Session of 02/12/2007

[David Randolph]

Anyone outthere with the e-mail of ben@schreib.net?

I see that you applied for a 14 days free trial to the 3 Stocks on Fire Premium service (thanks for the interest), but your e-mail returns my e-mails and you don't have a registered username. This way I'm unable to give you access to the Premium Area.

Help needed

[runner2847]

David, any new thoughts on PMED today? Do you still feel like its due for another leg up or are we in for a slow bleed till we get some news on sales?

[David Randolph]

David,

I don't think you have ever taken the time to look beyond the P/S ratio, which is really a shame.

I would never feel ashamed by not knowing everything there is to know about a stock, especially when that stock is trading at 15 times revenues and it is an OTCBB traded stock that lost money every year since inception. Not even Google trades at 15 times revenues.

I could read everything that has ever been written about NTRZ.OB and that wouldn't change the fact that it is trading at 15 times revenues and I would never touch the stock (unless it had a net profit margin north of 30%, which isn't the case).

Anyway, I hope it rises 10 fold, I have nothing to lose by being wrong here

[David Randolph]

David, any new thoughts on PMED today? Do you still feel like its due for another leg up or are we in for a slow bleed till we get some news on sales?

Usually stocks at least make a double top before going down (even if they want to dilute shareholder's value, which can be the case with PMED, if the market maker knows what he's doing, he'll make another bullish leg before everything is over).

It is a high reward/high risk situation, I wish you good luck

[nica33]

Hi Dave!!  Could you please check TESS?.  I know the volume is low but it's moro than 200 % and it's almost US 2M traded today.  Thanks

[lancefur]

PFSW - my concern is the gross margin. they are pretty low. Just looked 10Q breifly, the product segment only have 6%? (not certain about the number).  ecost.com is just an online also runs and will never be profitable. however, PFSW does show good growth in service segment (which have higher margin). Just my 2 cents and I can be totally wrong. good luck

I agree, gross margin in Q3 2006 was just 11.7%.

Why do you say www.ecost.com will never be profitable? www.tigerdirect.com, a competitor, is very, very profitable. I think long term average annual e-commerce growth of 20% plus will lift all boats, www.ecost.com inclusive, which is expected to sell $140 M in 2007.

Also consider that PFSW is trading at 1/10 of annual revenues and below book value.

Thanks for your 2 cents on PFSW makingmoney

I have strong hands on this one despite a drop. David, with the dip, would it be reasonable to purchase additional shares at such a discount? I await your guideance and this seems the logical step. Thanks!

[David Randolph]

Hi Dave!!  Could you please check TESS?.  I know the volume is low but it's moro than 200 % and it's almost US 2M traded today.  Thanks

Thanks for the suggestion nica33, the chart looks great, you really know how to pick them

Let me make some quick fundamental tests on TESS:

- Market cap is $144 M. Provider of integrated product plus supply chain solutions to professionals that design, build, run, maintain and use wireless voice, data, messaging, location tracking and Internet systems.
- Balance sheet is weak, as cash balance is $0 (or not disclosed by the company, strange situation).
- Revenues in 2006 were $459 M
- EPS in 2006 was $1.06. Estimates for the next fiscal year are for EPS of $1.56, so the forward earnings multiple is 17.5.

Here's the company's website: http://www.tessco.com/. I like the stock, both in technical and fundamental terms.

[nica33]

OSTE

[David Randolph]

I have strong hands on this one despite a drop. David, with the dip, would it be reasonable to purchase additional shares at such a discount? I await your guideance and this seems the logical step. Thanks!

I agree, logical, but a speculator can't work based on "common sense".

The obvious thinking is: "if it was attractive at $1.10 - $1.15, it is even more attractive at $1.05", right?

The problem is it doesn't matter how hard a man studies or how well he knows the market or a particular company, he can and will without a doubt be wrong in some occasions. If you average down when losing, you're magnifying the loss potential.

The market talks to traders that are willing to listen. When the market agrees with me, I get more confident that I'm right. When it disagrees, even if momentarily as I think it is happening with PFSW, I get less confident. I couldn't get less confident and tell you to add more, could I?

"Strong hands" means holding for a large move, ignoring short term fluctuations. It doesn't mean hold whatever happens and it sure doesn't mean to fight the market, by buying more at a loss.

I could average up my buying price, but never, ever, average down, as that is a loser's game in my opinion.

You see how I mix technical and fundamental analysis to achieve superior long term performance. I believe I know what I'm doing, and why I'm doing it, but I don't close my mind to what the market is telling me, because, ultimately, the market always knows better!

[lancefur]

I see that. Thanks for insight.

[David Randolph]

The 3 Stocks on Fire Portfolio took a further 1.63% dip today to $24,964, still up 66% since  inception in January 19, 2007.

But the 3 stocks held remain bullish and I still see great upside potential for them, especially for CPNE.OB and ETLT.OB, since in PFSW I'm experiencing a loss and as I wrote, I work my mind to get less confident when the market, at least at the current moment, doesn't agree with my views for that particular stock.

The Main Portfolio actually did very well today

Tomorrow is another day to study and potentially trade stocks, I'll be here