Under the Radar China Breakouts – Harbin Electric (HRBN), Shengdatech (SDTH), Fushi (FSIN)

December 18, 2007 Tate Dwinnell 2 Comments

It’s been a little while since I’ve taken a look at the SelfInvestors Breakout Tracker for a review of the top breakouts. It’s not a great time to be pursuing breakout stocks with aggression, but in this report I hope to highlight a few potential leaders if this market turns around. I personally initiate positions in breakout stocks in difficult markets, but they have to be the best and showing tremendous accumulations. I limit my risk by initiating smaller positions and take profits and cutting losses much sooner.

In reviewing the breakouts of the past two weeks, it’s clear that it’s still a difficult market for leading stocks (most stocks for that matter). Just 20 breakouts occurred with ONLY 6 finishing the period with a gain. On the bright side only Cbeyond (CBEY) and Shengdatech (SDTH) have losses of 8% or more. So while most leading stocks aren’t providing big gains, they aren’t exactly falling apart quite yet either.

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Did you know that you can get access to the Breakout Tracker all day everyday and keep on top of fresh breakouts in undiscovered companies for a measly $19.95 month! You can! Get all the details here.

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You may click on the image below for a larger view to see the top breakouts of the past 2 weeks. These are breakout stocks with a total rank (fundamentals + technicals) of 50/60 or above. Have a look at the Breakout Center tutorial for a complete rundown of what the data in the table indicates (some is not self explanatory such as the DI scores)

There were a few big winners to tell you about, most of which are China based but another that’s considered the Ebay of Latin America, Mercadolibre.com (MELI). Once it broke out from its first base since going public, it was off to the races and is currently up 25% from the breakout point. This is why I don’t think it’s a bad idea to dabble in the best of breed breakouts.

There were four big China breakouts over the past few weeks, none of which in companies most are familiar with. These four could potentially be the next big winners coming out of China so are worth keeping an all eye on. All 4 are money makers with very good looking charts, including Solarfun Power (SOLF) which I won’t highlight in detail because it’s way too extended from a proper entry point (up 35% from the breakout point!) and not quite as under the radar as the other 3/

The highest rated breakout (score of 52/60) of the period was Harbin Electric (HRBN), a Chinese manufacturer of motor products and systems. You can see in the chart below that that HRBN broke of a base on base patternn in early December and volume continued to spike higher indicating tremendous demand. I see this pullback to the pivot as another opportunity to get in. I’ll certainly be dabbling a bit more down here.

Shengdatech (SDTH) is the 2nd highest rated breakout of the week and just so happens to be another China play. SDTH is a China nanotech play. Bet you haven’t heard that buzzword in awhile! It too broke out of a base on base pattern just a few days ago but doesn’t quite have the buy conviction behind it that HRBN does. I’m looking to get into SDTH if it pulls back to the 50 day moving average around 8. Considering the run it’s had I’m just not willing to put money to work up at these levels.

Fushi International (FSIN) is the 3rd "under the radar China play" I want to highlight today. The maker of electric wire products and components has been showing nothing but accumulation since it was listed on the Nasdaq just a few short months ago. Like HRBN, volume levels indicate tremendous demand, so any pullback to the breakout point (or pivot) around 18 would provide an entry point.

Disclaimer: I am personally long HRBN and looking to get longer.

IPO's

Gushan Environmental Energy (GU) Leads the IPO Pack

December 17, 2007 Tate Dwinnell 2 Comments

This is the last week of IPO’s before the holiday lull and probably won’t see them popping up again with any frequency until around the middle of January. Another hot China IPO hits the street this week on Wednesday along with a couple other decent looking IPO’s

1. Gushan Environmental Energy (GU): Chinese biodiesel maker Gushan Environmental Energy produces nearly 200,000 tons of this renewable fuel per year out of vegetable oil, animal fat, and recycled cooking oil. The company buys these raw materials from local vegetable oil and waste management companies, then once processed, the biodiesel is sold directly to marine vessel operators, petroleum wholesalers, and retail gas stations for use in boats, buses, trucks, generators, and other engines. Sales of biodiesel account for more than 80% of Gushan’s revenues, while the remainder comes from selling biodiesel’s by-products, such as glycerine, to food and drug companies. This is a big company making a whole lotta money. Trading is expected to begin on Wednesday.

Note: Chris Perruna has a nice analysis of Gushan Environmental (GU)

2. Orion Energy Systems (OESX): designs, manufactures, and installs energy management systems that include HIF lighting, intelligent lighting controls, and its Apollo Light Pipe product, which collects and focuses daylight without consuming electricity. The firm estimates its products can help cut customers’ lighting-related electricity costs by up to 50% and reduce related carbon dioxide emissions. Since Orion’s inception in 1996 it has installed lighting in nearly 2,000 North American commercial and industrial facilities. Clients include such companies as GE, Kraft, and OfficeMax. Trading set to begin on Wednesday.

3. Milestone AV Technologies (MLS): develops and markets a variety of audiovisual and display equipment such as projector and flat panel display mounting, as well as audiovisual furniture and accessories. Established in 2003, Milestone AV Technologies serves more than 4,500 clients, including consumer electronics retailers (Best Buy) and home theater dealers (Abt Electronics). The company markets its products under the Sanus, Chief, and Vuepoint brand names, among others. Third-party suppliers in China, Malaysia, New Zealand, and the US make most of its products. Trading set to begin on Wednesday.

