Did somebody say PARTY?
Indeed, over-zealous stock market commentators, giddy analysts and tipsy traders on chat boards have been boldly trumpeting a tech party.
Excuse me, but if this was a party, I’m Warren Buffett.
Hold the champagne a minute. This was not anything resembling a shindig. This was a serious rehab program. It was the patient (ie. the Nasdaq composite index) crawling out of bed and taking one wobbly step forward (i.e. a six-per-cent Nasdaq step).
And then you pray the patient doesn’t trip over the intravenous lines and end up back in intensive care.
To put this rally into perspective, the Nasdaq, which has crashed 66 per cent from its all-time high of 5,000 19 months ago, would have needed to gain 200 per cent, not six per cent, to return to its pinnacle of the tech-craze days when stocks moved on pipedreams and hot air.
And if you happen to be one of the proud owners of Cell-Loc who bought at $80 a share, its all-time high, that weekly spike by Cell-Loc meant that your shares were down only 98.6 per cent and you can at least consider delaying plans to wallpaper your outhouse with them.
Among the high-profile companies on the Calgary tech scene, Cell-Loc (CLQ-TSE) was the clear winner with a 150-per-cent weekly jump to $1.10.
Besides rallying around strength in the tech sector, Cell-Loc was buoyed by news the company would receive $1.5 million from IQ2 Power Corp. for use of its wireless-location technology with an option to receive an additional $5.3 million.
Recoveries by other beleaguered Calgary tech companies weren’t exactly champagne poppers, considering how far they’ve fallen.
* Electronics Manufacturing Group (EMG-TSE) was up 32 per cent to 49 cents, which isn’t even within shouting distance of its year-high of $7.25.
* Wi-Lan (WIN-TSE) was up 20 per cent to $1.45, a far cry from its high of $89 in March of 2000.
* Zi Corporation (ZIC-TSE) was up 18 per cent to $8.92 (all-time high, $14.50). * Alternative Fuel Systems (ATF-TSE) was up 17 per cent to 331/2 cents (all-time high, $4.40).
At least the aforementioned stocks showed signs of life.
Several other Calgary-based tech plays remained comatose through the week.
RightsMarket, once a $3.25 stock, couldn’t move off a dime.
EarlyRain, which last traded at 12 cents, didn’t trade a single share all week. So, unless you had the guts to buy Cell-Loc at 44 cents and the patience to ride it all the way to $1 or more before selling, put the bubbly on ice.
The fact that Wall Street strategists like Abby Joseph Cohen have been shamelessly hyping the market again should be cause for concern. These daydreamers have been shooting in the dark and missing the mark for more than a year.
The reality is that this two-fisted bear market, fuelled by a war, widespread anxiety, waning consumer confidence and recessionary fears, could have another nasty knockout punch in it before a true rally materializes.
PRO'S THREE STARS
Peter Linder, Calgary-based oil and gas analyst with Research Capital, is assuming a bullish stance on natural-gas prospects while many of his peers remain bearish on gassy stocks.
Linder has raised his outlook for the price of natural gas from $4 to $5 (per thousand cubic feet). He believes not enough attention is being paid to the fundamentals in supply and demand balances.
Linder’s favourites are all gas-weighted companies — Canadian Natural Resources (CNQ-TSE), Bonavista Petroleum (BNP-TSE) and Gauntlet Energy (GAU-TSE).
Linder’s 12-month target for Canadian Natural is $57 (recent price $43.70, year range $37.25-$52.35).
“They have excellent oil and gas projects for the rest of the decade, they’re very well managed and they have no exposure to politically sensitive areas,” says Linder.
Bonavista (recent price $27.50, year range $21.75-$34.75) and Gauntlet (recent price $4.30, year range $1.50-$6.50) also made Linder’s top three in previous columns.
“Bonavista is one of the last quality senior gas producers left standing and they’re virtually all natural gas,” says Linder, giving the stock a $33 target.
Gauntlet, whose focus is also virtually all natural gas, gets a $6 target. Linder rates the company as a “potential takeover target.”
The analyst doesn’t foresee the red-hot takeover action in the Calgary oilpatch cooling anytime soon.
This year, Linder called three major takeovers — Anderson Exploration, Canadian Hunter and Genesis.
His top pick among takeover candidates? Rio Alto Exploration (RAX-TSE).
Linder’s Record (six Edge picks):
-10.8 per cent. Best Pick: Anderson Exploration +29 per cent. Worst pick: ProMax Energy -51.8 per cent.
* SAGE ADVICE: “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participating in it.” – Warren Buffett.
HOT ALBERTA STOCK: Cell-Loc Inc.
CLQ-TSE $1.10.
Up 66 cents (+150%) on 1,198,500 shares (for week ending Oct. 12).
Cell-Loc caught the wave of tech stocks and then took flight on its own merits — news that the Calgary-based company had a deal worth $1.5 million with a unit of IQ2 Power Corp. for the rights to Cell-Loc’s wireless-location technology in the Calgary region. The deal also has an option in which Cell-Loc could receive an additional $5.3 million.
COLD ALBERTA STOCK: Bushmills Energy
BSH-TSE $1.12
Down 88 cents (-44%) on 221,300 shares (for week ending Oct. 12).
Bushmills abandoned exploration of one of its Medicine Lodge wells near Edson, Alta., saying it was uneconomic. This was very unwelcome news to investors, who battered the stock to its year low. The Calgary-based natural-gas exploration company’s stock has traded as high as $2.59 in the past year.
