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I am the President of TFST Publishing which is a Stock Advisory Service . We publish The Focused Stock Trader an online newsletter www.thefocusedstocktradercom I have been a stock broker, investment banker, and CEO of 2 micro-cap companies ( see LinkedIn). At the present time I am focused on my... More
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  • Some Of Our Best Picks 0 comments
    Nov 11, 2013 11:00 PM | about stocks: OESX

    "Eventful Markets"

    How Traders Can Use Market Volatility and Other Current Market Conditions to Make Money In the Wake of Weakening Revenue Outlooks

    In my fifty years of investment experience, I have never had a stock triple in three consecutive trading days, as it did with Oxygen Biotherapeutics (NASDAQ:OXBT). "The Focused Stock Trader" recommended the company on Friday, November 1st at $3.20, hitting $11.20 on Wednesday, November 6th before stopping out of the position at $10.50.

    What we observed is that the movement in Oxygen's stock was driven by events as much as it is driven by fundamental and technical factors. The main catalyst was the agreement with Phyxius Pharma to market Levosimedan in North America. Levosimedan helps prevent and treat cardiac surgery patients at risk of developing low cardiac output syndrome, an estimated $600 million market with few viable solutions. The Phyxius transaction was completed for $4.8 million in common stock and preferred shares convertible into 3.4 million shares of common stock.

    Traders have also taken advantage of the volatility generated by such events as the government shutdown, lowered profit and revenue outlooks in the third quarter and an active M&A market to drive markets higher. But lately, traders have started to think more like investors; how solid will a company be in 2014 and beyond, as opposed to just the next quarter or two. As always, traders want to see events that have a long-term positive effect on the company.

    In the case of Oxygen BioTherapeutics, it was the drug Levosimedan, which is currently in phase III trials with FDA Fast Track status and an agreed study protocol under the Special Protocol Assessment (NYSE:SPA) that a single successful trial will be sufficient to support approval of Levosimendan. Levosimendan is approved in 53 countries and there is a strong likelihood that it will be approved here in the U.S.

    Events have also driven "brighter" revenue outlooks in the solar power sector, such as our successful picks in the solar power sector with stocks such as Canadian Solar (NASDAQ:CSIQ), which is up over 40% since we recommended it at $19.85 on October 11th along with Real Solar (RSOL), which was up 46% from our entry on October 11th at $2.67 to our exit at $3.90 on October 25th.

    With the increased volatility in the market, we advised investors to not only perform further due diligence than is the norm but also to consider situations geared for future growth well into 2014 and beyond. We also noted solar power as being one of the leading sectors of the market in 2014. Our report on the sector also noted that solar power manufacturers have vertically integrated themselves into the downstream power delivery and power conversion finance businesses. The report also discussed developments emerging from China, such as a VAT tax rebate program and a spate of consolidation and a sharp curtailing of growth in the overly bloated solar panel industry.

    For traders seeking fundamental guidance, look no further than the earnings picture. Earnings will be an excellent indicator of where stocks will head going into Q4 and into 2014. With shaky guidance from many companies heading into Q4 and possibly into 2014, earnings must be scrutinized even closer. For example, Canadian Solar projected quarterly gross margins of 18% to 20%, along with the projection of its first quarterly profit in two years on sales of $470-$495 million. Real Solar also reported that net revenue increased 64% to $34 million, compared to $20.7 million in the previous quarter and up 29% from $26.4 million in the same quarter a year ago. Compared to many other companies, these are projections that show healthy growth moving forward into 2014, not just for the next quarter.

    Adept Technologies (NASDAQ:ADEP) was a trade where we not only looked at revenue growth but also by event-driven catalysts, that is the advent of Adept's mobile robot business, the announcement of six new partnerships in the area of mobile packaging robot development and the significant, untapped growth potential of the market. Adept was first recommended at $5.80 on October 9th, which we ultimately sold out at $9.28 on October 25th, an increase of 60%. We also bought back into Adept on Thursday, November 7th at $7.73 ahead of earnings, which was announced on November 7th after the market close and showed revenue growth of 19% year over year and major growth in the mobile robotics field.

    Event-driven catalysts have been the spark that languishing stocks have long sought, as the case with Taser International (NASDAQ:TASR). When "The Focused Stock Trader" recommended the stock in August, the recommendation was based on the massive deployment of new electro-shock weaponry and the deployment of new wearable cameras and cloud-based evidence tracking and storage used by law enforcement officers. Going from $8.59 at the time of our recommendation in mid-August to $16.56 at the time of the position being stopped out in early October, Taser produced a return of over 90%. As much as our solar power picks were based on fundamentals of trends in the energy sector, our pick with Taser was based on recent court rulings that would require further use of wearable camera technology by law enforcement officers and the growth of cloud-based law enforcement technology. With Taser's Q3 2013 revenues exceeding consensus, $35.2 million vs. $33 million, it showed that Taser was promising not only for a company that beat Q3 expectations but for a company that has a promising product in an underserved market, the same as Oxygen BioTherapeutics.

    Some of our recommendations are trades where we took profits and eventually bought back in. Himax (NASDAQ:HIMX) is one such example of where we made multiple trades for a profit. We recommended the company back in April at $5.39 and got out at $7.50 in late July. We also bought back into HIMX again in August at $6.72, getting out in October at $10.77. The introduction of Google Glass and other wearable devices has proved to be a major catalyst event for the company's run of over 250% year to date.

    Orion Energy Systems (NYSEMKT:OESX) is another stock where we originally recommended the stock earlier this year, sold out at a profit and bought back into it based on past fundamentals and recent events. Orion's Q2 2014 revenue came in above expectations. Orion's revenue rose 42% year-over-year to $27.5 million, which was also up 32% sequentially versus the first quarter. We originally recommended OESX at $3.17 on July 26th and sold out at $3.90 a week later on August 7th, a gain of 23%, then again in mid-August at $3.60 for a gain of 18% when we sold at $3.71 at the end of September, which reflects the optimism that we have regarding the LED lighting sector as a sector with significant future growth.

    With the performance of our top ten picks over the last nine months returning over 80%, we believe that market volatility provides opportunity. We believe that by analyzing a company on a fundamental and technical basis, a trader will find a successful formula. But traders must also pay attention to events that will affect their positions and the markets as a whole. We still stress enhanced due diligence and stop-loss orders being placed 10% under any new highs as the cornerstone of any trading strategy for the foreseeable future. But more than anything, we stress discipline and focus as the key to success for traders. visit our site www.thefocusedstocktrader.com and take a free trial subscription.

    Disclosure: I am long OESX, HIMX.

    Themes: EVENTFUL MARKET Stocks: OESX
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