Weekly/After Stock Market Review Archives

Stock Charts Are Leading Indicators

December 16, 2007 Tate Dwinnell 2 Comments

In my last weekly report I urged you to Not Be Greedy and take the gift as the indices pushed higher into resistance levels with little conviction on expectations of another Fed rate cut. Sure, a 50bp cut may have propped up the market for a bit longer, but the bulk of the rate cute hopes were priced in already. That was your cue to take some profit and think about adding some short exposure.

As it turned out, the Fed didn’t surprise anyone by hitting the homerun with a 50bp cut (maybe due to the much hotter than expected inflation readings on Thursday and Friday), but had another trick up its sleeve, which proved to temporarily save the day and inject more liquidity, but more importantly a bit more confidence that the Fed will do anything to save the mortgage industry. However, confidence doesn’t last long and more liquidity doesn’t always work, so this market still finds itself mired in a state of uncertainty both fundamentally and technically. I’m not an economist and prefer not to spend precious hours debating inflation, recession or if the Fed is doing the right thing. Those are all LAGGING indicators anyway. Remember, LOOOOONNNGGGGG before those calling for a recession are proven right, the stock market will have already tanked and WE will have already bagged big profits on the short side and looking to get long again.

With that said, I turn to the ONLY leading indicators available. The charts. What are they telling us? Generally, they tell us what the big fellas are doing. The Banks, the Pension Funds, the Mutual Funds and increasingly so, the Hedge Funds. Actions speak louder than words and the big fellas reveal their actions in the price and volume movements.

Unfortunately, there are times when the charts indicate more uncertainty. Just a few days ago, there was much more certainty that the market would drop. It was oversold and buy volume was diminishing as overhead resistance loomed. Now that we have pulled back some, I’ve become a bit more neutral but still giving the bears the upper hand. The onus is still on the bulls now.

In the Nasdaq below we see that the first, steeper, downward trend was cleared and we are now pulling back to what is now a new support levels (around 2600). Despite the distribution (institutional selling) on the Fed rate cut day, the selling has actually been fairly orderly. Notice that there wasn’t much selling intensity on Friday despite the big price move down on those higher inflation numbers. I would have expected to volume to be more severe. It was not, so for bulls that’s encouraging. More orderly selling, could very well set us up for another run at key resistance levels but like I said I’m not making large bets on that just yet. I continue to sit on a sizable cash position and hedge with short positions.

The Dow also cleared a downtrend, but pulled back below that level late in the week, so now faces stiff resistance of two downward trend lines (in black) and the 50 day moving average (blue). Until the Dow can clear those resistance levels (above about 13700) some big volume behind it, I will not get aggressive on the long side and continue to hedge with short positions.

The financial heavy S&P of course remains the weakest of the indices and just barely nudged above its downward trend line before failing and taking out support of both moving averages. At this point, I would certainly put the odds of testing those November lows higher than the S&P breaking out above the downward trend with heavy volume.

While I won’t call this a bear market just yet, the bears continue to exert more control with each passing week. Play accordingly, play cautiously.

::: Model Portfolio :::

** This section will now appear as a separate report to be published on Wednesdays.

Would you like to receive buy and sell alerts within minutes of each transaction of the Model Portfolio? You can receive these along with ALL of the tracking tools and reports with the very popular Gold membership. Don’t delay, get started today and join me for many more highly profitable months here at SelfInvestors.com.

::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Home Health Care: 3.90%
2. Multi Media & Graphic Software: 3.65
3. Networking & Comm Devices: 2.40%
4. Semiconductor Specialized: 1.75%
5. Cleaning Products: .75%
6. Oil & Gas Drilling & Exploratoin: .35%
7. Metal Fabrication: -.20%
8. Chemicals – Major Diversified: -.20%
9. Building Materials Wholesale: -.25%
10. Publishing – Periodicals: -.40%

– Top 10 Worst Performing Industries For the Week –

1. Major Airlines: -12.00%
2. Silver: -11.95%
3. Banks – SE: -11.60%
4. Lodging: -11.00%
5. Auto Parts Stores: -10.85%
6. Home Furnishing Stores: -10.50%
7. Toy & Hobby Stores: -10.50%
8. Surety & Title Insurance: -10.00%
9. REIT – Hotel/Motel: -9.90%
10. REIT – Residential: -9.80%

– Top 5 Best Performing ETFs For the Week –

1. Templeton Russia and E. Europe (TRF) 8.40%
2. US Oil (USO) 4.10%
3. Powershares Clean Energy (PBW) 3.35%
4. Ishares Commodities (GSG) 3.15%
5. Morgan Stanley E. Europe (RNE) 2.30%

– Worst 5 Performing ETF’s –

1. Herzfeld Caribbean Basin (CUBA) -16.70%
2. Ishares China (FXI) -9.45%
3. Templeton Dragon Fund (TDF) -9.20%
4. Ishares Taiwan (EWT) -8.80%
5. Korea Fund (KF) -8.75%

::: IPO’s Worth Watching for This Week :::

This section will now appear as a separate report on Mondays.

