CVV and ECOX attractive upside potential regardless of the overall picture.
The year 2018 did not turn out the way most had thought. It is still too early to say for certain that the year was a total "bust", but it is not looking very pretty.
Historically, the 3rd year of the Presidential term has turned out to bullish 16 out of 18 times! Looking at the long term chart it is very easy to conclude that the trend remains bullish long term. Corrections are very positive for overall strength of a market to continue its march on the upside. Historically a low interest rate environment and low inflation has never resulted in a near term recession. During the past week or so the yield curve has inverted. The theory is that an inverted yield curve leads to a recession within 24 months. It has happened but not all the time.
At present with low interest rates, no inflation, consumer sentiment or confidence during 9/ 2018 at the highest level in 18 years, we have the lowest rate of unemployment (3.7%) in 50 years and recently another tax break relating to $2.25 ( average) selling price at the gas pump.
Regardless of your opinion of the current administration there are developments during the past 2 years that relate to a "Bullish" tone for the near term future of the USA.
There is little doubt that during the last 8 year administration that created a strangle hold on business large and small has been lifted and our present economy bounced hard like a coiled spring. The aggressive appetite to redo most of our world trade agreements has also been a very positive endeavor that this current administration has pursued & the fruits are starting to show results. The last 2 administrations never put America first, but now our true American spirit is beginning to shine brightly.
The effects of renegotiating NAFTA ( now USMCA), pulling out of the Paris Accords, signing away TPP (Trans Pacific Partnership) another poor trade deal that would never benefit the USA, and we cannot forget the current renegotiating trade with China ( very lopsided).
China is currently our largest goods trading partner with $635 billion in total ( two ways) goods trade during 2017. Goods exports to China from the US $130 billion vs goods imports totaled $505 billion. The US goods trade deficit with China was $375 billion in 2017! Surely there is something wrong with this number when you consider that China has a population of 1.4 billion vs in the US the current population is 329 million.
We believe that China will blink and the current administration will achieve greater access,lower tariffs and great protection for patents and technology.
China is a tough player and not the most honest kid on the block and during the past 2 administrations the US just went along transferring our wealth and jobs to China and other international players.
The current "china syndrome" has surely created a very nervous condition in the US markets and abroad. This continues to weigh on the upside momentum a& is one of the causes of the DOW collapsing some 3000 points from the all time high reached in early October 2018.
The other painful ingredient that has worried the markets has been the rise in interest rates by the FED! This puts a real damper on any advance because of the uncertainty of how much & when will the FED stop the climb ( higher rates affect everything -and can over shoot and cause a downturn).
On or about December 19th 2018 the FED will decide to raise another 1/4 point and then pause. The markets are all ears and will have a most dramatic effect on how 2019 pans out!
China and interest rates promise to be a large catalyst for 2019 and Brexit also looms. The unusual strength of the dollar also permeates globally.
At present all of the negatives & most unknowns are priced into the market and as things change so will the market momentum whether bullish or bearish. We lend to the bullish case and fear not the so-called coming recession!
Other issues that have no answers yet is the current weakness in the housing market, and how with lower Oil, prices if prolonged, will affect that industry ?
The professional crystal ball reader's crow about how this is the longest expansion in modern history! Personally, one does not believe that the growth period during the last administration really tells the whole story and its muted growth may not fit in the usual puzzle.
I always remember when Jim Cramer from CNBC warned investors to stay out of the market in 2009 when the Dow was around 6500! I guess the professionals might be as good as the dart board.
If all this was not enough to deal with we must also deal with tax selling season which is coming to an end and has created many stocks that are trading near their 52 week lows. During these extreme price swings of 500-700 points it is obvious that sellers, computers and shorts take control and buyers just stand back! Why step in front of a moving train?
As the adage proclaims, " when there is blood in the street" ! This 3K point crater has created much carnage & the broader indexes and OTC opps have not fared any better.
It is tough being a buyer when the losses are mounting, but we have made more money when the sellers are desperate and also tax selling season creates the perfect "chum" for us! We also believe averaging down is one the most successful investment strategies that should also be integrated into your investment protocol.
CVD Equipment Corp.(NASDAQ- CVV)
The company designs, develops, and manufactures a broad range of chemical vapor deposition, gas control, and other state-of-the-art equipment and process solutions used to develop and manufacture materials and coatings for research, design, and manufacture these materials of coatings for aerospace engine components, medical implants, semiconductors, solar cells, smart glass, carbon nanotubes, nanowires, LEDs, MEMS, and other applications. It's wholly owned subsidiary CDV Materials Corp provides advanced materials and metal surface treatments and coating to serve demanding applications in the electronic, biomedical, petroleum, pharmaceutical, and many other industrial markets.
52 week range $13.50- $3.87 (Dec 14th 52 wk low)
book value $5.86
cash/sh $2.18 ( based upon 6.5ml shares fully diluted
land worth $25 million with a $12 million mortgage
NOTE: The cash+ land is more than the price of the stock! +AN EXTRA $2.00 IN OTHER ASSETS.
