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Smith Micro Software Inc. Message Board

  • storyteller216 storyteller216 Jun 2, 2009 9:52 PM Flag

    Climax volume and why should hang on

    I'm hanging on the rest of my shares for a while now.
    Why?

    Take a look at the 5 year volume & price charts
    Notice how the volume moves up with price culminating in a frenzy of buying pressure near the top, then selling pressure on the way down until the volume returns to "normal" when the price swing ends.

    Look where we are now - the volume is picking up, but nowhere near where it was during the last two price peaks. In fact, it is only just above "normal" and really hasn't shown much indication of momentum buying - yet.
    As SMSI continues to make new 52 week highs some momentum investors will soon see this chart as well and begin buying, then more than a few value investors will take notice if there is a positive earnings surprise. Buying pressure will build even more as momentum investors receive confirmation of their “strategy.” Look at what happens to the price when ever momentum buying kicks in!

    The way I see it, it appears there is a 3 – 5 x price increase over the low to the climax high, but that high must be accompanied by climax buying. So if the low was $4 then simple math says the high is $12 (3 x $4), but since we have yet to see any signs of climax buying, my bet is on a 6 - 7x increase ($24 – 28). If accompanied by a real earnings surprise for several quarters in a row, we could see even more than that.

    Add in a buyout rumor, huge new customer sales, recovering market conditions, SMSI declaring itself to be the greenest software maker out there, branding of an SMSI battery technology for plug in hybrids, and other unforeseen pluses, and we could see $50! Maybe you could buy the bridge I have for sale….

    So hold tight to your shares until at least the first wave of momentum buyers appear, but you may want to hold tight for climax buying.

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    • Robert;

      Welcome. Pleased to have your perspective which is just more reinforcement that $10 or $12 need not be a "barrier" that was created in the 16 to $10 crash of Nov `07.

      Another thought here is there are quite a few investors that won't touch a company under $10, and it usually looks and feels too much like a penny stock. Now that we've crossed that threshold, there may be a few more investors that will give Smitty another look.

    • smoke'n to $28

      and some cold pizza for the munchies

    • Welcome Robert, Late to the party? I think not. Many of us have been here for 3 years riding this thing form the $6's to $21 and back again!

      I'm one of them. But I am not alone.

      I think we've got it right this time...

      Good luck.

    • You might like to get some input from a new investor in SMSI.

      I first bought a few weeks ago when SMSI hit a new 52 week high, as it was featured in an article with another stock I already owned.

      I am always late to a party, almost never buying a stock when it is unknown or below $5. But I don't ever come late enough that I am buying at the top. If I found it at 9, you can bet other risk-averse investors will find it at 10. A fast run-up really doesn't mean a stock will go down if it is still fundamentally undervalued.

      SMSI is the second highest on my list of undervalued stocks right now. I think a PE of 25 is possible, giving a target of 19 in 7 months. You also might want to check out EBIX, which seems too undervalued to be true.

      Cheers,
      Robert

    • bill's going to have a climax when smith reaches 28?

    • cane5@att.net cane5 Jun 3, 2009 10:31 AM Flag

      Im proned to agree with you.Most just got out and took their losses.There are a few ones like us that have hung on and thank goodness its come back somewhat.

      I kind of like the way the stock is hanging in there.Though off its high of 10.30 yesterday its staying in the dollar area which is a pschological win.

      Dont get me wrong the technicals are as strong as you can get.And the story is good with SMSI.In fact wireless is getting a second footing with stronger speeds and new devices.So going forward you have to feel like we are in the right place.

    • cane5@att.net cane5 Jun 2, 2009 11:04 PM Flag

      Storyteller

      As far as I know you can only make one 52 week high and we have already done that.We have a chart that is almost straight up.No stock goes straight up. Chances are it tests support and hoefully consolidates there without any acute losses.

      Also we have 30 thousand shares outstanding and our total year sales are projected to be liberally 130 million.If you divide those two and add in cash our stock price shouldnt be more than 6 to 8 dollars a share.

      Giving every reasonable accounting of where this stock is.Id be really happy now and take a bit more off the table.

      Keep 5o percent of your positiona and hope to god Smith can execute in every way to make the highest margins and continuing higher revenues going forward.

      • 3 Replies to cane5
      • <As far as I know you can only make one 52 week high and we have already done that.>

        Hmmm. In my math world, you can make a new 52 week high every day if that day's HOD is higher than yesterday's, which was also a 52 week high. this is true because yesterday's 52 week high was well, higher than all other daily closes including a year ago today's.

        If this logical proof is not true in some set theory that I'm familiar with I'd be happy to stand corrected, but I'll bet it involves multi-dimensional spaces (mathematical, not physical) and imaginary numbers (which are valid math operands).

        <Also we have 30 thousand shares outstanding> That would be 30 million give or take, but I get your point.

        But I think you have forgotten, or do not know, that a Price Earnings ratio (PE) is really a sliding scale of market value based how the market feels a company should be valued. It's an odd concept I know, but currently the PE for large Cap stocks is somewhere around 14 - 15 (it may be higher after this recent run up ) and is a typical bench mark for well, large companies. If you are perceived as a fast growing company in a fast growing market segment, the PE your company is "granted" by the collective wisdom of all traders could be 20, 30, maybe 40 or higher.

        Last the E in PE is earnings, that's NOT revenue as in your example. This is why so many focus on the earnings per share (EPS) because if you multiple the EPS, by the perceived PE, then add in the cash per share, you can come up with an approximation of the price others are willing to pay for the stock.

 
SMSI
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