::: Upcoming Economic Reports (12/17/07 – 12/21/07) :::

Monday:         None
Tuesday:       Housing Starts, Building Permits
Wednesday: Crude Inventories
Thursday:      GDP Final, Chain Deflator Final, Initial Claims, Leading Indicators, Philly Fed
Friday:            Personal Income/Spending, Core PCE Inflation, Mich Sentiment

::: Upcoming Notable Earnings Reports :::

Tuesday: Goldman Sachs (GS)
Wednesday: Oracle (ORCL), Heico (HEI)
Thursday: Research in Motion (RIMM)

::: In Case You Missed It – SelfInvestors Blog Entries of the Past Week :::

1. Offshore Crude Oil Exploration & Production Perspective

2. Best IPO’s Trading This Week – Xinyuan Real Estate (XIN), VanceInfo (VIT) & More

3. A Classic "Sell the News" Result to Fed Rate Cut; Stock of Day – Synchronoss Technologies (SNCR)

4. Barry on Navigating the Emotions of Stock Options Trading

5. Stock Market Model Portfolio Review 12.12.07

6. Preventing Online Identity Theft With Insurance From LifeLock

Money Saving Tips

Preventing Online Identity Theft With Insurance From LifeLock

December 14, 2007 Tate Dwinnell 7 Comments

It’s time again to deviate a bit from the de facto stock market speak du jour. I want to discuss Identity Theft. I know, it won’t happen to you. We all tend to think that way. BUT it can and COULD happen even to you. Identity theft is something I’ve been increasingly concerned about ever since I noticed multiple charges on my credit card from companies I have never done business with. This came just a few weeks after my brother had checks stolen from his mailbox. How the thieves were able to retrieve my credit card info I will probaby never know, but it’s unnerving to say the least. What other info do they have? I was forced to close the account which was a minor headache. Identity theft is no minor headache. It can ruin lives, but the good news is that the growing problem (now 10 million identity theft victims a year!) has created some solutions.

Government is starting to step in and force the credit bureaus to offer a credit freeze. According this article "Consumers can have a sigh of relief as of November 1st, 2007. All three credit bureaus gave into security freeze options for all states, including the 11 states without laws, before they all forced it by mandatory laws.

Now that the security freeze is available to everyone, here is how it works: Once a security freeze is desired a consumer needs to write a letter to each credit bureau and pay a fee of about $10 for each bureau. Once the freeze is in place, it prevents the big three credit bureaus from releasing information without the consent of the consumer.

A consumer can allow access to their credit report to either a specific business or organization, or they can choose a specific amount of time they want their credit report to be available without authorization. When a consumer freezes their credit report they are given a unique PIN that is used to lift the security freeze. Lifting a security freeze is also referred to as thawing your credit report."

Writing and paying each credit bureau for the freeze seems like a hassle to me.

Perhaps the better solution is going with a company like LifeLock which automates the process of protecting your identity, not to mention putting a halt to all that junk mail. WallStrip founder Howard Lindzon is an investor and I first read about this service at his blog. You can use the discount code "wallstrip" for a small discount. I personally have signed up and the $100 bucks a year is a small price to pay knowing I’ll never have to worry about identity theft again.

The LifeLock service does the following:

1. Insures you up to 1 million dollars in case of identity theft
2. Sets fraud alerts so that you are contacted when new lines of credit are requested
3. Provides credit reports
4. Removes your name from junk mail lists (worth the cost right there!) in addition to pre-approved credit card offers
5. 24 hour support

There are a couple other companies out there offering similar services but LifeLock appears to the best of the bunch. I highly recommend checking them out and protecting your identity.

Additional Resources:

Federal Trade Commission – Identity Theft
Department of Justice Identity Theft
Non-Profit ID Theft Resource Center

Model Portfolio

Stock Market Model Portfolio Review 12.12.07

December 12, 2007 Tate Dwinnell Leave a comment

I used to provide the weekly Self Investors Model Portfolio review in the weekly market reports but will begin publishing these every Wednesday night as a stand alone post. That should help ease the work load on those Sunday afternoons when I’d rather be on the couch with football and a few beers.

The last review of the model portfolio was a week and a half ago as the market was reaching the tail end of an oversold bounce. Since that review, I haven’t really deviated from my plan of sitting on a sizable cash position (currently at 34% of the portfolio) and hedging long positions in leading stocks with a few short positions. I did add a decent sized core position in Microsoft (MSFT) to go along with existing core positions in Google (GOOG), Cisco (CSCO) and Mastercard (MA). Core positions are stocks I generally hold for longer periods and add to the position on the dips. In addition I initiated a position in one of those high flying stripper stocks looking to score another round of big gains. Both RICK and PTT were traded for gains of 54% and 19% in October and my current postion in PTT is already up another 18% in just a few days. To hedge these long positions, I’ve been playing the short side as well and initiated two new short positions since the last review. One short position in SBAC was just closed this afternoon for a quick 10% gain.

As I’ve been mentioning in recent months I’ll continue to tread lightly as long as this market remains volatile and unpredictable. It’s a strategy that has certainly paid off in the latter part of the year. If you’ve been a reader of the blog for awhile you might remember that the Model Portolio struggled to keep up with the S&P in the spring and part of the summer as I missed much of the rally. However, I stuck to what has worked for me and didn’t lose confidence in what I was doing. I can’t stress how important that is.

Despite sitting on nearly 50% cash for almost the entire year and NEVER using a dime of margin, the Model Portfolio is still up over 6 times the S&P with a year to date performance of right at 30% (a rise of 3% in the last week and a half). Just goes to show that you don’t need to take on excessive risk to generate outstanding returns! You have to pick and choose your time to get aggressive and leverage with margin. My technical analysis this year just never provided a clear entry point to get overly aggressive. There will come a time again when a fresh bull market begins and I have the opportunity to double my portolio by leveraging with margin but that time is not now and probably won’t be for at least another couple years. That’s OK, I’ll gladly take the 30% returns until that time comes.

