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Ramsburg
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Ramsburg is a seasoned trader with over 17 years of experience trading the US and European Markets, he was the pioneer of Technical Analysis in Portugal (his home country) during the 90's where he used to run Portugal's biggest financial website that he later sold during the dot com bubble, he's... More
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  • Hot Stocks On Radar: SKUL

    Hi guys!

    I'm finally back home after a few days in Marbella (South of Spain), while I was there I've noticed an interesting trend among the young (cool) people: headphones with Skulls, literally all over the place… lol… what does it have to do with Hot Stocks on Radar? well, after a little research, I understood that trend is far more extensive than just Marbella, it's global! I also discovered that Skullcandy is a public company, growing exponentially and already a mid-cap, and by the way… it's hot right now, here it is:

    Hot Stock # 1

    Name: Skullcandy, Inc.
    Ticker: SKUL
    Market Cap: 434M
    Profile: Skullcandy, Inc. develops and distributes headphones and other audio accessories to retailers in the United States and to distributors internationally. Its headphone products include in ear, on ear, over ear, and gaming headphones. The company also offers speaker docks, mobile device cases, apparel, and other accessories. The company markets its products under the Skullcandy and Astro Gaming, as well as 2XL brands. Skullcandy, Inc. sells its products through specialty, consumer electronics, mass, sporting goods, and mobile phone retailers, as well as through Websites and third party distributors. The company was founded in 2003 and is based in Park City, Utah.
    Website: http://www.skullcandy.com

    Chart:
    (click to enlarge)

    • Notes: SKUL is a fast growing company, sales are increasing exponentially, their products are high end / high margin, and it's already (quite) profitable. I'm not going deep on fundamentals, but SKUL trades with a 20X P/E ttm, estimates are probably conservative and show only 11X P/E FY13 which is almost ridiculous if you consider it's a true growth stock (with actual past growth near 50% CAGR) and prospective growth around 35% CAGR… zero long term debt and healthy current ratio…
      From a technical perspective, the sign is not yet in place despite a few hot symptoms, volume is building up during the past weeks, and SKUL may attempt a breakout soon, if that happens (near 16.50$) the theoretical projection will stand around 24$, there's a few resistances along the way and probably will be a throwback during the process, so there's lots of ways to play this… I'm already holding a small position on this one, got to buy first and ask questions later ;)

    Happy Trading Guys!

    Ramsburg

    Disclosure: I am long SKUL.

    Aug 28 1:45 PM | Link | Comment!
  • GameSpot Under The Scoop

    This is our first covering analysis on GameSpot (NYSE:GME) so I'll start as usual with my detailed Technical view on the stock:

    The Short Term annotated chart:
    (click to enlarge)

    Primary Trend: Bearish Down Trend
    GME is riding a Bear Market since late 2007, down from the 60$'s to a recent low near 15$. The Downtrend is well defined with consecutive lower highs and lower lows, leading moving averages retain a bearish setup with the 50-ema trading below the 200-ema, making this a very solid trend from a long term technical perspective.
    I'll remain long term bearish on GME until it trades above ~21.20$ where I've noted "Inversion Trigger" on the chart, this price would potentially invalidate some of the bearish thesis and would most likely generate a true technical inversion to the upside on the long term time-frame.

    Downside References:
    - I've noted the "downside #1″ near 16.80$, this is approximately the recent breakout zone and also the short term ascending support level, so basically it defines the short term downside potential expected from short term consolidations or simple market noise.
    - On the 15.30$-15.50$ range I've noted the "downside #2″, this is the recent lows and should act as a support level in case "downside #1″ fails to sustain GME.
    - Near 15.00$ I've posted a "Danger Zone", this would post a new low and would expand the downside further south giving strength to the Long Term Bearish thesis, I could project further downside references but I won't do it at this time.

    Upside References:
    - CME recently broke out it's mid term descending channel, this process is a good sign and it puts an upside projection @ 19.80$, currently in-play, I've noted "Breakout's Projection - Upside #1″ there since this is the most likely area of expansion for the current setup (note: the breakout itself and today's run were both made under heavy volume… that gives strength to the process).
    - As stated before, near ~21.20$ I've noted the "Inversion Trigger", this is not a resistance by itself and should not be interpreted for short term purposes, but this zone would potentially end the Bear market opening the upside to further expansion.
    - Above 25.00$ is the "upside #2″, it looks like a long shot from here, but if the primary trend turns green it would be the first area of reaction expected on the upside.

    The Long Term chart with trend annotations:
    (click to enlarge)

    The long term chart leaves no doubts about the Bear Thesis (from a Technical point of view), GME had a huge deep in 2008, started some kind of lateralisation until mid 2012 giving some kind of hope, but the recent drop into new lows putted the Bear Scenario once again very alive…

    Quick Fundamental View:
    GameSpot used to be a (NASDAQ:FAST) Growth Stock until 2008, and that's why the stock jumped from 3.75$ in 2003 to above 60$ in late 2007, the price drop started before the fundamental stalling because the market works just like that, anticipating things, especially when a traditional growth stock stops growing…
    Currently GME's market cap is 2.34B, it trades with a low P/E of just 7.71x ttm, the Balance Sheet looks clean with acceptable Current and Debt/Equity ratios and zero long term debt. The problem here is clearly growth related, GME has to have growth in order to trade at higher earning multiples like it did in the past, and right now earnings have staled with EPS up and down between 2.25$ and 2.41$ in the last 4 years without a clear growth trend.
    Although there maybe a light at the end of the tunnel, estimates give us some prospects with 3.14$ and 3.35$ for FY13 and FY14, if that comes true I doubt to see GME trading at the current low multiples, and make no mistake, a simple multiple adjustment could potentially mean a big move in share price… I'vent dig much into it, but it's enough to identify at least a potential catalyst in-play…

    Final Notes:
    From a technical perspective GME is on Bear Market and I personally avoid trading stocks with a primary down trend. Although I've identified a "inversion trigger" at 21.20$ that if printed could change my mind about it. Currently there's also a breakout projection in-play near 19.80$, that's a bit more near that inversion trigger, so there's hope… On the fundamental front, GME suffers from a much common problem among ex-growth stocks: the lack of growth… on the other hand, estimates point to considerable growth starting this FY and beyond, so this is probably a nice turnaround play to keep under the radar.
    I wouldn't buy it now, but I wont have a problem buying it higher with a more solid technical and fundamental setup.

    Happy trading guys!

    Ramsburg

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Aug 27 12:39 PM | Link | Comment!
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