Insider Buying Nov 29th CEO bought 5000 share @ $4.57
Revenue $19.6 million vs $31 million and a loss of (.51) vs a gain of .58
Backlog $6.5 million - inline with last yr
PSR: based upon est. yr end 2018. A value of 1.
The past 2 quarters have shown a loss vs profits during 2017. Management explains that there have been delays in anticipated orders. According to management the 4th and 1st Q of 2019 may result in more lumpy results until their new CVD facility is built. According to L. Rosenbaum , President and CEO of CVD, " Despite setbacks, knowledge of our markets and conversations with current and potential customers continue to make us optimistic about our overall business and the materials segment's to contribute to our long term success in high-growth areas such as biomedical materials, aerospace, and corrosion resistant applications.
He continues, " Recently filed key provisional patents for corrosion resistant coating and a family of novel Fluid Reactors that allows the efficient transfer of gases into and out of liquids. One potential application is for use in O2 cartridges used during cardio pulmonary bypass surgery." At present the stock is trading at a 10 year low.
Overview:Here we have a high-tech company that is transforming and missed a few contracts temporarily.. We have a huge cash hoard, land valuation, other assets yielding a book value of almost $6.00. Just the cash+ land is worth more that the price of the stock. In reality you get the business for FREE. The President has been an active buyer recently in the open market.. This stock has been the perfect tax selling candidate because it has dropped some 62% since Jan 2018. We anticipate a strong rebound in early 2019 because of the severe oversold condition. The bonus will be that at anytime the company could announce a contract and the stock could easily double because of the limited amount of shares outstanding. We also have the potential that the company is also bought out. Regardless of the stated book value we are not even considering the patents and company know how! Bottom-line: CVV which trades on the NASDAQ is extremely cheap and we see almost zero downside risk when you consider all the elements of this cutting edge tech company. During 2019 CVV could easily double or triple with little effort. We rate with a strong buy at current levels.
Eco Innovation Group, Inc ( ECOX) current price .23
This micro-cap is not for everyone, but everyone might like the potential return during early 2019. This company is primarily an incubator for companies. The management team plans on acquiring early stage investments and helping facilitate their growth and valuation. At present there are 1.8 million free trading common shares fully diluted. During late August 2018 a 1000/1 RS, which resulted in a 1.8 million share count. Management own all their paper between .60-.65. During November the company issued 1 million restricted shares for consulting services to Pinnacle Consulting Services to aid in aggressively pursuing the corporate mission. .
On or about September 17th 2018 a contribution of 20 million common shares of "Marijuana Company of America, Inc was made to the Company (MCOA-OTC BB). At present worth around $500k. We now have a "pot" stock wager.
The is a preferred stock that is not trading and owned by the President and 1 other investment group.
The reality is that one of these days the company will announce something exciting and the stock being so thin has the potential to explode rapidly to upside with very little overhang. Patience is the key, but the reward is in the making. Since management owns all their stock @ .60-.65 it is easy to conclude that there is motivation to accelerate investor interest. The kicker for some is the "pot" stock position that has been highly sought after.
Of course this is very speculative, but the reward could be huge for a very small investment.
Treecon Resources,http://www.treeconresources.com (TCOR)
Current price .40
fully diluted shares outstanding~ 28.3 million (management owns 50%)
9 months rev $65.5 million and net income $1.6 million or .06/sh.
Stated book value around $1.15
last year revenue was $70 million and net income/sh was .03
It is easy to see that revenue and income/sh has exploded during fiscal 2018. It is very easy to conclude that TCOR will reach revenue of $100 million or close to that figure and earning results for the year should reach .10!
The book value does not take into account the 5000 acres of timber land located within Texas and Louisiana. It is obvious that this land is worth many times the value that is stated on the books.
From our calculations the cash value approaches $4 million.
The company reports 4 times per year.
TREECON RESOURCES IS A HOLDING COMPANY THAT, THROUGH ITS SUBS, DISTRIBUTES, LEASES AND PROVIDES FINANCING FOR INDUSTRIAL AND LOGGING EQUIPMENT. THE COMPANY IS ALSO ENGAGED IN SAWMILL OPERATIONS, OILFIELD FLUIDS SERVICES AND REAL ESTATE.
TCOR is a hidden gem for patient investors that appreciate discounted value and very cheap fundamentals. The stock is trading at least 60% below stated book value. We assume that TCOR will earn around .10 for year ending Sept 30th 2018. The stock is trading at around 4X est. PE for fiscal 2018. The PSR is based upon $100 million in sales ending Sept 30th 2018~.11 est PSR ( value of 1 is consider very cheap). The current growth 2018 vs 2017 is around 30% (based upon $100 million vs $70 million last year) if we assume a PE of 15X vs current 5X the share price would be at least $1.50 ( 200% appreciation from current levels.). The stated book is now $1.15~ We assume the 5000 acres of timber is worth as much as $25 million so that might add another $1 in book. We are not sure, but could easily trade at three time book or $3.45. If we applied a PSR of .5x or 1/2 sales the share price would explode to a at least $2+ .
