for anybody. The stock is
trading close to the 52 week low.
I like the stock for entry anytime under $20, but still OK here.
Up From $22.10 to over $35 since February
Comtech Telecommunications ( CMTL ) (52 week range 20.95 - 36.94), now at
$27.53. CMTL is a stock
to own for the long term.
only buy area that I like right now would be the $22 support level, meaning now might be a bit to high. The stock seems to be on
a steady up trend and a continued strong market would lead to higher
ground, with my target near $40. The current PE is 20.52.
In closing I would like to mention that one of the worst things we can do is buy stock in a young penny stock company that has already issued, or is going to issue too many shares too low in price.
market makers love too many shares as it keeps the price low making it
possible to short millions of shares, which prevents the stock from
a quality small stock "to buy" with not too many shares owned, near the
low, will be very hard but once found the rewards can be plentiful.
If you have a situation, or questions, please feel free to contact me.
I wish you all good luck!
J.R. Budke became a stock broker in 1981, an options
principle in 1982 and a branch office manager in 1987 and a National
Sales Manager over 150 stockbrokers. He is currently
inactive as a stockbroker as of 12/31/99. J.R. writes the articles and
opinions for the Stocks in the Spotlight. The stories and stocks found on this
site, or any "Stocks in the Spotlight" written material, are the
opinions of J.R. Budke unless other wise stated, and should not be
considered as advice. You should not purchase any stocks
solely on the opinions found on the "Stocks in the Spotlight's" web
site or in any of its written material. You should also be aware that
options are not for everybody and carry a high degree of risk.
The "Stocks in the Spotlight" provides information only, this is not
meant to be a recommendation to buy or sell the profiled security, nor
is this an offer to buy or sell the security. The publishers of
"Stocks in the Spotlight" are not investment advisors and are not
acting in any way to influence the purchase or sale of the security. Before purchasing or
selling any security profiled, it is encouraged and recommended that
you consult a stockbroker or other registered financial advisor. The
reader must understand that the companies we select may involve a high
degree of investment risk. Potential investors must understand that
they may lose all or a portion of their investment due to the risk
|The recommendations and updates in this "Current Up-Date" may
include "forward- looking" statements as that term is defined in the
Private Security Reform Act of 1995, & therefore are subject to
various risks & uncertainties. There can be no assurance that
actual results, business conditions, business developments, losses
& contingencies, and local & foreign factors will not differ
materially from those suggested in the "forward-looking" statements as
a result of various factors, including market conditions, competition,
advances in technology, acquisitions, potential litigation, personnel
changes, capital availability, and all sorts of other factors.