Hello all. Ah the fairness of the market. Record record profits, beat revenue and EPS estimates, guide in-line moving forward, and drop 3%. Or, you can be our upcoming pick and further your losses, guide below, beat EPS estimates, and have no turn to profit in sight…and jump 4%. Makes sense right. This is one of the main reasons why I feel that buying is not for me right now. I am holding our Buy to Overnight to start the morning at least for a little bit. I want to see what it can do.
Otherwise, we are avoiding all buys. This market is just atrocious…
Short Sale of the Day: Energy Conversion Devices (ENER)
Analysis: We are avoiding the buys today, and we are looking at a short that can complement what appears yet another sliding downwards day. Today, we have Energy Conversion Devices (ENER). The company is energy convertor company that supplies materials, tools, and consulting for renewable energy companies mostly in the solar industry. The company, this morning, reported an earnings beat with a loss of 0.48 per share. The company was expected to be at -0.60. One year ago, however, the company was at -0.37. Further, the company guided below what was expected mobing forward. Yet, the stock is up nearly 4% in pre-market trading. Why?
I am not sure, and that is why it is a great short sale candidate. The stock has lost a lot of value moving into earnings, and it did not have a ton more downside prior to this morning. The 4% movement puts it into a short term overvaluation, and I do not think its earnings are strong enough to support such valuation.
The stock is definitely going to have trouble maintaining its gains because of its guidance and the fact that it is a trader’s stock. It is below $5, so a lot of institutions stay away from the stock. Therefore, I expect a lot of profit taking to be done since short term traders are involved.
Technically, the stock was in the pits, but a gain of 3-4% will really change the short term picture of this stock. It will become a bit oversold, fair valued, and move near its 50-day moving average. All that will give it a temporary ceiling, and it will either break through or fall. I am thinking after early gains, it will fall.
Entry: We are looking to enter at 4.15 – 4.25.
Exit: We are looking to exit for a 2-3% gain.
Stop Loss: 3% on bottom.
Good Investing,
David Ristau
