We are now down 17% from the peak of the run up in anticipation of the earnings announcement ($7.5). I am surprised at how dramatically RC has sold off especially given how strong earnings were. RC is definately undervalued, however now that earnings are out I am worried the stock got ahead of itself and is just going to drift down to where it was a few weeks ago (below $6 or even below $5). Does anyone see a catalyst in the near term to propel us back above $7?
Well, you could look at it as down 17% from the peak, or ... you could just ignore the past week or so and see that the uptrend continues.
Last week, MONTHS worth of stock was bought. Pretty clearly, there was one major buyer, and he was hungry enough (and clear enough about RC's value) to be willing to pay up to $1 above the previous quote to get his stake of - guessing - 500k shares. When the buying stopped, short-term'ers started to sell, and that's where we are today. Note that the volume has come down dramatically over the past few days (it's now closer to long-term averages).
If you look at the chart (I'm not a believer in TA, by the way), you'll notice that the UP days have been on high volume and the down days on lower volume for virtually the entire run-up from the 1's. Big buyers paying more than the current quote is very strong evidence that funds (or wealthy individuals) are accumulating shares.
Pullbacks like this are great opportunities. I know I will be buying again if RC drops back down into the 5's.
On the recent conference call, management indicated that in light of the recent debt rollover, they would now be willing to tap the buyback reserve to buyback shares "at these levels". Clearly trading at a deep discount to intrinsic value, buybacks in this range would be tremendously accretive to shareholder value. If RC only used the fund on the books ($3.5 million USD), the effect they could have on the stock would be profound.
I wouldn't let the pullback bother you. As distressed mentioned, the stock pops on very large volume, and drifts lower on low volume. Nothing goes straight up, although RC has tried (and will likely continue to try) its best.
I expect we will soon be having this discussion again relatively shortly, wondering why it pulled back from 8.50 to 7.50 in such a short time. And so on...
you may be right. There are a lot of undervalued stocks that are just sitting around while junk crap goes to the moon on hype. Earnings aren't in style right now but they will be in the future- if it somehow hit 5.00 (a major discount to BV) I would back up the truck.