In response to a number of requests that I've received via email or comments asking for 'VFC's Take' on numerous stocks that readers have found, I'll do my best to address as many as I can, as long as everyone takes a few things into account while reading:
- I have not thoroughly researched all of the stocks that I'm about to comment on. I've done the initial DD but my opinions are mostly based on my first impressions of the stock. I'm merely providing VFC's Take, as requested. Use that as a starting point to do your own DD.
- Don't get testy if I don't like your stock. Remember, this is just my initial impression and I take into consideration some variables that other people don't, that's why VFC's Take is not always the mainstream impression.
- I appreciate all the recent feedback, and keep the stock tips coming; this is a great forum for all investors of all levels to share tips and insights. There's a whole lot of stocks out there, but there's only a few gems. Let's keep trying to find those gems.
Here's my problem with the Spongetech move. They should have gone 1-10. By going 1-100 they take themselves out of the "speculators" domain. If I am in SPNG (which I am, avg .11), I am looking for a big hit. I don't want to buy SPNG at $14.00 a share! I'll take a potential ride up from $1.40, but no way am I buying at $14 when I don't know if as you say "the products are going to take hold". It would have to hit $100 a share to make the big hit I am in for. I sold half yesterday at .155 and may sell the rest. This is not a potential homerun anymore.
VFC's Take: I do see this poster's point, however the outcome does not have to be quite so bleak. The market cap is not going to change as a result of the reverse split, so if sales growth can support a higher market cap, then the stock price is going to rise the same amount (in terms of percentages) regardless of the price for which the stock trades.
By doing a 1-100 vice 1-10, the company is trying to weed out the speculative traders, in my opinion, and keep the long term growth investors. If the company can grow the business and sell the products then investors will be rewarded in the end.
As for the potential of a ten-bagger here, a ten-bagger from this point would mean a market cap of roughly one billion - regardless of whether the stock trades for ten cents or ten bucks. That is a bold prediction in any case, but if Spongetech can generate sales that support such a high market cap, then the stock will trade accordingly; again, I emphasize, it's a percentages game, not a stock price game.
If you thought Spongetech would sell that much product, then it's just as much worth the buy on September 23rd as it is today. I understand the newfound fear of the potential downside, but if you're in SPNG for the future of the potential sales growth - nothing has changed. Don't alter the amount of money you put in, just accept the fact that you'll have far few shares in the account - the percentages will play out regardless of price.
I'm going to add shares now - pre-split - and if the stock dips significantly post-split, I may add again; then I'll wait and see how well these products catch on and hold the market place.
As for the "home run" call, in my opinion, if you can double your money in a stock - I tend to consider that a home run, especially when most of America is satisfied with a 15% annual gain in a mutual fund.
I still think that SPNG could eventually be at least a double, even after the reverse split. For that potential double - I'll hold.
Disclosure: VFC is long SPNG.
Would like to know what you think about Telanetix (TNXI). It's in the visual conferencing field and was featured in Barron's a couple of years ago. It's way down since then, but it seems to be a solid business in a field that when it comes back again, should lift up the stock as well. Would you care to express and opinion on that? Thank you, one of your regular readers...ds
VFC's Take: I'll refer back to my earlier comments on TNXI (CLICK HERE) and since nothing has significantly changed since then, I won't alter my stance.
That being said, it's a lot more attractive buy right now for under ten cents than it was before; if it hits five cents, I might buy a few shares myself in order to sell them into any potential spike.
It's on the watch list, but I'm not yet a buyer.
Disclosure: No position.
Trubion Pharmaceuticals (TRBN)
VFC, you should check TRBN. Look at it's brakeout and news... It should move up a lot from recent level. Have a nice time.http://www.tradingmarkets.com/.site/news/top story/2503027/
VFC's Take: Ordinarily I'd shy away from a pharmaceutical stock after it has enjoyed a run such as the one Trubion had - in order to avoid chasing - but I think that this one is worth keeping on the watch list and, if you're looking for a long term speculative play, buy TRBN on the dips.
Trubion's pipeline is still in the early stages of development, although a recent partnership with Facet Biotech Corp. for the development of TRU-016, a treatment for Chronic lymphocytic leukemia [CLL], makes TRBN a bit more stable of a speculative investment than most, in my opinion; although partnerships mean nothing if the drug is proven to not work (see: Cell Genesys). Of note, Facet recently rejected a buyout offer by Biogen.
Trubion also has an alliance with Wyeth for the development of TRU-105 (it's most advanced candidate) and SBI-087.
Trubion's business plan of funding the pipeline products through partnerships somewhat alleviates the future risks of dilution and makes it a decent long term speculative play, in my opinion.
If you're looking to get in, I'd throw it on the watch list and wait for it to settle down again, a dip to below five bucks is a give, in my opinion; remember, this company is still a long way off from bringing anything to market. However, if you can't be bothered averaging down, buy a few shares now and throw them away for a while and check back in a year to see where they're at.
If nothing else, this one deserves to be kept on the watch list.
Disclosure: No positions.