"In ancient times skillful warriors first made themselves invincible, and then watched for vulnerability and their opponents."
- Sun Tzu, The Art of War
Yesterday certainly was a busy day for many investors. Three stocks in particular caught my eye; I traded one, tried to trade another, and will be looking to trade the third today. All three ended the trading today down double digits. While many of the numbers look interesting, only one of the three is a value buy at current prices, in my opinion.
The first stock, Sanmina-SCI Corp. (SANM), is an $853 million electronics manufacturer that opened gap down approximately 15% lower than the close on the previous day.
The gap lower caught the attention of my scanning computers, and I looked to buy the stock in the panic selling at the open. SANM did not quite trade down low enough for me to enter. Later in the day I tried to short it, but due to the new short sale regulations that just took effect, I was unable to do so.
Towards the end of the day I once again looked to buy the stock or to sell put options, as it became oversold in my opinion. It is no surprise that SANM closed at 20% down: Hari Pillai resigned with an effective date of "immediately," and news emerged that the company was lowering guidance for the top and bottom line. The earnings guidance was previously $0.40-0.43 a share and is now $0.28-0.32 a share; company revenue numbers are now expected to be between $1.56-1.6 billion, down from an estimated $1.62-1.67 billion. Company reasons for the downward guidance are very weak at best, and indicate likely near-term future pain for investors.
I use a proprietary blend of technical analysis, financial crowd behavior, and fundamentals in my short-term trades, and while not totally the same in longer swing trades to investments, the concepts used are similar. Based on my criteria, I have come to the following conclusion: I will be looking to either write put options or buy the stock today for a short-term trade.
China Integrated Energy, Inc. (CBEH), is a Chinese fuel-related $127 million small-cap.
What appears to be the biggest question for CBEH is whether or not it will be the next Chinese reverse merger implosion. Based on the recent price action along with the massive 33% short interest, it's very clear that many investors are betting it will. An instablog claiming fraud by company management became a catalyst for an avalanche of selling. Clicking on the link to read the" full report," I noticed something interesting in the disclaimer at the end: It looks remarkably similar to what one would see with a penny stock promotion e-mail. You can find the report easily enough, but I would like to include the disclaimer here:
[Click to enlarge]
GES did fine for the last reporting quarter, with a 19% rise in profits. North American same-store sales year-over-year fell slightly more than 1%. What appears to be the primary concern for investors is next quarter reporting guidance of $0.41-0.44 per share earnings, compared to the Street estimate of $0.61 per share. For the full fiscal 2012 year, GES is guiding $3.30-3.50, not far below the Street estimate of $3.50.