Inspiration

Barry on Navigating the Emotions of Stock Options Trading

December 12, 2007 Barry Brush Leave a comment

2DIME’S INVESTOR NOTES

Wednesday, December 12th, 2007

“You Have the Option to Remain Silent.”

"Any Emotion You Display Can and Will Be Used Against You On the Trading Floor."

so…. “SNAP OUT OF IT!”

I have heard it said that "Trading is as much psychological as it is skill." I personally think it is much more psychological than skill because much of the skill consists of being able to control the emotions which are along for the ride on every trade.

If you trade for a living like I do, you understand full well the psychological ups and downs which accompanied last months 10% correction. Control of them was the key to eking out a pay check.

As for myself, an ex-fighter pilot, having graduated from a career with a commercial airline, I’m supposed to have superior skills in emotional stability and control. I used to get paid to take hundreds of people from point A to point B without ever needing to see the ground or the sun, and often two or more hours from the nearest landfall. If I preflighted the aircraft and properly planned for the flight, i.e. made sure I had enough gas, and precisely followed a checklist from start to finish, I always reached my goal; 100% of the time. Well, .. maybe not 100%, but close.

In my new career as an options trader, the trades I make are not exactly like that; but one can draw a tight parallel to the emotion involved. The checklist I run now before I place a trade runs something like this. I pick an equity that is fundamentally above average. I preflight it to verify it will take me to my planned destination. Earnings and Sales Growth, Accumulation and Distribution, DELTA and then, just like every trader I know, I make my pick jump through a series of technical hoops based on price pattern, position and volume before pushing the thrust levers up and putting my money on the runway in harms way.

Usually all goes well and the flight to prosperity continues; but every once in a while a malfunction occurs, usually a direct result of an overlooked piece of analysis known as a glitch, a screw-up or simply a mistake. In the cockpit, we used to say if you screw something up unscrew it as soon as possible. When things go wrong what can we do? We bite the bullet. We accept responsibility and take the appropriate action. Exit the trade to preserve capital. Then, we reflect on the cause so as to avoid it in the future.

As simple as that? What about that emotional fog of doubt that lingers? What do you do with that? What do you do when you start talking to yourself and beating up on yourself. Thinking to yourself, Oh! I screwed that up, or You dumb a–! Or why did you do that? What will he/she think of me now? I was really stupid to gamble that way!

Unfortunately, these thoughts can only be escaped through experience and the emotional battles you win over time. My advice to new traders is to never ever think badly about yourself. You are your own best friend and the best asset you own. You are an excellent money manager! And well, you’ll be rich! Nothing else is acceptable.

If it were simple ………;but it’s not, is it? Those things called emotions; Greed, Fear, Hope & Doubt are always lurking. They fluxuate, expanding and contracting over the life of any trade. They must be recognized and controlled to achieve success.

I think that trading options has the potential to be a little more emotionally charged than equities. Options have an innate factor of increased leverage. Their spirit or volatility colors them a little brighter than stocks. Their rapid price movements and fluxuations can “whip” an equity trader in and out of trades with regular frustration. While a 7% stop loss on a stock may be sufficient, a mental 30%-50% stop is often necessary in order to stay with an option trade to maturity. The mental stops I use require continual price and volume technical analysis of the underlying equity. A 5% decline in the stock price can mean a decline to 0% in a near term option. Conversely, a $2.00 move up could result in a 40% – 100% gain. I admit to watching some of my trades go to 0% only to bounce back to a 400% gain. Its pretty exciting stuff; but it can also be a trying, stressful, emotional ride.

I use a couple of tools to put the emotional beast in its place. First, I compartmentalize my emotional thoughts by recognizing them. Then, I substitute or overlay them with information I have learned through my training and education. In Pilot speak, its like flying a Category III instrument approach, where you don’t “know” you are landing until you feel the wheels touch down. Its just like trading where you rely on your knowledge, your indicators and memorized procedures to get the job done. Educate yourself and trust your knowledge. I often reassure myself by saying: “I am an excellent money manager”.

I have to confess that some times those negative thoughts are very resilient. When I started trading, I had to come up with a simple way to combat them and add emotional stability to my trades. I adopted a short cut I call: “SNAP OUT OF IT!” I used it a lot at first. Here’s how it works. It is a physical mind trick I still use today, although thank goodness very rarely. Let me explain.

If you run into me, you might notice I wear one of those affinity rubber wrist bands. My current one says “END HUNGER.” (from some kind of a diet program I think.) It doesn’t matter what it says. What matters is that it stays on my wrist and I can use it to control my emotions. If I ever catch myself thinking one of those negative thoughts, (My favorite is: “You Dumb A_ _ !) I stretch the band about 3 inches off my wrist and let go. OUCH! Then I caress the sore spot and say something like “Well I’ll be rich!” It is kind of a psychological punishment for bad behavior and reward for good combined. It really works. Afterward, I dispassionately move on to do what I am really good at, making a living trading stocks and options; staying cool, calm, collected and rich.

Cheers, 2Dimes / Barry Brush
To contact me send an email by using the Contact form (link above) and Tate will make sure I get it. The best option is to submit your comment to the blog here 🙂

Weekly/After Stock Market Review Archives

A Classic “Sell the News” Result to Fed Rate Cut; Stock of Day – Synchronoss Technologies (SNCR)

December 11, 2007 Tate Dwinnell Leave a comment

Today’s somewhat dramatic sell off should not have been too much of a surprise (ok I suppose the small chance of a 50 bp would have produced a different result) so I hope EVERYONE profited accordingly. The market sells off with heavy volume, rises to overbought conditions (more than I expected) with diminishing buy volume as the market prices in the 25 bp cut and sells off on the news and sells BIG. In a divergence from most of the action of 2007, the market actually moved in the direction it was forecasting for once. It does feel good to be positioned correctly and profit in a down day like this doesn’t it?

