Happy Easter everyone! May the lovely festival of Easter bring you lots of joy, love, happiness, faith and hope. Once again, there is...

Weekly Superstock Scan 2 April 2018 - 6 April 2018: Nil

Happy Easter everyone! May the lovely festival of Easter bring you lots of joy, love, happiness, faith and hope.

Once again, there is no potential superstock this week. There is no stock that passed the technical screen, reflecting the lack of control by the bulls in recent weeks.


Looking back at the first quarter of 2018, my hit rate has been fairly low. All of the Singapore based superstocks did not work out. The saving grace was BXC which more than doubled in price, giving me a positive trader's equation. CRNT and ULBI started off well after I entered a position in them and they might show their full potential in a few more weeks' time.

It was an exciting week in the market with the US-China trade spat. On the contrary, my superstock scan did not see much excitement as no po...

Weekly Superstock Scan 26 March - 30 March 2018: Nil

It was an exciting week in the market with the US-China trade spat. On the contrary, my superstock scan did not see much excitement as no potential superstock was found this week.



This week, two US stock did passed the technical scans. The first one was LOAN. It has a fairly nice breakout from a box but its industry (REITS) is not a sector that I am looking to find superstock from. The second company was RUN. Nice technical as usual, but its fundamentals were not good enough.

With this, we will be moving on to the second quarter of the year next week. Looking for even better quarters ahead.

The potential superstock for the week is Ultralife Corporation (ULBI) . ULBI designs and manufactures power and communications systems incl...

Weekly Superstock Scan 19 Mar 2018 - 23 Mar 2018: Ultralife Corporation (ULBI)

The potential superstock for the week is Ultralife Corporation (ULBI). ULBI designs and manufactures power and communications systems including: rechargeable and non-rechargeable batteries, charging systems, communications and electronics systems and accessories, and custom engineered systems. ULBI sells their products and services to government defense and commercial sectors internationally.

ULBI operates in two operating segments:
  • Battery & Energy Products segment: includes Lithium 9-volt, cylindrical, thin cell and various other non-rechargeable batteries, in addition to rechargeable batteries, uninterruptable power supplies, charging systems and accessories, such as cables.

  • Communications Systems segment: includes RF amplifiers, power supplies, cable and connector assemblies, amplified speakers, equipment mounts, case equipment, integrated communication systems for fixed or vehicle applications and communications and electronics systems design.

In 2017, the Battery & Energy Products segment contributed to 82% of ULBI's revenue, and 52% of ULBI's revenue was obtained from government and defense.





Technical



ULBI has been trading in a box from $6 to $8 since July 2017. Last week, price broke strongly above the box to $9.60 before closing at $9.35 for the week. The volume for the week was 460 thousand shares, almost 3 times its average weekly trading volume.

The $7.50 to $8 region has served as strong area of resistance since 2010. If ULBI can stay above the resistance, the next major resistance may be as far as $15.

There was no earnings release or press release last week, so the reason for the spike is unknown


Fundamentals



Including the most recent quarter, ULBI recorded 6 consecutive quarters of year-on-year EPS growth (including flat quarters). 

New Products for the IoT market

ULBI has developed ThinCell products and 3-volt cylindrical cells that are commonly used for wireless devices in IoT. ULBI estimates that there could be 50 to 100 million units of household security systems and other types of devices produced, and ULBI is targeting to capture 5% to 10% of the market. At this point, ULBI is already working with more than 20 companies for possible collaboration in the IoT space.

Other than IoT, ULBI is also looking at new products opportunities in the medical, asset tracking and robotics market.

Increasing Backlog

ULBI's order backlog at the end of FY 2017 was $39 million, 49.3% more than the end FY2016 backlog of $26 million. This is driven by higher demand for medical products and a large order for their Vehicle Amplifier-Adaptor through a large global defense supplier for the U.S. Army's Security Force Assistance Brigades.

Return of Government Orders

ULBI saw difficult government spending environment for the past few years. In Q4 2017, early signs of recovery continue to emerge and revenues increased 8% year-on-year with contributions coming in from the DLA and World Business Channel Partners.

Furthermore, the new defence budget gives the Pentagon an increase of US$80 billion this year and US$85 billion next year. This is good news for ULBI as that will mean more orders from the DoD and some of them involving longer term projects with the increase visibility of more funds coming in the future.

Matrices
o Small float of 9.75 million shares with a average daily trading volume of 34000 shares. The float is thus almost 290 times its average trading volume.
+ ULBI is trading at 25.3 times its trailing twelve months EPS.

Risk Factors/ Things I do not like:

  • High Valuation: Its current valuation is on the high side. Its growth rate may not be able to support a higher valuation, hence the upside of the stock may be limited. We may even see a drop in share price if the company is deemed as overvalued.
  • Sporadic Nature of Government Orders: Defence/government orders contribute a significant portion to ULBI's revenue. However, orders from U.S. DoD and other international defense organizations can be sporadic based on their needs. ULBI is trying to diversify into the commercial sector to smoothen out its revenue stream.

The potential superstock of the week is Xcerra Corporation (XCRA). XCRA is a provider of test and handling capital equipment, interface prod...

Weekly Superstock Scan 12 Mar 2018 - 16 Mar 2018: Xcerra Corporation (XCRA)

The potential superstock of the week is Xcerra Corporation (XCRA). XCRA is a provider of test and handling capital equipment, interface products, test fixtures and related services to the semiconductor and electronics manufacturing industries. Xcerra operates in the semiconductor and electronics manufacturing test markets and is the parent company to the atg-Luther & Maelzer, Everett Charles Technologies, LTX-Credence and Multitest businesses. Semiconductor designers and manufacturers worldwide use XCRA's test and handling equipment and interface products to test their devices during the manufacturing process.






