Here you will find new trade ideas that CRI is initiating in CRI's account. If it is posted here, then we are doing it.
New trade for October 20th, 2010.
With the impending Republican sweep back into the House of Representatives (and maybe even the Senate too) It seems one ought to be taking a good look at sectors that will do well in that event. Oil has always been a mainstay of the Republican party and I do believe that the market is thinking the same way.
CRI's recently released TTA - First Two Weeks of Q4,'10 Report suggested that commodity related assets ought to do well for the quarter. And specifically suggests that Energy shall be one of the best performing asset classes for the quarter. Additionally, CRI's most recent CTS is still quite bullish of Oil and has a close to $90 target.
So the question then becomes, if one were to invest in energy where should one do it. One could buy a large stock and even an option on a large stock but the screens suggest we look a little further down the food chain...
We use the Ven Cap Inv. Model to screen potential fundamental candidates.
ASX-V (Alberta Start Development) for example screened very high.
With only 21 million shares outstanding (5:1 rollback in March, 2010) and currently trading at .79 price to tangible book value per share, this company is (in my opinion) very cheap. As well, over the summer they announced both an asset purchase and shares to insiders of the company (in the form of options to directors).
Technically, ASX has recently completed a very wide based 'W' or double bottom price pattern. This pattern was confirmed when prices closed above $.45 the second week of September. CRI was able to work open orders to buy the stock at $.455 and has been filled over the past two trading days.
According to the 50% rule, one ought to expect a run into the low $.80's over the coming weeks. Considering the fact that they are currently drilling multiple wells and news of potential production increases could hit any day, it is not surprising the market put the bottom in and is slowly working the stock up.
I will have an open order working to sell half the position at $.91 and will let everyone know when I get filled. Once we get to that point we will decide if holding onto the remaining position makes sense.
Regardless, ASX-V appears to be a good little company that is trading at a fraction of its book value.
That's all for this post,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
the-rational-investor.com
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