So now what? Well .. we wait. Remember that the first reaction to a Fed announcement is often times a false move, so it’s going to take a day or two for the Fed rate cut dust to settle and get a true sense of the technical picture.

::: Major Indices Performance – The Numbers :::

(Note: volume averages are based on the average over the past 50 days)
Data as of 4:00EST – End of Day December 11th 2007

Nasdaq: DOWN 2.45% today with volume 1% ABOVE average
Nasdaq ETF (QQQQ) DOWN 2.32%, volume 3% BELOW average
Dow: DOWN 2.14%, with volume 14% ABOVE the average
Dow ETF (DIA): DOWN 2.18%, with volume 32% ABOVE the average
S&P ETF (SPY): DOWN 2.74%, with volume 23% ABOVE the average
Russell Small Cap ETF (IWM): DOWN 3.51%, with volume 37% ABOVE the average

::: SelflInvestors Leading Stocks :::

The Self Investors Leading Stocks Index is comprised of stocks in the Breakout Tracker, which is a database of the fastest growing companies near a breakout or having already broken out of a base. Leading stocks were hit harder than the major indices today but not as hard as the small caps that make up the Russell 2000. If there is a bright spot today, it’s that volume wasn’t overwhelming on the sell side.
Summary:

* Decliners led Advancers 278 to 30
* Advancers were up an average of 1.56% today, with volume 62% ABOVE average
* Decliners were down an average of 3.51% with volume at the average
* The total SI Leading Stocks Index was DOWN 3.02% today with volume 6% ABOVE average

::: Where’s the Money Flowing :::

Many investing websites provide leading industries based on price performance alone. However, without accompanying volume levels, this can sometimes be misleading. The only way that I know of to gauge industry/sector strength WITH volume levels is through the analysis of ETF’s. A couple years ago this was not possible, but as more traders/investors use ETF’s they become a much better tool for gauging the health of the market and seeing where the money is flowing (or not flowing). Using the proprietary SelfInvestors Demand Indicator score which measures price and volume movements, I’m able to quickly see which sectors/industries are seeing the greatest inflows of cash. For a detailed look at how I go about gauging sector/industry strength please see the following post: http://selfinvestors.com/si/industry_tracking/

* Current Leading Sectors/Industries (over last 30 trading days):
Dynamic Utilities, Pharma, Commodities, Energy, Basic Materials, Agriculture

* Current Lagging Sectors/Industries (over last 30 trading days):
Networking, Retail, Semis, Nuclear Energy, Telecom

* Today’s Market Moving Industries/Sectors (UP):
Bonds & Telecom

* Today’s Market Moving Industries/Sectors (DOWN):
Home Construction, Realty, Financials

::: Stocks :::

The stocks section will be an area where I highlight one stock selected from a group of stocks moving up with volume well above average and most likely breaking out of a base or consolidation. Despite a day where few leading stocks rose with volume, Synchronoss Technologies (SNCR) surged above its 50 day moving average with volume and is today’s Stock of the Day.

ABOUT:

Synchronoss Technologies, Inc. (Synchronoss) is a provider of on-demand, multi-channel transaction management solutions to communications service providers (CSPs). The Company has designed its solution to be flexible across communication services and channels (such as e-commerce, CSP stores and other retail outlets), allowing it to meet the changing and converging services offered by CSPs. Synchronoss targets complex and high-growth markets, including wireless, high-speed access (such as cable, digital subscriber line (DSL) and Wi-Max), voice over Internet protocol (VoIP), video and also target CSPG’s bundling of these services (double, triple and quadruple plays) and their intersection (video over wireless, Internet protocol television (IPTV), content activation). The Company’s ActivationNow platform automates, synchronizes and simplifies electronic order management, activation and provisioning of these services.

FUNDAMENTALS:

Synchronoss (SNCR) is a company that grew rapidly at the beginning of the 21st century but didn’t turn it’s first profitable year until 2005 when it earned .31/share. The company hit a brief rough patch in the middle of ’06 when it posted 2 consecutive quarters of negative growth. However, over the past year, the company has begun firing on all cylinders and has posted accelerating earnings and sales growth in each of the past 4 quarters. That kind of growth has led to ’07 estimates of more than a doubling of profits over ’06. With net margins around 20%, ROE around 20% and management ownership hovering around 35%, SNCR has ALL of the components of a Self Investors leading company.

TECHNICAL:

I typically feature leading stocks that are near a breakout or have already broken out of a sound basing pattern, but SNCR is a bit early in the formation process. The stock spent most of October and November digesting gains after a long runup in which the stock soared more than 500% in just over a year. A remarkable run. This is the first significant base for the stock since going public in the summer of 2006, so there is quite a bit of room left to run. Currently, it’s carving out a cup base with the bottom of the base finding support right at the 200 day moving average. Sell volume has begun to dry up and buyers are beginning to exert some control again. Today, it was up more than 10% at one point before it sold off after the Fed rate cut, leading to a high volume reversal on the daily chart. This kind of action typically indicates the stock will need to at the very least spend some time sideways and at worst retest the lows of the base. Either way, you want to see the stock carve out a nice looking handle formation with quiet volume, then result in a big breakout above today’s high (42.58). It’s probably at least a week or two away from attempting a breakout, but SNCR is without a doubt one leading stock you’ll want to put at the top of your watch list.

