Financial journalism is all about breaking news. News is easily researchable and journalists feel comfortable voicing their opinions. But the truth is that most news -- no matter how fabulous a company's PR firm makes it sound -- usually means little to a company's stock (it's more about the market's expectations, something that is not very researchable).And that's why I prefer to write about companies whose stock charts are breaking out, as I have with Mercadolibre (NASDAQ: MELI) here, Solarfun (NASDAQ: SOLF) here, INVESTools (NASDAQ: SWIM) here and TheStreet.com (NASDAQ: TSCM) here (all of which are nicely, and somewhat predictably, higher) and LDK Solar (NASDAQ: LDK) here (which, in my defense, never reached my breakout price of $77; instead it tanked, exemplifying the risks involved with buying stocks before breakouts). After all, while it's fun to learn about breaking news and new products, it's even more fun to profit from the stock market (my apologies to all financial journalists, but you guys just aren't traders)!
So, let me introduce you to the latest breakout play, solar cell marker Evergreen Solar (NASDAQ: ESLR). Think of its technical breakout as breaking news. Sure, sure, this company's got proprietary technology that supposedly gives them a competitive advantage over competitors like First Solar (NASDAQ: FSLR) and Suntech Power (NYSE: STP), whose market caps are 12x and 20x, respectively, that of ESLR, but that's nothing new. Most analysts like them and they've even got some rosy projections, here, take a look (even though it's still very early in the game for them). But since I don't trust analysts or corporate management (their interests just aren't aligned with investors), none of that information (misinformation, cough, cough) interests me.
I care more about this stock's near-perfect chart. Investors already have seen a nice double in 2007, but more importantly, just yesterday, the stock broke out to a new two-year high, closing at $18.84. And, it's not for a lack of trying, as it had already failed to breach the magical $17.75 breakout price twice in the past two months. The third time was definitely the charm and this makes for one giant cup and handle chart pattern, which, in my experience, is a very bullish sign. And that's why I just bought shares – let's see if this stock's got legs.
DISCLOSURE: I own shares of ESLR and SWIM, although I sold my positions in SOLF and TSCM far too soon.
Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, the star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund
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Reader Comments (Page 1 of 1)
12-27-2007 @ 11:46AM
Mariux said...
hey, what about WWAT? It is a replay waiting to happen.
12-27-2007 @ 1:06PM
Neal said...
This stock is the best kept secret in the sector. The stock was downgraded on good news if that's not a good sign come earnings time I don't know what is.
Bought it at $8, $11, $12, and $13, and $15 talk about doubling yourself.
12-28-2007 @ 12:50PM
The Stockoholic said...
Neal, you are right about the downgrade on good news being a good sign. It appears that this stock has a lot of room to grow. The author is also correct on Mercado Libre (MELI). This stock is going. The growth prospects are fantastic. Feel free to read my article on Mercado Libre at www.thestockoholic.com.
12-28-2007 @ 11:44AM
The Stockoholic said...
Neal, you are right about the downgrade on good news being a good sign. ESLR appears to be a good stock in a hot sector with lots of room to grow. The author is also right about Mercado Libre (MELI). This stock (dubbed by Cramer as the next Baidu) is taking off and has a ton of potential. Feel free to read my article at www.thestockoholic.com on Mercado Libre.
1-14-2008 @ 4:00PM
messels said...
eslr is trading below $15 which is a buy in my book since eslr is shooting for profitability in q408 so i think it's more than a sweet deal for an investor, esp' one investing money in the renewable sector. (note please, that i'm distinguishing between an investor and a speculator/trader)
i first bought eslr in 2002 for about a buck fifty and there weren't any technical charts to justify the buy. it was based on the fundamentals you gloss over in the beginning of your post. ;-) lol. anyway, good to see eslr picking up more and more traction w/ the general investment community.
i'll be posting from time to time on the eslr: www.positionmakers.com. despite what you may be thinking, i'd love to get your feedback from a technical perspective. a few of the other authors on the blog are much more technically focused than myself and they'd also love to get feedback from you.
cheers!
1-15-2008 @ 9:19PM
tim said...
I'm buying ESLR tomorrow. It actually could benefit from a slowdown or recession because there will be less demand from other companies that need polysilicon. Look what happened to INTC today.