Category Archives: Asian Stocks

Logitech International is Now Over the Hump (LOGI)

To say the past twelve months have been tough ones for Logitech International SA (NASDAQ:LOGI) might be an understatement. Shares have fallen from a high of $10.29 last September to a low of $6.24 in April of this year. Though LOGI hasn’t traded lower than that since then, it’s not like the stock’s suggested it wants to stage a major recovery… unless maybe you look really, really close. Well, I did.

If the name rings a bell, it may be because you’ve got some Logitech International SA equipment attached to the device you’re using right now. The company makes computer peripherals – speakers, keyboards, cameras, etc. Their stuff is among the best in the industry. That’s not why I’m rapidly becoming a fan of LOGI, however. In fact, the organization has failed to turn a profit over the past four quarters (on a net basis). I’m rapidly becoming a fan because the chart says the worst of the company’s sales and earnings struggles are behind it.

How’s that? In simplest terms, LOGI has now made a higher high following a higher low. It’s the first time it’s happened in over a year.

Don’t discount the importance of that detail, and its technical ramifications. Logitech International SA has been working on this rebound for months, slowly logging an arc-shaped reversal (the kind that sticks) since late March. As of this week, however, that turnaround effort finally finds the undertow working in its favor.

Analysts foresee numbers that jive with the stock’s recovery. After Logitech International lost a total of $175 million over the past twelve months on $2.11 billion in sales, these pros are looking for a per-share loss of $1.11 for that timeframe to turn into a $0.27 profit per share this fiscal year. Sales are still expected to roll in at only $2.03 billion this year, but are projected to improve to $2.08 billion in fiscal 2014, when the company should earn $0.43 per share. That’s officially a turnaround.

It’s not just a pipedream either. Last quarter, LOGI beat estimates for the top line as well as the bottom line. Better still, the company is now on a mission to divest all divisions and product lines that aren’t profitable by the end of 2014. That’s music to investors’ ears, played by Logitech speakers.

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If You Liked Randgold Resources, You’ll Love This Junior Name (VGZ, GOLD, GLD)

A couple of days ago when gold and the SPDR Gold Trust ETF (NYSEARCA:GLD) were getting back into a bullish groove, I advocated Randgold Resources Ltd. ADR (NASDAQ:GOLD) as the better way to play gold’s rebound. GOLD had fought its way back above a key ceiling, and was poised to take off… much more so than GLD was. To tell you the truth though, Randgold Resources Ltd. wasn’t actually my first choice. The gold mining name I wanted to suggest was a little smaller – Vista Gold Corp. (NYSEMKT:VGZ). In the meantime, VGZ has forged out enough of the bullish progress I saw brewing then to merit a mention now.

With a market cap of only $88 million, VGZ isn’t exactly capable of commanding the same kind of attention that $7.5 billion GOLD can. The fact that Vista Gold isn’t actually producing gold isn’t helping either. But, for those who know the difference between a ‘trade’ and an ‘investment’ (Randgold Resources Ltd. is an investment, while Vista Gold Corp. is a trade), there’s some serious opportunity with Vista as of today.

It’s all in the chart. Last week, VGZ broke above a key falling resistance line (red); what you can’t see is how that line tagged the peak from September of last year. This week, Vista Gold Corp. shares broke above their 50-day moving average line (purple). Both are multi-month firsts, which in itself is an indication of a paradigm shift. But, to see them at the same time signals a major turning of the tide. After nearly eleven months of bearish pressure though, this small bullish nudge could simply be the first step in a much bigger rally.

There’s more to the budding rally than just a technical catalyst though. Gold prices themselves are on the rise, and that – philosophically anyway – makes gold mining names like Randgold Resources and Vista Gold more profitable. The costs to mine the stuff are fixed, but the price at which it’s sold is variable. Margins widen considerably even with just the slightest uptick in gold prices. In all actuality, this is irrelevant for VGZ, since it’s not producing gold yet. The power of association and potential is a strong one when it comes to stocks, however, so this little company is most definitely on the right side of the trend.

As for how long/far Vista Gold could rally, that’s still a function of gold prices; how long/far can GLD rally? The projection I made for gold on Wednesday still stands. Translating that into a firm target for SPDR Gold Trust ETF, the fund should reach the $143 area before hitting any major walls. That’ll also be when GOLD and VGZ start to struggle. Should be a great ride between here and there though.

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Take the Sigma Labs Clues at Face Value (SGLB)

For veteran traders who’ve kept tabs on Sigma Labs Inc. (OTCMKTS:SGLB) over the past three months or so, it may be surprising to hear someone suggest it as a buy. Like so many other stocks of its ilk have done since the beginning of the organized market, SGLB went from (proverbially) zero to hero between late May and mid-July with a move from $0.025 to a peak of $0.118 only to fall back to the $0.04 level a couple of weeks later. It’s the relatively common “one hit wonder”, and if Sigma Labs followed the usual pattern of other small stocks that burned brilliantly for a few days, we wouldn’t see anything particularly bullish from SGLB for a few months, if not years.

A funny thing happened on Sigma Labs’ return trip back to irrelevancy, however. Rather than fade back into the funk it was in before May, SGLB shares renewed their strength. This second wind is not only a trading opportunity in itself, it may point to a much bigger brewing move… if the subtle clues are any, well, clue.

The chart of SGLB tells the story. As you’ll see, shares were unusually hot beginning in June, fueled by some significant – and new – attention thanks to the company’s participation in a retail investor conference. We later learned why Sigma Labs Inc. was suddenly so interested in a PR effort… it needed to raise money, announcing on July 24th it had raised $1.2 million. Yes, that dilution was the catalyst for the late June pullback – investors hate dilution (not to mention that the post-conference euphoria can’t last forever).

Thing is, though dilution stinks, SLGB may well be one of the few technology companies that can actually turn that $1.2 million into more money for investors. That’s what the chart’s saying anyway, and we should take those hints at face value.

The first hint, aside from the fact that Sigma Labs is on the rise, is where the rebound took shape… right at the 100-day moving average line (gray) between July and August. Reversals that take shape at known support and resistance lines tend to be the real deal. The other big clue (and this one just appeared within the last few days) is the way volume is starting to grow again on the way up. With more and more participation rather than less and less, the effort has a good chance of lasting a while. Take a look.

There’s till risk with SGLB to be sure, but that’s nothing new – there’s always risk. The odds here, however, are better than average given the clues we’ve seen thus far. The second wind moves often end up being the game-changer, for the better.

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