SELFINVESTORS RATING: With a total score of 51/60 (27/30 for fundamentals, 24/30 for technical), Synchronoss (SNCR) is a highly rated Self Investors leading stock.

Full Disclosure/Disclaimer: The stock of the day is by no means a buy recommendation. Please do your own research and make a personal decision based on your own tolerance for risk. I currently do not own a position in Synchronoss Technologies (SNCR)

IPO's

Best IPO’s Trading This Week – Xinyuan Real Estate (XIN), VanceInfo (VIT) & More

December 11, 2007 Tate Dwinnell Leave a comment

1. Xinyuan Real Estate (XIN): develops large-scale residential projects in China, which include multiple-building housing communities, high-rise apartment complexes, retail outlets, health and leisure facilities, and schools. Xinyuan’s development sites are primarily acquired through public auctions of government land. In addition to constructing these properties, Xinyuan Real Estate offers property management services. It currently has operations in the Sichuan, Anhui, Shandong, Jiangsu, and Henan provinces, covering more than 770,000 sq. meters Trading set to begin on Wednesday.

2. VanceInfo Technologies (VIT): helping companies in China advance through outsourcing. Typically serving clients with operations in China (but headquartered elsewhere) VanceInfo Technologies provides outsourced software development and IT services consisting of research and development, enterprise solutions development, application development and maintenance, quality assurance and testing, as well as globalization and localization services. Customers include companies in industries such as technology, telecommunications, financial services, and manufacturing. Major clients include Citibank, IBM, Microsoft, Motorola, and TIBCO. Trading set to begin on Wednesday.

3. CGEN Digital Media Company (ADTV): helps advertisers get their messages to consumers who not only are ready to buy, but already have gone to the store to do so. The company operates an in-store TV advertising network that spans more than 530 retail locations — including hypermarkets and home improvement centers — in about 65 cities in China. CGEN Digital Media makes most of its money from selling network time to more than 250 advertisers, including global consumer brands Nestlé, Kraft, Crest, Johnson & Johnson, and Asahi Beer. It also earns a portion of its revenues from organizing in-store promotional events for retailers and advertisers. In 2007 the company agreed to be acquired by rival Focus Media. ** Note: CGEN was acquired by Focus Media (FMCN) yesterday.

4. ChinaEdu Corp (CEDU): The Company’s primary business is to provide services to the online degree programs of Chinese universities. Its services for online degree programs include academic program development, technology services, enrollment marketing, student support services and finance operations. ChinaEdu also operates private primary and secondary schools, market and support international post-secondary and English language curriculum programs to established learning institutions, and offer online interactive tutoring services to primary and secondary school students. It has relationships with 11 universities, nine of which are under long-term, exclusive contracts that vary from 15 to 50 years in length. Nine of these universities operate online degree programs. Began trading today at 10.00/share.

5. K12 Inc (LRN): The "virtual public school" company offers online educational programs for children in kindergarten through 12th grade (K-12). Products include full-time online public schools (in about a dozen states), course material and product sales directly to parents, and individualized supplemental programs offered through traditional public schools. K12’s programs are targeted at kids who underperform in public school, aren’t safe in public school, or can’t attend public school because of travel issues, disabilities, or because they are athletes or performers. Trading set to begin on Friday.

6. Classmates.com (CLAS): company operates the Mypoints online loyalty marketing service in addition to its popular social networking Web site Classmates.com. Classmates.com helps users locate and communicate with acquaintances from school, work, and the military through a network of more than 50 million registered users. The company’s 2.7 million subscribers pay for access to various tools and content. Advertising on the Web site supplements the company’s subscription fees. Classmates Media also provides targeted marketing services for advertisers looking to reach more than 8 million consumers registered in its MyPoints rewards program. Trading set to begin on Thursday.

7. Teekay Tankers (TNK): owns and manages a fleet of nine double-hull Aframax tankers, which it charters to such customers as ConocoPhillips, Eiger Shipping, SABIC, and Skaugen PetroTrans for use in seaborne transportation of crude oil. Teekay Tankers’ fleet has an overall capacity of about two million deadweight tons (DWT). Wholly owned by Teekay Corporation, a large global operator of medium-sized oil tankers, Teekay Tankers generates revenue by selling both voyage charters (single short-term trips at a variable rate) and time charters (often longer-term and generally fixed-rate). Trading set to begin on Thursday.

8. MedAssets (MDAS): MedAssets helps hospitals widen their profit margins — or at least not lose quite as much. The company’s Spend Management segment operates a group purchasing organization that negotiates prices for hospitals and health systems which then get better deals on medical supplies and devices. Its Revenue Cycle Management segment provides software and consulting services that help track and analyze a hospital’s revenue stream. Such services aim to increase collections and reduce account balances. It counts more than 125 health systems as customers, including Christiana Care, Banner Health, and Fletcher Allen. Trading set to begin Thursday.

Industry Spotlight

Offshore Crude Oil Exploration & Production Perspective

December 10, 2007 Tate Dwinnell 1 Comment

ABOUT: The following Oil & Gas Industry report is provided by guest author Robert Williams, PhD, P.E., and industry executive with over 40 years experience working for major oil corporations as well as smaller companies all across the globe. Robert has extensive petroleum, water and electrical industries experience regarding Supervisory Control and Data Acquisition (SCADA) systems, Management Information Systems (MIS/IT), Distributed Control Systems fire & gas/emergency shutdown systems, instrumentation, metering, communications, security/CCTV and electrical engineering on such major projects as Shell Bonga FPSO, Saudi Strategic Storage Project, Libyan Water Pipeline, Trans Alaska crude oil pipeline, Alaska Natural Gas Transportation System, Occidental Piper B and Saltire offshore platforms and many other worldwide projects.

