Three New CANSLIM Long Positions, One New Very Speculative Long Position, And Two Stocks I Am Adding To My Existing Position

July 23, 2007

There is nothing here in the new longs that is perfect. All of the new CANSLIM longs have some flaw or some reason to not be bought in bulk. The prettiest chart in the bunch is HUB.A. Gold members know how much I like this one. But due to the fundamentals not being great I simply can not pound the table, despite how perfect the chart is since mid April. The max green BOP and fantastic price and volume action since late June is beautiful.

new CANSLIM long positions: RBN PRXL MFRI

RBN is breaking out of a short flat base on base pattern, on strong volume. This chart really shaped up in April when it made that move off the bottom on very large volume. The entire uptrend that followed was full of BOP above the zero line with it mainly being green the whole way. The great intraday price action and accumulation, along with the constant green BOP the past month really does make this a nice chart. The only problem is that this is a very short base that it is breaking out of and has a higher chance of failure than a breakout from a base lasting at least 5 weeks. The fundamentals are very strong, with EPS growing between 45% and 517% the past seven quarters, sales growing between 8% and 12% the past four quarters, a ROE of 6%, cash flow of $.52 per share, and YOY earnings estimates for 2007 and 2008 for gains of 138% and 16% respectively. Fund ownership has grown from 74 to 90 funds the past four quarters, clearly showing the smart money is interested in this stock. Cut your loss with a close below the 56.70 level, if the stock does not move higher immediately.

PRXL is bouncing off the 50 day moving average and appears ready to breakout of this ascending base pattern, on very strong volume. This chart has been in a strong uptrend since the move off the January bottom on huge volume. Since then the uptrend has been full of accumulation, low volume pullbacks, and BOP above the zero line with sporadic moments of green. This is not the best chart but the bounce off the 50 day moving average and volume surge with BOP going green makes this a nice chart. The fundamentals are strong, with EPS growing between 40% and 244% the past five quarters, sales growing between 3% and 25% the past eight quarters, a ROE of 11%, 0% debt, cash flow of $1.86 per share, and YOY earnings estimates for 2007 and 2008 for gains of 43% and 26% respectively. Fund ownership, however, has fallen from 119 to 112 funds the past four quarters. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

MFRI is bouncing off recent support and the pivot point area of the July breakout, on very strong volume. This has been a very nice chart for well over a year with all the green to max green BOP and heavy accumulation. More recently, the stock has been in a very strong uptrend on very strong accumulation with strong BOP, since mid-May. The move today with BOP going green, along with the big surge in volume appears to be the start of a move to attack the old July highs. The fundamentals are good, with EPS growing 400% the most recent quarter, sales growing between 9% and 63% the past six quarters, a ROE of 13%, 77% debt to shareholder equity, cash flow of $1.60 per share, and YOY earnings estimates for 2007 and 2008 for gains of 50% and 55% respectively. Fund ownership has gone from 9 funds to 17 funds the past four quarters, showing that the smart money is definitely interested in this stock. Management still owns 24% also, so obviously they have a vested interest in higher prices. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

new very speculative long position: OPK

OPK is bouncing off the 50 day moving average and breaking out above the past two month’s resistance, on very strong volume. This is not a good long for newbie investors due to the huge inherent risk in this stock. I can not get any fundamental data on this stock from IBD’s Daily Graphs. I am not sure what the reason is but I am sure it is not the best of signs. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

adding to existing speculative long positions: HUB.A DGSE

HUB.A is bouncing off support near the 50 day moving average and breaking out to new 52-week highs from a two-week tight base, on below average volume. This is a beautiful chart going back to April, with all the great daily intraday price action, the excellent and huge accumulation along the way with low volume pullbacks, and the green to max green BOP all the way long (except two days). What makes the chart more perfect, in the short term, is that on the recent bounces BOP has gone max green from a high green. This makes this chart near perfect. The only problem I see is the RS line is lagging the price to new highs. It is also more risky with the low average daily volume of ONLY 9k a day. So newbies should use limits and not load up on this one. The fundamentals are pretty darn good, with EPS growing 6% in the most recent quarter, sales growing between 3% and 18% the past eight quarters, and a ROE of 16%. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

DGSE is breaking out of a flag pattern and closing at a new 52-week high, on very strong volume. This has been a very pretty chart since the move in June started. The intraday daily price action, huge accumulation, and max green BOP helped to create this pretty chart. The base was made on very quiet volume and with BOP staying max green the stock was looking pretty perfect. But on todayâ€™s breakout the BOP fell from max green to green. However, I guess with the RS line hitting a new high with price it is pretty much a break even event. The fundamentals are not very good, with EPS growing 33% this quarter after seven quarters of mixed results, sales grew 5% this quarter after an 18% slowdown last quarter, and ROE is 10%. Fund ownership stands at only 1 for the past four quarters. So obviously there is not a lot of interest in this stock, besides management which owns 79%. It is just a pretty chart. This is not a good long for newbie investors due to the poor fundamentals, non-perfect chart, and the low average daily volume. Cut your loss with a close below the 3.58 level, if the stock does not move higher immediately.