Great Trades

Great stock trades based on fundamentals and technical analysis.

Wednesday, February 08, 2006


Strong Sell on REDF

REDF has run up to 33.75 on a big short squeeze, as shorts who look at the fundamentals have jumped on it as a great short, and now are being squeezed as it moves higher. Meanwhile, Jim Cramer has continued to hype it, despite the horrid fundamentals, and momentum traders piled on to drive it higher. We are downgrading REDF to a Strong Sell, as we expect it to move much lower in the long term, after the hype dies down.

Tuesday, February 07, 2006


MMGG and Other Zinc Stocks

Since our MMGG Valuation Analysis, the price of zinc has continued to climb from $.9366 to $1.08 per pound. Zinc stocks have rallied sharply as well. Amazingly, despite its recent rally, MMGG is still significanly behind in price appreciation relative to other zinc stocks, near historic lows in relative terms. It has a long way to go to catch up...

Here's a comparison chart with EZM showing MMGG was 17.86 times EZM's price in 2003, and is only 1.29 times EZM's price now.

Here's a comparison chart with YZC showing MMGG was 13.49 times YZC in 2004 and is only 3.55 times YZC now.

Here's a comparison chart with BWR showing MMGG was 8.3 times BWR in 2003 and is only 1.92 times BWR now.

With them well into their feasibility study with one of the few huge zinc deposits in the world ready to go into production in the next few years, one would think MMGG would be leading the zinc stock performance, not pulling up the rear. Our original report described the reasons MMGG sold down to such a tremendous value level. Add in the silver/copper potential, and MMGG should improve significantly on its relative performance vs. other zinc stocks.

This article discusses takeovers in the gold industry at a very steep price ($1100 per reserve ounce). Given this premium takeover situation in the gold mining sector, it makes sense that Anglo American is selling their gold mining unit and focusing on investing in base metals and other areas. To give you some idea of how undervalued MMGG is, these gold mining companies were bought out for more than 200% of the value of their gold reserves. By comparison, MMGG is currently valued at 1-2% of its zinc resource.

Thursday, February 02, 2006


Morgan Joseph Initiates INCY with a Buy and $8 Target


"Morgan Joseph initiates INCY with a Buy and $8 tgt. They note that the co's lead product candidate, DFC, is currently in Phase IIb development as a once-daily oral therapy for HIV. They anticipate positive results from this study, which should become available in 1H07. They also believe the co's CCR2 program, recently partnered with Pfizer (PFE), could translate into substantial revenues in the form of milestones and royalties.

They believe newsflow from other internal programs, including novel sheddase inhibitors for cancer (currently in Phase I/II dose-ranging studies) and an oral CCR5 antagonist for HIV (Phase I slated to begin in 1H06), will boost investor interest."

INCY reports earnings before the market open on Thursday, February 16. You can access the conference call that morning here:


REDF Sell Opportunity (REDF) reported EPS of 1.23 cents per ADS this morning. Yes, that's 1.23 cents, not $1.23. News wires misakenly ran a headline of $1.23 earnings, which they later corrected. However, while the stock spiked up as much as $3 to $23.85 on the earnings headline, it still is trading over $2 higher in premarket, near $23, despite what we view as a horrible earnings report.

On January 25, REDF was trading at $15. That night, Jim Cramer, on his CNBC show "Mad Money," hyped redf as the Google of India. The stock immediately traded over $20 on frenzied buying.

While India is a huge country, with lots of potential for growth for an internet company, REDF was only able to grow registered users by 18% over the previous year. For a stock trading at a PE of about 450, 18% user growth is abysmal. Google apparently is being aggressive in the Indian market. REDF should be trading well down on this earnings report, not up. Buyers on the mistaken headline will likely be very sorry. (By comparison, our Asian favorite CNTF is trading at a PE of about 16 x 2005 EPS and has a revenue growth rate well over 100% in China, a bigger market than India.)

Despite Jim Cramer's rants about REDF, we at Great Trades are initiating REDF with a Sell rating, for both the short term and the long term.

Wednesday, February 01, 2006


Year-to-Date Performance Update

For January:
The Dow closed up 147 (1.4%)
The Nas closed up 100 (4.5%)
The S&P 500 closed up 32 (2.6%)
The Russell 2000 closed up 60 (8.9%)
The GreatTrades top 5 picks for 2006 closed up an average of 40.91%

Not bad for one month...

Meanwhile, every single short-term trade has been profitable since the inception of GreatTrades.


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Disclaimer: Great Trades may have a position in all or some of the stocks discussed in this blog, but is not paid by any company to promote their stock. Great Trades contains opinions, none of which constitute a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. Great Trades does not provide personalized investment advice.

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