The most profitable business sub is the heavy equipment division that can be used in construction of Oil and Gas drilling and home and business construction and pipeline creation. There is a huge bottleneck in the movement of oil and gas and additional pipelines are needed to be built in order to move the products to the refineries. Another division supply fluids for the Oil and Gas industry. As we know Texas is the number 1 producer in the USA and TCOR is in the game. The harvesting of primarily Pine trees is the third division and adds to the mix.
It is easy to conclude that TCOR has entered a serious growth mode because of the economic climate that has overwhelmed the US since Trump has taken office. This company could also be in play as a takeover candidate because it is so mispriced.( at present 160 employees)
Recent conversation: business strong having hard time finding workers. The oil and gas and heavy equipment business remains very buoyant.
We rate TCOR with very strong BUY rating at current levels for short and long term appreciations.
Extreme selling in the micro cap arena and other larger cap that we find attractive.
CETX-Introduction of Smart Desk- appears the business herd likes it! Management did a "stupid' rights offering with a 5% below the bid scenario. Has crippled the stock until at least the 19th of Dec when the offering expires. We doubt they will raise the need funds this way (looking for $2 million). Still very cheap and hammered by sellers, shorts and lack of buyers. Currently .78
Oil stocks we like. Will Oil stay at $50? Simple answer NO! We like WLL, NOG, and SNDE.
SNDE~ $3.00 way over sold-cheapest of the micro caps-An Eagleford play. Production going to explode during 2019.
WLL $28.14 A leader in the Bakken -trading near 52 wk low because of tax selling , weak market and $50 oil. A little patience investors will be rewarded.
NOG~$2.39 like the business model. In the Bakken ND-cheap at current levels.
VUZI~$5.50 I think this is the year that AR finally goes mainstream in the Enterprise arena. Maybe someone will finally buy them out @ a much higher premium than the current share price. Has held up very well considering the slaughter in the market.
CVM~$3.05 Looking for the first Q for results from Phase 3 study. Huge upside potential if successful. The market cap is a fraction of the billions that it could be worth.
OPXS/OPXXW- Another stock that has held up. Our only military play. ER reports any day. Anticipate .06-.08 earnings for the 4th Q. Stock should trend higher. The warrants remain extremely attractive with 2 1/2 years left and low exercise price of $1.50- currently the shares trade @ $1.50 and warrants around .35-.40
MICT- never recommended because management is questionable in our opinion. Sold their prize sub to another "gem" DPW ( this is another piece of work -ran from .30 to $6.00 to the current price of .14). So they sold the division and were left with an interesting division ( truck monitoring software). Only problem the PRES. sold his position to a Chinese based cmpy for $1.65 a few months ago and left the herd to fend for themselves - stock @ .33! Something may happen-worth a shot around .25! Management teams from DPW and MICT are deadly in our humble opinion.
ZMTP ~ recommended @ $2.40 ran to $4.50 now $1.55- missed number and dealing with 10% product tariff. Looking to cobble during the next 2 weeks. Again terrible market, tax selling, buyer strike, China overhang and there must be something else i can complain about?
HEMA-$9.00 the "star" has been weaker, but still up 200% since the beginning of 2018. Recall we recommended HEMA @.35 strong buy - some brokerage firm put a $19 target for 2019!
ARWR-$14.32 Too much info about our fav cmpy. Go and visit and read the material about this biotech that has the potential to change the way we fight diseases. The Trim Platform could revolutionize medicine ! strong buy! J&J and Amgen invested. In time could be a $100 stock!
AWSM~ Brief history: Merger results in a $2.00 stock then does a 5/1 reverse- now a $10 stock- drops to $2.50 and then rockets to $22.61 and now $1.50- Intending to roll up Apple stores and has been successful, but can they grow and prosper? Severe tax selling and no buyers yet-looking for money and the short artists know it! Could be worth the gamble.
Tough year, but the red usually turns to black for the risk oriented investors with steel -----! Happy Holiday!
PS: FAANG- FB out of favor-has lots of privacy issues and hacks and blocking content that does not fit the liberal agenda, AMZN-expensive but has changed the world. Is it getting too big? Working conditions, wages and union issues may be looming, AAPL the ultimate darling on Wall Street- suddenly has head wind in all directions-slowing sales, China disputes,profits maybe at risk, stock has been hammered, NFLX TV junkies love it and growth continues and turning into a content powerhouse, GOOG- privacy and controlling content has the GOV hot on their tail. The liberal bias within social media is a cancer that needs to be addressed.
WE MAY BUY, SELL AND OR HOLD AT OUR OWN DISCRETION .We currently own shares in CVM and have been hired for PR for 1 year .We wish to give credit to First Genesis Consulting for some their material that was used within this report
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