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Oil & Gas Industry Perspective Part II (Offshore)
by Robert Williams, PhD, P.E.
See Part I – Oil & Gas Engineering

The major oil supplier areas of the world are Middle East (specifically Saudi Arabia), West/North Africa, Russia, Venezuela, Mexico, Indonesia and including the North American suppliers and consumers, USA and Canada. Major oil consumers are USA/Canada, Europe, Japan, China, India/S.E. Asia and Australia/New Zealand.

The crude oil process of converting to automobile gasoline involves finding the oil or gas by seismic surveys, drilling and extracting, producing and transporting crude oil. Crude oil may be refined at the supplier’s origin country and the petroleum products exported or the crude oil is transported for refining in the consumer country. Natural gas is pipelined to consumers otherwise it has to be transported as liquefied natural gas (LNG) tankers.

Oil and gas industry capital expenditures include exploration permits from national governments, seismic surveys, either buying or leasing drilling rigs, onshore/offshore processing facilities, crude oil/products pipelines and/or tankers including loading and offloading port facilities, crude oil/products storage terminals, fuel truck loading racks and gasoline stations.

These industry perspectives are designed to identify companies actively involved in all of the oil/gas industry aspects and specifically highlight those for potential investment on a long or mid-term basis. There are many companies who are industry leaders and there are others that have established a niche in these industries Their charts will be provided to identify possible long trades. No speculation will be made as to short or options trades in these companies. The first Industry Perspective highlighted oil/gas engineering companies whereas this Industry Perspective will focus on offshore crude oil exploration and production.

Finding and producing oil and natural gas deposits, converting these into petroleum products and transporting them to market makes the oil/gas industry the most international of all industries. Many offshore production and supplier companies are exchange listed in London, Oslo, Amsterdam or other exchanges, including Australia. These companies have not been identified in this Industry Perspective No. 2. Please contact author at riwilliams1@cox.net if you have international trading access and wish to know more about these companies.

Industry Perspectives

1. Maintained high crude oil prices are initiating new and old exploration fields to be developed. For example, Chile has just announced exploration and production contracts for new onshore development fields.

2. Driven by increased demand in China and India, Asia is now the largest consumer of oil products.

3. The production of oil and gas reserves is increasingly moving to remote, challenging locations, such as Russia’s Sakhalin Island, offshore West Africa (Angola, Nigeria, etc.), and Canadian arctic and deep or ultra deep offshore locations including the Gulf of Mexico.

4. A major oil company has made a new oil discovery in the ultra-deep offshore West African coast in water depths of approximately 6000 feet. Ultra-deep is an industry term which especially applies to the Gulf of Mexico where oil exploration and new discoveries are at depths of up to10,000 feet.

5. Anadarko Petroleum (APC) has made an oil discovery at its West Tonga prospect in the deepwater Gulf of Mexico. The discovery well, located in approximately 4,700 feet of water, was drilled to a total depth of 25,680 feet. The well was drilled by Diamond Offshore’s (DO) semi-submersible, Ocean Valiant. (Source: Rigzone 12/05/2007)

6. Chevron and Massachusetts Institute of Technology announced an energy research program to develop remote, ultra-deepwater exploration and production technology. The $5 million Chevron Remote and Ultra-Deepwater Research Program will focus on developing the technologies required to access hydrocarbons in water depths up to 10,000 feet in a safe, cost effective and environmentally friendly manner. (Source: Rigzone Newsletter)

7. Mexico’s national oil company (Pemex) has only nine years of proven oil reserves at current production rates, and the company is hoping to find new deposits in deeper waters of the Gulf to compensate for declining output at its traditional areas. Pemex plans to begin producing oil at deep water projects in 2014.

8. China’s electricity consumption has exceeded planned expectations to the extent that is affects reliability, i.e. shortages and many parts of China have electricity rationing programs. World Bank projections are for a doubling of energy consumption from 2000 to 2020. China are building a semi-submersible capable of deep and ultra-deep drilling for their offshore fields which is part of their long range planning to alleviate their dependence on imported crude oil.

shell oil rig 9. The Shell Bonga field, offshore Nigeria, required a complex and extensive subsea system to extract the crude oil from 3000 feet deep water. Production facilities comprise one of the world’s largest Floating Production, Storage and Offloading vessels (FPSO) and deepwater subsea infrastructure. Author was onboard the Bonga during topsides assembly, prior to sailing to Nigeria, and can wholeheartedly verify its size. An FPSO is effectively a 2 million barrel stationary tanker with an offshore production platform on its deck.

10. Bonga subsea well clusters were drilled and completed from a mobile drilling unit and connected to the centrally located FPSO by production flowlines, risers and control umbilicals. The project’s estimated recoverable resources add up to more than 600 million barrels of oil. Production began in November 2005 and the current production is 225,000 barrels of oil and 150 million standard cubic feet of gas per day. Crude oil is offloaded onto tankers and gas is pipelined to onshore facilities. Field development costs were approximately $3.5 billion and the initial exploration contract was agreed in 1993. Source: Royal Dutch Shell (RDS)

11. An umbilical is an assembly of hydraulic hoses which can also include electrical and/or fiber optic cables used to control subsea structures from a platform or a surface vessel. A Riser is a pipe or assembly of pipes used to transfer produced fluids from the seabed to the surface facilities or to transfer injection fluids, control fluids or lift gas from the surface facilities to the seabed.

