Tag - Rtk

In these cases, I often pass on the investment, but if I like the company I'll continue to watch for signs that it has broken out of the development stage.  Timing the investment properly can mean the difference between making, or loosing, a lot of money.

This brings me to the topic of today's issue. A reader wrote in about an exciting company that just reported its first profitable quarter.  However, when I looked closer, the company's operation is actually funded by a subsidiary in an entirely different business.  This is a case where it really pays to do your homework: investors who jumped into this stock at its recent high are now down 50% in a period of weeks.

That's not to say the stock won't go higher – it very well may.  But like I said, timing is everything, and this company makes for a good example of how to do your homework.  Since the company is interesting and may be a future pick, I'll share with you what I found...

Stocks are rebounding today after Monday's 2% sell-off. As of press-time, 2:00 P.M. eastern, the Dow is trading up 86 points at 9,222; the Nasdaq is up 24 points at 1,955; and the S&P 500 is up 9 points at 989.

Stocks in the Russell 2000 are up 1.56% and with the index trading at 556.

Leading small-cap gains halfway through today's session is American Axle (NYSE:AXL). The beleaguered auto parts manufacturer's stock is up 95% today on news that it will receive up to $210 million in ad from former parent company General Motors. The firm will receive $110 million in payments from GM to recover costs from GM's bankruptcy this spring. Another $100 million will also come from GM in the form of a loan against which American Axle will have the right to make draws. Other parties in the loan terms include JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC).

Other small-cap leaders include Rentech (Amex:RTK) up 74%; Huron Consulting Group (Nasdaq:HURN) up 35%; and Popular (Nasdaq:BPOP) up 28%.

*****Lowe's (NYSE:LOW) reported weak earnings yesterday. Plus, the company's guidance for current quarter earnings was weaker than expected. Needless to say, worrisome headlines about consumer spending sprang up, and stock prices went down.

At SCI Daily, we've been discussing how high unemployment necessarily means that consumer spending will be weak. And that with little chance of any improvement in unemployment in the foreseeable future, there's not likely to be more money spent. This is a major condition of my "Managed America" economic scenario.

Too bad Lowe's CEO Robert A. Niblock isn't a reader. He said "Wavering consumer confidence, unseasonable weather in core markets, and restrained customer spending compared to last year's fiscal stimulus-aided results led to lower than expected sales in the second quarter…"

Yeah. It's the weather. That's it.

And Lowe's COO Larry Stone ran with it, saying that the mild summer has led to declines in air conditioner sales. But Stone said the heat wave in August has air conditioners selling at a "…pretty good clip."

Apparently better air conditioner sales couldn't keep Lowe's from lowering future guidance and scaling back its expansion plans.

*****The Fed is phasing out several economic rescue programs. Treasury bond purchases and a money market lending program will expire, while a program for loans to commercial banks is being scaled back. 

One program that isn't in danger of getting cancelled is the Term Asset-Backed Securities Loan Facility, or TALF. That's because TALF was expanded to allow commercial real estate assets to qualify under the program. And with $165 billion in commercial real estate loans due this year, and values down 35%, TALF could come in handy.

Again, despite the fact that it's essentially taxpayers at risk, this is a good thing for the economy. And we expected the Fed would do something to help commercial real estate. 

*****Jason Cimpl, the technical analyst for TradeMaster Daily Stock Alerts
just nailed down another winner. This time, his readers were treated to a 29% gain on PPG Industries (NYSE:PPG) in just under two months.

Never heard of PPG Industries? Well, me neither, until Jason uncovered an extremely bullish trading pattern on the stock chart and recommended it to his readers. Jason is extremely skilled at finding profitable trading patterns on stocks, both well-known and unknown.

Now, Jason has his readers positioned to profit from a downward move in financials stocks. For more, click HERE.

*****We have a winner! I'm pleased to announce that we have a winner in The Small-Cap Investor t-shirt contest.
 
We received hundreds of submissions from our readers around the world. And 470 of your fellow readers voted for their favorite t-shirt slogan. The winning t-shirt slogan received 41% of the audience's vote. And the slogan is…"Don't sweat the big stuff. Trade the small stuff. The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks."
 
