Morgan Keegan yesterday:
AS&E Update: We recently met with AS&E management for an update on the company's current major initiatives. Below
we highlight our key takeaways:
� CAARS: According to management, revenue from the developmental phase of the CAARS program is modestly
profitable. We had previously modeled this funding as breakeven, and are therefore revising our FY 2008 earnings
estimates upward (please see "Revising Estimates" section of note).
� Phoenix pilot of SmartCheck: Management indicated that the Phoenix, Arizona pilot tests of SmartCheck, the
company's backscatter based personnel screening solution, are going well. We continue to believe that the maximum
potential for SmartCheck would be to serve solely as a secondary source of screening. Management agrees, stating
that SmartCheck "will not serve as a replacement to metal detectors."
� Acquisitions: Recently, there has been a great deal of talk surrounding AS&E and possible acquisitions. This talk was
fueled by the recent joint venture established by Smiths and GE (GE, NR - $36.00). This was due to the thought that
competitors would seemingly have to combine forces in an effort to compete with the soon to be created security giant
(Smiths/GE JV). However, we do not believe AS&E will be actively seeking acquisitions over the coming months due to
a significant premium associated with most security companies we deem attractive targets..............Maintaining Market Perform rating on ASEI: We came away from our meeting with management slightly more positive
on AS&E than we were at this point last year. We are encouraged to see the company continues to work to diversify its
revenue stream beyond one primary product (ZBV) and one primary customer (DOD). The company is gaining traction
with its cargo screening line of products, as well as with its personnel screening solution. In addition, management noted
that the company now has a "handful" of $10+ million customers........"
Looks good. Back when I traded oil companies, their value seemed to follow the price of oil. Now they seem independent since the price of oil has been stable and relatively low for a long time.
I figured if the price of oil companies was going to follow the price of oil then USO was a pretty pure play. I did OK until August 2006 when the oil bubble burst.
Be careful, those prices of VLO and Sun have been climbing for quite a while. Same with copper. I do not think that copper can stay this hi for long. Sure, long term copper will always be pricey, but there will be a consolidation in price soon. Just be careful of what happened in Aug 2006. All commodities dropped along with the oil bubble bursting.
Also mentionef was...
"there are 21,624 warrants outstanding as of 12/31/2006, if NOT (my caps) exercised, these will expire in May, 2007"....
Do you know if these are the $59.00 warrants??
Do they expire on May 19th, 2007??
Appreciate ay comments on above as IF above is correct...Could provide financial incentive for normally silent + cautious management to release (held back??) sales, etc a few weeks prior to expiration...
<I could quote you the flipside of that. All attempts at rallys seem to go nowhere.>
You could, but I wouldn't agree with it. The indices have double bottomed and are now several percent off the lows while negativity continues to fester. I'm hearing a lot of anecdotal talk about shorting the index ETFs. I think I want to be on the other side of that trade for a multimonth rally. Yes, it did take a few months for things to bottom last May, but not every market setback plays out the same way.
Your record is very impeccable and I challenge your views with great hesitation.
I could quote you the flipside of that. All attempts at rallys seem to go nowhere.
I will admit that the selloff that I was expecting has not occurred yet. This is the 3rd leg to the selloff that began Feb 27. Two weeks later was the next selloff. Seems the market is moving sideways. Big up resulted in folks selling, big downs resulted in folks buying. The selloff back in May 06 took about 3 months to break out again.
I'll will be honest and admit I do not know what to make of it. I am basically long with puts on the S&P, AAPL, GS and PCU. I think copper is quite overpriced.
I do not have the guts to bet on the oil runup. I would buy USO for that. I have been burned before on oil.
At this point I will watch. I am not ready to sell my puts nor am I ready to invest in some stocks I have my eye on: GROW, HANS, NVEC, VPRT, SPAR.
I still think ASEI is going to just go sideways. There has been news about the company but at this late stage, that news is going to invite only late to the party types into the stock. Tye have a good chance of being burned unless they wait until ASE has moved up on hi volume then follows through with a move up several days later. Moving up on a single sale is just going to be a short term suckers rally.
Good luck with your trading.
<Put/call ratio is not a contrarian indicator unless it is extreme. It is not really extreme at this point, at least for the S&P.>
I'm surprised to hear that, because the overall put/call ratio is at an all-time high. The negativity out there is pretty massive and it wouldn't surprise me if a multimonth rally is upon us. Notice how these attempts to sell off on bad news go absolutely nowhere.
Put/call ratio is not a contrarian indicator unless it is extreme. It is not really extreme at this point, at least for the S&P. Also Mom and Pop, who are usually wrong, do not trade S&P options much. I think S&P option activity is trading from institutions
I can see big buying demand in the strength of some stocks.
Folks are not going to hold long over the weekend with the Iran - British issue. Also the higher price of oil is not a good sign either.
BTW, not sure ASE will hit 44. I just think it will trade sideways for a while. Yawn.