Baltia built a Blog

Check out Baltia Air’s Blog:

Baltia Weblog

They are staying positive about FAA approval and have even announced plans for an upcoming innaugural flight (however there’s no date set). Cool blog though. Seems like it will help me keep up with what’s going on over there.

If this FAA approval ever does happen, Baltia is gonna make me a nice profit.

What else has been happening? Not much. The U.S. economy is in horrible condition. Of course I posted that it was crashing before Wall Street realized it and I prepared my portfolio, so I’m good. Just annoyed that we’re on hold while the world economy adjusts itself. At least they’ve started arresting the assholes that dreamed up this subprime idiocy (see Bear Stearns).

Now I’m just riding out the storm, doing a little buying of my favorite stocks as they hit bottoms (like CBTE), and waiting for a recovery. Analysts estimate that will happen in late 2009. So I guess my portfolio play is on hold awhile. Glad I don’t run a hedge fund! haha

 

CHCG 1st Quarter Results

China 3C Group (CHCG) posts 1st quarter results. Down as expected..

Mr. Zhenggang Wang, Chairman and Chief Executive Officer commented, “While the first quarter was clearly a challenging period for our Company for a number of reasons including rising raw material costs, increased competition, and the severe snow storms in January that decreased store traffic and disrupted our supply chain, we were pleased to have increased our net income margin and believe that the remaining three quarters of 2008 will be more productive for our business. We were pleased to maintain Q1 general and administrative expenses as a percentage of revenue on the same level as a year ago. This is a result of our strategy for 2008 of improving efficiency and profitability per store as opposed to pursuing rapid expansion as we have in the past.

“As part of our strategy to improve profitability per store, we have decided to implement several new, higher margin concepts at our stores, including providing leasing services for products we sell, providing after sale equipment maintenance, working with a pre-owned 3C product retailer to roll out a second-hand 3C product repurchase service, and working with manufacturers to roll out zero-inventory consignment sales which can, among other benefits, decrease our inventory requirements.

read more here

It went up 5 cents on the news. I’m still long…

ABDS on the Move

I got a Yahoo! Alert today letting me know that Allegro Biodiesel (ABDS.OB) is running. Went up 80% today. I didn’t see any news bulletins for them, so I’m not sure why its moving. I bought at .14 so its gonna need to move a little more for me to be happy..

Scared Rabbits

I know, not much posting going on here. That’s because there’s not much trading going on. I’ve been watching a full board of stocks every day and they aren’t moving.

I see momentary rises but they are always quickly knocked down by profit takers. Looks to me like traders are so panicked they’re afraid to keep their money in the market. Scared rabbits!!

One of my clients mentioned that the profit taking could be due to US tax season and people need their cash to cover gains made last year. Anything is possible.

I saw nice action on a couple of my picks, CBTE hit a nice high and CHCG is mid-way through a nice run-up (probably cash out late summer or fall).

My other penny stocks are just sitting around though. People keep asking me if my position has changed and I’m still long on these:

• AMHI – reduced their costs and started turning a profit. just waiting for positive financial news.
• IFLI – only long because its cheap. its a good product but definitely risky. they have tons of press releases and news coverage, so growth will depend on profit.
• ABDS – strong company, newsworthy product line. it needs to start making a profit and the stock will run. right now though i’m not sure the company knows how to make a profit.
• BLTA – when oh when will the FAA approve? this one is risky but could explode if they get their approval. seems like the company expects it, since they even rented part of a terminal at JFK airport. FAA approval will mean 2 or 3 points. FAA denial will bankrupt the stock.

So, in summary, I haven’t been trading. Just holding my positions and waiting for these furry freaks to calm down and start investing again.

Oh yea, and its a great time to buy cheap houses if you are in the market. American house prices are down 15-30% from last year. Will probably be a few years before you can flip them though, since no banks are issuing mortgages anymore. Have fun!

American HealthChoice

A true penny stock, the stock hasn’t moved much in the last year, but it may push high in 2008. American HealthChoice (AMHI.pk) is a pink sheets stock. I bought a bunch of shares of this stock 2 years ago, saw it take a wild ride, then dumped it.

I decided to look at it again, and their recent news looks promising.

The Company has reduced its clinics to a core of six profitable clinics that should bill approximately $5 million in 2008. The clinic operations will continue to contribute profit and will be cash positive in the foreseeable future. AMHI continues to reduce corporate expenses to less than $400,000 annually.
http://www.americanhealthchoice.com/articles.cfm?art_ID=65

The financials aren’t updated with the SEC due to a lack of competence by their auditor. That’s also explained in the article above.

They are awaiting FDA approval for a new device that allows doctors to remotely monitor patients via IP. If that approval comes, news chatter will be boosted for the stock. 

