Small Cap Network's  Instablog

Small Cap Network
Send Message
Small Stocks. Big Returns. The SmallCap Network is one of the web's leading small cap stock trading communities. While large caps tend to receive the majority of media attention, small and micro cap stocks as well as penny stocks can often offer the most potential for investment gains. The... More
My company:
SmallCap Network
My blog:
SmallCap Network
  • WTSLA, KRG, and NCS - Bullish Technical Alerts 0 comments
    Aug 3, 2009 1:02 PM | about stocks: WTSL, KRG, NCS

    While most stocks have made gains in recent weeks, not all of them are positioned to continue rising in the foreseeable future. On the other hand, not all of them deserve to make more gains either. Wet Seal Inc. (WTSLA), Kite Realty Group Trust (NYSE:KRG), and NCI Building Systems Inc. (NYSE:NCS) are three of the fairly rare stocks right now with compelling technical analysis charts in addition to a positive fundamental outlook.

    Though same-store sales were down more than 11% for Wet Seal Inc. (WTSLA) in June, that hasn't prevented the stock from gaining 18% over the prior three weeks. Perhaps the market continues to focus on the 24 cent per share profit the company's on track to generate this year... something most other teen-retailers haven't been able to do.

    Wet Seal shares crossed back above their 50 day moving average line today, which has been a decent entry trigger in recent months even when the market was struggling. Now with a market recovery as well as an economic recovery taking hold, the 50 day signal could gain even more traction.

    Wet Seal's forward-looking P/E of 10.5 is not only low, but plausible; the analyst estimates have been pretty much on target in recent quarters.

    Kite Realty Group Trust (KRG) shares, for the first time in years, managed to make higher lows when forced lower in March and June. It's a subtle paradigm shift for the REIT, but an important one.

    What we have not yet seen is higher highs, but recovery efforts have to crawl before they can walk.

    On that note, the technical buy rating is being issued now rather than later, since the bullish trigger - a cross above the resistance at the 100 day moving average line - could start a rally in too much of a hurry to profitably chase. KRG has been toying with the 100 day line for a while now.

    Kite is one of the market's better run REITs, having never posted a quarterly loss during the recession. Analysts are expecting operating EPS of 59 this year, and 53 cents next year. If the 53 cent figure is on target for 2010, the forward-looking P/E is a mere 5.9, in which case the stock's recent revival is justified.

    NCI Building Systems Inc.
    (NCS) is much like Kite Realty in that it's been toying with a breakout above the 100 day line for a while. Given what we know about the chart, however (it stopped giving up ground over the last six months) the buy alarm is being sounded early for NCS as well.

    NCI Building Systems is a bit of a real estate and construction recovery play, though a solid trade even without a decisive recovery. The company manufactures metal products not for houses, but for commercial buildings of all sizes. Though investors hear less about it (as opposed to housing), that market's lull is bottoming too.

    Though not profitable for the last twelve months, analysts believe NCI Building Systems will earn 29 cents in the quarter ending in October....which would be a significant change of fortune. Next year's expected EPS of 50 cents translates into a projected P/E of 6.7 - more than enough to fuel this new bullish trend.

    Stocks: WTSL, KRG, NCS
Back To Small Cap Network's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


More »
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.