12. Offshore fixed platforms have been the norm for continental shelf oil/gas drilling and production; tension leg platforms are used to 3,000 feet water depths and floating production facilities are used for deeper waters. A Tension Leg Platform is a floating production unit anchored to the seabed by taut vertical cables, which considerably restrict its heave motion, making it possible to have the wellheads on the platform.

13. A semi-submersible is a floating drilling vessel that is supported primarily on large pontoon-like structures submerged below the sea surface. The operating decks are elevated above the pontoons on large steel columns. This design minimizes loading from waves and wind. Semi-submersibles can operate in a wide range of water depths, including deep water. They are usually anchored with six to twelve anchors tethered by strong chains and wire cables, which are computer controlled to maintain the semi submersible at the programmed location.

14. In ultra deepwater, riser systems become a technical challenge and a major part of the field development costs. Large external pressures in these great depths cause flexible solutions to run into weight and cost problems.

Major Oil/Gas Companies

Exxon Mobil Corporation (XOM); BP (BP) Chevron Corp. (CVX); Conoco Phillips (COP); Occidental Petroleum Corporation (OXY); Marathon Oil Corporation (MRO); Anadarko Petroleum Corporation (APC) are some of the international oil and gas companies involved in the exploration and production of crude oil and natural gas; the manufacture of petroleum products, and the transportation and sale of crude oil, natural gas and petroleum products. APC is a oil and gas exploration and production company whose major areas of operations are located in the United States, the deepwater of the Gulf of Mexico and Algeria. Anadarko also has production in China, Venezuela and Qatar, a development project in Brazil and is executing exploration programs in several other countries.

Independent Oil/Gas Companies

Apache Corp. (APA); Devon Energy Corporation (DYN); Murphy Oil Corporation (MUR) are independent energy companies that explore for, develop and produce natural gas, crude oil and natural gas liquids. APA’s exploration and production interests are focused in the Gulf of Mexico, the Gulf Coast, East Texas, the Permian Basin, the Anadarko Basin and the Western Sedimentary Basin of Canada. It has interests in onshore Egypt, offshore Western Australia, offshore the United Kingdom in the North Sea (North Sea), and onshore Argentina. DYN owns oil and gas properties principally in the United States and Canada and, to a lesser degree, regions located outside North America, including Azerbaijan, Brazil and China. Murphy’s exploration and production include the United States, Canada, the United Kingdom, Ecuador, Malaysia and all other countries.

Oil/Gas Offshore Services Companies

Transocean Inc. (RIG) is an international provider of offshore contract drilling services for oil and gas wells. RIG owns or operates 89 mobile offshore and barge drilling units. Its fleet included 32 high-specification semi-submersibles and drill-ships, 20 other floaters, 25 jack-ups and four other rigs as of February 2, 2007. RIG’s primary business is to contract these drilling rigs, related equipment and work crews primarily on a dayrate basis to drill oil and gas wells.

Diamond Offshore Drilling, Inc. (DO) provides contract drilling services to the energy industry worldwide and is also engaged in deepwater drilling with a fleet of 44 offshore drilling rigs. The Company’s fleet consists of 30 semi-submersibles, 13 jack-ups and one drill-ship. The Company offers a range of services worldwide in various markets, including the deep water, harsh environment, conventional semi-submersible and jack-up markets. The Company provides offshore drilling services to a customer base that includes independent oil and gas companies and government-owned oil companies.

Schlumberger Limited (SLB) is an oilfield services company supplying a range of technology services and solutions to the international oil and gas industry. SLB subsidiary WesternGeco is an advanced surface seismic company. SLB’s products and services include the evaluation and development of oil reservoirs (controlled digging, pumping and testing services), well construction and production consulting, and sale of software programs. The Company also offers storage tank and seismic monitoring services.

Halliburton Company (HAL) provides a variety of services, products, maintenance, engineering and construction to energy, industrial, and governmental customers. Its six business segments are: Production Optimization, Fluid Systems, Drilling and Formation Evaluation, Digital and Consulting Solutions, Energy and Chemicals, and Government and Infrastructure. It refers to the combination of Production Optimization, Fluid Systems, Drilling and Formation Evaluation, and Digital and Consulting Solutions segments as its Energy Services Group (ESG).

Flowserve Corporation (FLS) is a manufacturer and aftermarket service provider of flow control systems. The Company develops and manufactures precision-engineered flow control equipment, such as pumps, valves and seals, for critical service applications. It produces industrial pumps, industrial valves, control valves, nuclear valves, valve actuators and precision mechanical seals, and provides a range of related flow management services worldwide, primarily for the process industries.

Some companies involved with deep sea oil/gas developments have significant earnings projections.

Summary

The oil/gas companies combined performance charts (see chart) indicates a general uptrend and are all indicating increasing earnings. Please note that recent markets declines do affect these companies’ stock pricing but may very well provide excellent entry points depending on your market timing criteria.

The world is continuously expanding both crude oil consumption and development of new crude oil sources. See the next Industry Perspective for oil/gas projections to 2030.

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If you have questions or comments for Robert regarding this report or the oil industry, you may submit them here at the blog using the comments form or click "Contact" above to submit and I will forward those on.

Disclaimer: The author Rober Williams, currently has no positions in the companies above. I do have a long position in Transocean (RIG).

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