XCRA operates in two reportable segments
  • Semiconductor Test Solutions (STS): Includes operations related to the design, manufacture and sale of automated test equipment for the semiconductor industry that is used to test system-on-a-chip, digital, analog and mixed signal integrated circuits.
  • Semicondutor Handlers: Includes operations related to the design, manufacture and sale of test handlers used.

Technical



XCRA has one of the best long flat base that I have seen for some time. Since April 2017, XCRA has been trading in a very tight range from $9.05 to $10.23. Last week, price broke strongly above the base to hit $10.93 before closing at $10.67. 

The volume of the week was 10.6 million shares, almost 4 times its average weekly trading volume. There was no news last week, but the volume started to pick up two weeks ago. Then XCRA reported outstanding quarterly results along with a 'negative news' of a failed merger. After two weeks of tug-of-war, it appears that the bull has taken control.


Fundamental



Including the most recent quarter, XCRA recorded 6 consecutive quarters of year-on-year EPS growth. 

The current quarter was an especially good quarters, as XCRA reported $0.14 EPS compared to $0.05 a year ago. The company highlighted that Q2 is a seasonally weak period and the current Q2 EPS was XCRA's highest for any fiscal Q2.


Failed Acquisition by Hubei Xinyan

XCRA announced last year that Hubei Xinyan Equity Investment Partnership had agreed to buy the company’s all outstanding shares for US$10.25 per share in cash, which valued it about US$580 million.

Two weeks ago, XCRA announced that it will terminate its sale, citing difficulty in getting U.S, approval for the deal. 

While the deal was beneficial as it will allow Xcerra to accelerate its growth in the China market as well as broadening and strengthening their customer relationships around the world, the failed deal was not all negative.

After the acquisition was announced, shares have traded around the acquisition price while revenues and earnings have grown strongly, suggesting that the company may be undervalued at the acquisition price. Moreover, Xcerra can still reap the benefits without being acquired as XCRA and Xinyan are discussing alternatives to pursue opportunities in new and existing markets in China.

Increasing Market Share Through New Products

XCRA saw share gains in 2017 for all STS products, specifically, XCRA gained two points of share on SoC tests, two points in handling and contactor revenues are now at record levels. 

One of the main reason is the rollout and instrumentation that they put on Diamondx and growth into specific regions including Japan. XCRA also launched multiple new sensor applications for InMEMS solution that brought in more customers coming into volume.

For the electronic manufacturing segment, growth has out-paced the market too except for the fixture service business.

XCRA is expected to gain share through a product introduction in 2018. XCRA has pointed out that the MEMS space may be a potential catalyst in late 2018 (2019 fiscal year) driving the handling upside.

Matrices
o Float of 50.2 million shares with a average daily trading volume of 1.2 million shares. The float is thus almost 40 times its average trading volume.
+ XCRA is trading at 11.4 times its trailing twelve months EPS.


Risk Factors/ Things I do not like:


  • Multi-year Resistance level: The $11 level served as a multi-year resistance level for years. XCRA's share price bounced off the resistance level in 2010 and several times in 2014 and 2015 but failed to break above. It may be tough for XCRA to break above $11 once again.


This week, there is no potential superstock of the week. During the technical scan, only one US company made it through the technical scan. ...

Weekly Superstock Scan 5 March - 9 March 2018: Nil

This week, there is no potential superstock of the week. During the technical scan, only one US company made it through the technical scan. The company is ProPhase Labs, Inc. However, the fundamentals was not good enough, i.e. it has a year-on-year EPS fall.


It has been quite a long time since I updated something other than my weekly superstock of the week report, maybe it's time to update what will be going on with superstock and other components of trading this year.

1) Superstock

I realised I have not had a round up of all my picks that I had in 2017. Meaning that among all the superstocks that I posted in 2017, how many were profitable based on my strategy and how much would my profit in based on an equal weight strategy.

I am also interested in conducting a study on my superstock picks to investigate the drivers of superstocks, meaning factors are most important in determining whether a potential superstock will turn up to be a loser, winner or multibagger. I am also interested to find out if by buying a potential superstock based on technicals alone is a profitable strategy.

 2) Daytrading


In the past few months I have been binge reading Al Brook's three books on price action. Daytrading was the main contributor to a losing year in 2017 mostly because I was unprepared. I would want to give daytrading another chance because it makes (and loses) money fast and I am way behind on my retirement plans.

What I intend to do this year was to study Al Brook's book extensively (at least twice per book) and I am looking at signing up for a day trader course by the end of the year. In the meantime, I will paper trade based on the strategies I learnt from the books and course.

3) Cryptocurrency


This was my new venture since the end of last year when cryptos are really hot. After a strong surge and a pullback, cryptos have been relatively stable in the past few weeks. This component is a low maintenance component for me as I am choosing the cryptocurrencies to invest in based on a newsletter subscription.


4) Forex


I expected this to be my bread and butter strategy. After months of backtesting, I believed that I have an edge using the strategies I developed. I started to trade the strategies using very small sum of money. In January, I was barely profitable and February was a losing month. I am testing to see if it is a strategy problem or was it an execution problem. I am also waiting to see how the trading using the same strategy will turn out to be in March.
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All information in The Trader Diaries (TTD) does not constitute to investment advice or recommendation to buy, sell or hold. Readers are advised to consult their financial advisors prior to making any investment or pursuing any investment strategy. TTD will not be liable for any losses resulted from information published or shared from the blog.