The slogan was submitted by Monika Schmidt. Monika will receive a one-year membership to all of my advisory services, a $2,680 value. Plus, she'll get a personalized, autographed copy of my The Small-Cap Investor and three t-shirts with her winning slogan. Congrats Monika, and thanks for contributing a great slogan to our contest! We hope you enjoy your complimentary membership to our investing newsletter services, including SmallCapInvestor.com PRO.
 
Monika's winning idea was one of many great submissions we received from our audience.  The runners up were as follows:
 
#2: "For profits to peak, small-cap stocks are what we seek." Contributed by Keith Timm, received 91 votes or 19%

#3: "Profit Like the Big Dogs by Investing in the Little Dogs. Learn the Secrets to Winning Big with The Small-Cap Investor." Contributed by Bryan Alvarez, received 74 votes or 16%

#4: "Economy = Uncertain; Stock Market = Volatile; The Small-Cap Investor = PRICELESS." Contributed by Dr. Paula Tucker, 62 votes or 13%

#5: "Got Profits? The Small-Cap Investor. It does a portfolio good!" Contributed by Jannica Beam Johnson, 48 votes or 10%

Everyone who submitted their slogan has received a complimentary one-month subscription to SmallCapInvestor.com PRO. If for some reason you haven't already heard from Claire in my office, please call her at 202-420-7800 and she can setup your complimentary one-month membership. I hope you enjoy your trial, and consider purchasing a copy of The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks. You can pre-purchase your copies today by clicking here now.

Thanks again for your support and interest. Once the t-shirts are available, I'll share the design with you. 

Best Regards,

Ian Wyatt
Editor
Small Cap Investor Daily

P.S. My book The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks is coming out on September 14 - visit www.smallcapbook.com to learn more. You can also follow me on http://twitter.com/ianwyatt 

Ian Wyatt is the Chief Investment Strategist of SmallCapInvestor.com and author of The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks. You can learn more about his book and receive small-cap stock picks at www.smallcapbook.com.

Small-cap stocks opened sharply lower, pressured by a renewal of the credit crisis fears and reeling from a dramatic surge in crude oil that could crimp consumer spending habits and weigh on sentiment. At 9:52 a.m. ET, the Russell 2000 (NYSE:IWM) was down 4.43, or 0.62%, at 715.12.

Financial shares sparked a wave of overnight selling after American International Group (NYSE:AIG) released earnings that disappointed investors and renewed concerns about debt write-downs among financial institutions. AIG tumbled 5% on the regular opening (which was better than the overnight showing), and the largest bank Citigroup (NYSE:C) was basically flat — also not as bad as overnight action — as the CEO spoke at an investor meeting.

There also was talk of asset allocation plays being back in vogue this morning, with investors shifting money away from equities and into treasury products. The old stock market adage “sell in May and go away” appeared to have a life this first full week of May trading.

In a Goldman Sachs research report released overnight, analysts say that the underlying shock of mortgage credit defaults is large and “still has a ways to go.” Although they say that some of the markets that have been beaten down will normalize and create positive spillover on sentiment in the broader economy, they said that excess housing supply, acceleration of home price declines and over leverage in the U.S. housing market will not go away anytime soon.
 
“We believe that such losses (from over leverage) imply further adverse surprises for balance sheets in parts of the financial sector, with correspondingly adverse effects on lending and economic activity. The focus of the pain is likely to shift away from subprime mortgages, where the markets are already discounting very large losses, to other residential mortgage debt, including prime mortgages. This is one reason why we are expecting a renewed slowdown in economic activity after the stimulus-fueled bounce in mid- to late 2008. In turn, it makes us fairly confident that . . .

Rentech, Inc. (AMEX: RTK) shares are up after the maker of synthetic fuels reported fourth-quarter revenue of $29.6 million, up 10% from $26.8 million a year earlier. The firm’s quarterly gross profit rose to $1.96 million, from $1.2 million in the year-ago period. The company said the increase in revenue was due to improved pricing and higher demand.

“We are extremely pleased with the strong performance of REMC, which has far exceeded our expectations,” CEO D. Hunt Ramsbottom said in a statement. “We continue to expect robust demand and pricing for REMC’s fertilizer products and will continue to invest in the plant to ensure that we are able to extract the maximum value from the market opportunity for REMC’s products.”