If all they explained in the report is true – new device approved, profitability, SEC reports submitted – this penny stock could run soon. At these prices, it doesn’t hurt to be invested.

SELL CBTE

If any of you got into CBTE when I recommended it a few weeks ago – at its bottom – its time to sell it. The stock surged today after a couple positive news stories broke:

• Venturepharm Laboratories Becomes a Strategic Investor and Joint Venture Partner of Commonwealth Biotechnologies, Inc.
• Exelgen, Ltd, a Subsidiary of Commonwealth Biotechnologies, Inc., Announces Two New Major Drug Discovery Collaborations

Today’s high hit 2.97 (so far), which is more than a point higher than yesterday’s close. My shares sold automatically at $2.80 – 90 cents higher than I bought them a couple weeks ago.

The news just gave investors a reason to look at CBTE and what they found is all good. Great growth, great financials, great management. Now people are buying, so I hope you are selling.

Fight Night for Wall Street

Combine the flashy showmanship of the WWE with the gruesome full contact fight style of the UFC and you get the IFL – International Fight League (IFLI).

The International Fight League is an American mixed martial arts (MMA) promotion billed as the world’s first MMA league. Instead of the established norm for MMA events, where matchups are strictly one-on-one affairs, each IFL card is a showdown between two camps of at least three fighters, each fighter fighting one match against another in the opposing camps. from Wikipedia click here

Add that up and its a very exciting fight league with the potential to bring in lots of fans for every “camp”, however the IFL has yet to find its following. The UFC has been ingrained into American media through Spike’s obssesive event coverage and reality TV show. WWE is loved in nearly every trailer park in the US, with tens of thousands packing stadiums every week to watch live (fake) fights.

The IFL is televised in the U.S. by Fox Sports Net & MyNetworkTV, and several International networks – Malaysia Television (announced March 4, 2008), HBO Latin America, MBC in the Middle East and parts of Africa, Star TV in Asia, CanWest Global and Fox Sports Canada in Canada, EGO in Israel, TV4 in Sweden and Armed Forces Television.

The stock had its IPO in November 2006, through a merger with Paligent Inc., and quickly rose to over $13 after being touted on CNBC and 60 minutes. Its been in freefall ever since to today’s current price of 7 cents. Revenues have grown 68% since the IPO and their quarterly net loss was cut in half in Q3 2007 compared to Q2 2007 (from $6.8 mil to $3.6mil). Cash climbed during the same period from $2.5 million to $9 million.

See Quarterly Balance Sheet & Quarterly Income Statement

With a declining quarter-to-quarter loss and at least 3 quarters of cash in the bank, the question is, will this company see a profit before it runs out of cash?

Billionairre Mark Cuban thinks its a goldmine. He’s decided to show fights on his network, HDNet. You can view videos and read more about it on No Holds Barred.

You can read a Seeking Alpha article about the struggling MME industry here: World Wrestling Entertainment’s Mixed Martial Arts Potential

Also visit International Fight League homepage

There’s a lot of volume the last couple of days, indicating “something” is going on. The most recent quarterly report (Q4 07) and 2008 annual report will come out in about a week. If either shows a profit, this stock could climb quickly (at least enough to profit from 7 cent shares).

China 3C Group

This OTC company is a huge retailer and distributor of electronic products in China:

China 3C Group, headquartered in Hangzhou City in China’s Zhejiang province, retails and distributes a wide range of consumer electronics, including cell phones, MP3 players, cameras, DVD players, stereo systems and household appliances. China 3C Group also distributes business electronic products such as FAX machines, computers and land line telephones. Four subsidiaries, each offering distinct product lines, retail a broad range of consumer electronic products. These are sold through more than 800 retail outlets, all but one of which are located on the premises of third-party supermarket chains. China 3C’s core markets are the city of Shanghai and the eastern coastal provinces of Jiangsu and Zehjiang, among the most densely populated and fastest growing in China. Around 70% of the company’s revenue is generated by its retail business. All but one of its retail units consist of 800+ “stores-in-stores” operating on the premises of supermarket chains. China 3C plans to expand significantly within its core markets, increasing the number of its stores to 2,000 by 2008, and 4,000 by 2010.

source: Taglich Brothers

Considering the booming middle class economy in China, anyone selling electronics is a great bet. So, let’s examine this thing further.

According to Seeking Alpha, the company had 86% growth in 2007 but has hit a stumbling block in the first quarter of 2008. That stumble being huge snowstorms in China.

The company reports that sales for 2008 expects to be lower by up to 20%, but I don’t think they are accounting for the rising middle class growth (read more in WikiPedia or Escape Artist) or the upcoming Olympic Games.

Their stock price is tumbling, as bad news usually knocks a stock down, but it looks like the bad news is merely paranoia. China 3C (homepage) is one of the strongest electronics retailers in a booming economy.

