I know someone who bought Cell-Loc a year ago at $75 a share when it was all the rage in town. He advertised the fact with cellphones in both ears, breathlessly bragging about his wisdom.
I asked him how the wife and kids were doing.
“Stole Cell-Loc on the dip today!” he replied.
I asked him if he wanted to go bowling.
“I’m going to buy some more Wi-LAN,” he responded. “Hey, what are you waiting for at $85? This baby’s goin’ to the moon . . .”
The other day, we crossed paths at Costco. I think he was there for the free buffet.
I asked him how his babies, Cell-Loc and Wi-LAN, were doing and he said the wife and kids were fine.
He may have been busted, but he had a new lease on life. There were no cellphones, no hot tips, no bloated ego. My bowling pal had come back to Earth from Mars.
Thank you, stock market, I thought.
It’s amazing what a 90- or 95-per-cent hit on a tech stock can do for one’s perspective and personal growth.
A year ago, an obscure tech company burped and its share price spiked 50 per cent. Frothing tech traders broke every rule in the book. They stopped looking at companies with earnings. They laughed at laughable price-earnings ratios. They played all the hunches and fairytale stories.
Mesmerized by tech mania, my friend ignored all the red flags and he’s still carrying Cell-Loc, the Calgary cellphone tracking company that is down about 97 per cent to a recent price of $2.75; and Wi-LAN, the Calgary wireless tech company, down about 92 per cent to $7.25.
But he’s smarter and humbler.
In recent weeks, the coast-to-coast hand-wringing and lawsuit mania has been over Nortel Networks, but the fibre-optics giant hasn’t done so badly, relatively speaking.
Nortel’s 72-per-cent drop from a year ago doesn’t look quite so bad next to devastated stocks such as Book4golf.com (Internet tee-time booking, down 97 per cent to .34), Brocker Technologies (software, down 96 per cent to .55), Global Investment.com (online financial service, down 94 per cent to .13) and Sikaman Gold (3-D Internet mall, suspended from trading by the TSE) and Samsports.com (online sports instruction, suspended from trading on the CDNX).
Unlike Nortel, many of these won’t recover.
If you’d taken your tech profits a year ago just before they fell off a cliff and channelled them into oil and gas, you’d be sitting pretty.
Take a look at Anderson Exploration, which was trading at $18.50 a year ago. It has quietly doubled to $37 in the past year.
PRO'S THREE STARS
Vancouver-based analyst Ross Turnbull of Odlum Brown is steering clear of tech stocks.
“I don’t believe the carnage is over yet,” cautions Turnbull, noting his company’s weighting in technology is only 20 per cent.
His top pick is Calgary oil-and-gas play Gulf Canada (GOU-TSE), which he rates a strong buy with a 12-month target of $13. Gulf recently traded at $8.65 and has a year range of $4.75-$9.55.
“The balance sheet has improved substantially and they have great exploration prospects on the east coast,” he says.
His other picks are biotech star MDS Inc. (MDS-TSE) and auto-parts manufacturer Tesma International (TSM.A-TSE).
MDS is rated a buy with a 12-month target of $30 (recent price, $22, year range, $18.75-$32.37).
“We think MDS is a great way to participate in biotechnology because, unlike most biotechs, they have earnings. There’s less risk.”
Tesma (recent price, $27.15, year range, $18-$31.90), is also rated a buy by Odlum Brown with a 12-month target of $40. The subsidiary of Magna International makes engine, transmission and fuel components.
“When sentiment turns in the auto industry, which we believe will be the case in six months to a year, we believe Tesma will do very well.”
Turnbull holds positions in all three companies.
TRADING TIP
When the market looks about as safe as a landmine and is overcome by fear, which seems to be the case lately, savvy traders start to take gradual positions.
SITE OF THE WEEK:
Baselinereporting.com.
This is a unique online investing service that focuses on about 135 of the biggest publicly traded oil-and-gas companies, selling subscriptions at $250 per year.
HOT STOCK: Northstar Drilling Systems
NSD.A-TSE $1.80
Up .50 (+38.5%) on 957,200 shares (for week ending March 9).
Shareholders received a nice pop on news that Calgary-based Northstar was merging its Polaris electromagnetic technology business with NQL Drilling Tools. As a result, Northstar shareholders will receive a fifth of an NQL share for each Northstar share. Considering NQL has been trading in the $9 range, the news had shareholders gushing with excitement.
COLD STOCK: Snow Leopard Resources
SNW.A-TSE 35.5 cents
Down 20.5 cents (-36.6%) on 2,100,100 shares (for week ending March 9).
It's tough enough being a fuel-cell penny stock these days without having to admit to shareholders that you’re having technical problems with your technology, which seems to be the problem at Snow Leopard. The Calgary-based company said it was suspending activity at an Illinois facility because of non-processing related difficulties, primarily cell leakage and cracking caused by a lack of moisture. Ouch.
