Glen’s Christmas Special Part 2/3
By
Glen Bradford
This is the second part of the Glen Bradford Christmas Special. The goal is to identify companies that are worth following that I haven’t mentioned yet. The fundamentals I mentioned in the last article are the ones that are easier to follow and I’ll call them surface fundamentals. The type of fundamentals I’ll try to illustrate now are undercurrent fundamentals. This is where you try to outguess industry “experts” as to the true trend of where things are headed. I learned this lesson the hard way, when I found a company mid-2008 in the construction industry that was fundamentally looking great based on the numbers, but the underlying currents were falling apart. Cramer called it correctly. BooYeah!
When I met Jimmy Wang from Worldwide Energy and Manufacturing USA (OTC: WEMU), I could sense the overwhelming optimism that got him into trouble earlier in the year. Their backlog last I checked is being serviced and their backlog was larger than their price per share. Things are shaping up for a Q4 that makes you wonder why you didn’t own this now. I figure margins will improve, but not to where they were as demand picks up again. Did I mention uplisting? It’s inevitable in my opinion starting now. Rumors suggested that $5 was when they were going to get taken “seriously.” Taking a look at their forward guidance and their ability to make guidance in the past, I’d usually grin and move on. In this case, I would advise taking a second look, and a third.
The coal industry also took a breather in the last year. Based on the conversations of the people on television, which are of course factual because everything on television is true, I should start looking at coal for 2010. Well, in 2009 coal was pretty darn good to me. My forecast is that things are going to keep getting better the longer I do nothing. Puda Coal (AMEX: PUDA) looks good to me. If you get jokes at all, it’s a steel at these prices. I’ll give you another coal idea in my next piece.
If you can’t get the hang of the underlying currents idea, it helps to compare and contrast a company that is less cyclical. If you’ve failed to get Too Much Information, you can always Carbon Copy ME. Know where I’m going? China MediaExpress Holdings (AMEX: CCME) is another company that is cheap on a forward basis. Assuming that management hits their targets, which is incentivized by them earning shares, the forward earnings guidance puts this company earning $2 per share ballpark in 2010, looking at around 25% growth going into 2011. Who is interested? Do note that if you know what you’re doing, you can buy commons through the warrants for $2 off, Christmas Special. But it’s already a special in my opinion since they’re at ¼ the price of their competitors Focus Media Holding Limited (Nasdaq: FMCN) and Vision China (Nasdaq: VISN).
It’s time for that speculative idea. Sparkling Events (OTC: XODG) looks interesting as they are trying to mass market their LED lights across North America through various retailers. Their latest press release suggests Home Depot, Menards, Costco, Lowe`s, Ace, Do it Best and True Value. I want to point out that I do not yet own this one, but am watching attentively from the sidelines.
Today, I again tried my hand at shopping for Christmas presents. I spent a couple hours wandering around Kohls (NYSE: KSS) and my dad and I were able to find my mom a turtleneck. I came to the conclusion that shopping for most people this time of year has to consist mostly of waiting in lines rather than actually sorting through goods to be purchased, whether those lines are made up of cars waiting to get through intersections or people in front of you in the checkout isle.
Disclosure: Bradford was long Worldwide Energy, Puda, and China MediaExpress at the time of publication.