Archive for April, 2008

How To Enter A Short Order

By: admin | Date posted: 04.15.2008 (10:03 pm)

I received a comment on my previous post about how to short a stock through a broker so I will describe it here in case other people are confused.

When you go to enter an order you probably have a few options to choose from. I use Scottrade and I have the following options to choose from: Buy, Sell, Sell Short, and Buy to Cover. When you short a stock you would choose “Sell Short”. You would then enter the rest of the order: number of shares, stock symbol, order type (market or limit), and duration.

When you short a stock you are actually selling the stock. Therefore, if you want to place a limit order you would set your limit price higher than what the current price is. If you place a market order your order would get filled at whatever the bid price is (Unless your market order was for more shares than the bid offered. In that case you would take out more bids until your order got filled.) If you are confused about market and limit orders leave me a comment and I will write a post about them. (more…)

More on this topic (What's this?)
Don’t Be A Wall Street Patsy (Money Morning, 1/27/12)
An Important Sell Signal (Comments for thetechnicaltake, 1/29/12)
Read more on Investment Brokerage - National, Sell, Medtronic at Wikinvest

Should You Short Stocks?

By: admin | Date posted: 04.13.2008 (8:05 pm)

If you are an experienced investor shorting stocks should be part of your investment strategy. Shorting allows you to profit when a stock goes down in price. In a declining market, such as the current one, it is a lot easier to make money shorting stocks than buying stocks.

When you short a stock you are actually borrowing shares of a stock from your broker and selling the shares. You owe the shares you sold (shorted) to your broker so you have to buy them back and repay them (cover) at some point. If you are able to repay them (cover) at a lower price than you sold them (shorted) you make money. If you buy (cover) the shares at a higher price than you sold (shorted) the shares you lose money.

I tried to explain that as clearly as I could but I will also use a rough analogy that I have read elsewhere to help explain what shorting is. Let’s say your friend has a bike that is worth one hundred dollars. You know that the same bike is going to be on sale the next week for eighty dollars. Therefore, you decide to borrow the bike from your friend and sell the bike for one hundred dollars (you just shorted the bike). The next week, when the bike goes on sale, you buy the bike for eighty dollars and give it back to your friend (you just covered the bike). You make twenty dollars. That is roughly how shorting works. (more…)

Any Stock Suggestions?

By: admin | Date posted: 04.09.2008 (8:58 pm)

Every month or two I will have a post dedicated to stock suggestions.

If you know of any stocks that are undervalued or overvalued feel free to mention the company and why you think the share price will go up or down.

I would be particularly interested in any company that is quickly growing earnings and has a low valuation (based on PE ratio or book value). I would also be interested in companies that are not profitable yet, but are quickly cutting their losses and headed for profitability in a few quarters.

The comments on my site are moderated and I have to approve or disapprove them to show up. Therefore, they may not show up immediately. However, as long as your comments don’t have spam I will approve them.

SWIR Announces Acquisition of CradlePoint and Share Buyback

By: admin | Date posted: 04.08.2008 (9:09 pm)

SWIR – Sierra Wireless (NASDAQ) – (Closing Price – $18.43)  

Yesterday, Sierra Wireless announced it agreed to buy privately held CradlePoint Inc, which develops and supplies wireless networking products, in a cash and stock deal worth about 30.2 million.

The company expects the deal to add to earnings by the end of 2008, excluding restructuring and integration costs. The deal is expected to close in July.

Two analysts who follow Sierra Wireless said positive comments about the acquisition.

The company also announced that it would seek regulatory approval to purchase up to 1.56 million shares of its common stock on the Toronto Stock Exchange and the NASDAQ, representing approximately 5% of the common shares outstanding.

If the approval goes through the share buyback will obviously be a positive development because the share count will go down and EPS will increase. The potential share buyback also shows that Sierra Wireless feels its stock is undervalued.

These announcements provide two more positive reasons for owning Sierra Wireless.

Disclaimer: I have no position in SWIR.

Free Stock Picks April Update Part 2

By: admin | Date posted: 04.03.2008 (9:41 pm)

Here are the rest of my current stock picks:

SILC – Silicom Limited
The stock price of Silicom Limited have been erratic since my initial buy recommendation but the stock price is currently trending up. Silicom is set to report first quarter earnings on April 28 and I expect there will be a run-up in price before earnings. I will provide another update after earnings are announced.

SWIR – Sierra Wireless:
The stock price of Sierra Wireless has also been erratic since my last update but the stock price is currently undergoing a pretty strong rally. Sierra Wireless is heavily shorted and a short squeeze is already underway. The fundamentals of Sierra Wireless didn’t merit such a huge selloff and I think the stock price could easily rally to 20 – 25 dollars after earnings. Sierra Wireless reported first quarter results last year on April 26 so they should report earnings later this month. (You should also check out NVTL).

Short Recommendation:

SWC – Stillwater Mining Company:
Both Stillwater Mining Company and PAL have sold off since my initial short recommendation but they haven’t dropped as much as I expected. I still think there is further downside left and I would continue to hold your short position.

Disclaimer: I have a long position in SILC. I don’t have a position in the other stocks mentioned.

Free Stock Picks April Update

By: admin | Date posted: 04.02.2008 (10:27 pm)

I usually don’t write about my stock recommendations unless they report quarterly earnings or some other important event happens (press release, news event, etc). However, I am going to start updating all my recommendations at the beginning of each month to keep you better informed on how each stock is doing and report on any important news.

Buy/Hold Recommendations:
CAAS – China Automotive Systems:
China Automotive Systems reported sound Q4 results on March 25 and the stock price has rebounded quite a bit from its lows. Today, the company announced that it completed its 35.5% acquisition of Henglong Automotive Parts and the transaction will be immediately accretive to earnings. China Automotive Systems is trading at a nice valuation and the company’s fundamentals should continue to improve in the coming year. I still think the company is a good buy. (more…)

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