Looks like this stock is a bargain. The stock dropped 22 cents today to $1.30 (CHCG.OB) and dropping. The 52-week high was $8.50. I’m going to try to get in under $1 and see what happens from here to the Olympics.

TIBET RIOTS

One note about the big China news this week — Tibet. 50 years ago Tibet was a small, very poor rural country on the outskirts of China. China annexed Tibet in order to help bring that country economic growth and improve the lives of its people. GDP, healthcare, and sanitation in the country have all improved dramatically, yet some Tibetans riot (mostly monks who don’t care about the economy, healthcare or sanitation).

This is a small news story, considering how tiny Tibet is compared to the size of China – 1.3 Billion residents. The world’s media blows this story out of proportion because they are trying to find ways to knock down this rising giant (no one likes to hear good news when yours is all bad). It won’t happen. The Olympics will go as scheduled and China’s growth will continue to outpace the rest of the world, fueled primarily by the massive amounts of products it exports to the West.

If you want to hurt China, stop buying all your crap at Walmart. Have you ever noticed that 90% of what Walmart sells is made in China? Everybody likes the cheap prices of products coming out of China, but they hate the country. Seems like more hypocrisy to me.

Maylasia & Palm Oil

I’m working on a new penny stock post, so I’ll make this quick.

CNBC Asia had a huge story today on IOI Group in Malaysia (homepage). The story was about how the group is buying up all the palm oil plantations in Malaysia and Singapore, which is coinciding with a rising palm oil price. Demand is far outpacing supply of palm oil and making this company rich.

CNBC Asia Interview video with IOI CEO

They trade as IOICORP on Bursa Malaysia. If you have a broker, ask them about it, or you can go through CIMB, JPMorgan, or UBS. Of course, unless you have millions to invest, CIMB is probably the only place that will return your call. UBS might be okay too. Not sure what their account limits are.

IOI’s chart is HERE.

If you are a foreign trader, try IOI Group.

What’s up with Drugstore.com?

I was in love with Drugstore.com (DSCM) about this time last year. While hunting for undervalued stocks using the MSN Stock Screener I noticed that the stock was low compared to its 52-week high. I’ve found many cheap stocks using that formula – 52-week high greater than $5, current price under $2 (or $2.50 & $4 I think was the case here).

I bought the stock last year in early Summer 2007 at $2.45 because I noticed the stock always climbs in the second half of the year and then crashes. I guessed correctly that it was about to climb, cashing out a few months later when it reached $3.40.

I always thought the stock had strong visibility, which is crucial for a dotcom, and I even ordered some bath products on their site before investing, just to make sure the company wasn’t a complete mess.

This year, however, I’m unsure of this company.

The price fell after the Q4 peak just as it does every year. Right now its sitting at around $2.30. My worry is that this year it won’t climb back up.

They just changed out some of their key company executives, they announced a net loss for yet another year, and the company CEO is more concerned with being appointed to the New York Times board.

Key executive changes happen, but what kind of web company operates in the red these days? Its not 1999 anymore. How hard is it to make a profit in online retail? Of course, I know the answer. One of my long-time web clients, 1-800-luggage.com, went out of business last year after being squeezed off the web by major industry players (like eBags, who strongarms their vendors into sub-wholesale prices). Just goes to show, profit is crucial to survival.

However, Drugstore is called the #1 online Health and Beauty site. Their Alexa ranking is around 5,000, which puts it at the top of the web. These should be positive things for profit. Their annual report just came out today showing they had a 10% increase in sales. It didn’t say how much more these new sales cost though. If they are still in the red, I’m guessing their cost per sale is rising faster than their increase in sales.

Zacks.com bumped the stock up to a BUY today, which helped raise it a few pennies.  They say “DSCM shares trade at a discount.” Read here:

DSCM shares trade at a discount to its industry peers based on price-to-sales and price-to-book ratios. Note: the company has no earnings and, thus, no price-to-earnings multiple. In our view, the company’s lack of profits and difficult competitive environment warrant a discount valuation relative to its peers. That said, with the company moving closer to becoming profitable, its stock should still be able to trade at a price-to-sales multiple of 0.9x our 2008 sales estimate. We reiterate our Buy rating on the stock. We also maintain our $4.50 target price, which is derived using a price-to-sales ratio of 0.9x.
(more here – Discount Makes DSCM a Buy)

One nice thought that is being kicked around is an acquisition of Drugstore.com by eBay. I don’t know if this is just rumor, but it would obviously turn a buy into a nice return.

Drugstore.com stock has performed well for me in the past. They are probably just seeing some rough days. In the end, the financials really don’t matter because investors seem to buy every retailer in the 3rd quarter. As long as Drugstore.com doesn’t do anything completely stupid, the stock profits will come again this year.