In December 2013, I profiled Net Element Inc. (NASDAQ – NETE - $2.45) at a price of $2.23 a share and the stock doubled within three weeks. Since that meteoric rise, the stock has languished, reaching a nadir of $0.88 a share less than a week ago. (Boy, what a trade that would have been.) Anyway, with the stock essentially back where it was in December, I thought it would be an opportune time to revisit the story and take its temperature to see if it is worthy of another favorable missive. The answer is: Yes.
For the uninitiated, Net Element is in a hot space (mobile payments) and is generating strong results via an acquisition that closed in 2013. Net Element owns and operates a global mobile payments and transaction processing provider, TOT Group. TOT Group companies include the recently acquired Unified Payments, recognized by Inc. magazine as the No. 1 Fastest Growing Private Company in America in 2012. Tot Group also owns Aptito, a next-generation cloud-based point-of-sale payments platform. Tot Group also owns TOT Money, which holds a leading position in Russia and has been ranked as the No. 1 SMS content provider by Beeline, Russia's second-largest telecommunications operator. Together with its subsidiaries, Net Element enables e-commerce and adds value to mobile commerce environments. Its global development centers and high-level business relationships in the United States, Russia and Commonwealth of Independent States strategically position the company for continued growth. The company has U.S. headquarters in Miami and international headquarters in Moscow.
Fast-forward to 2014 and the stock endured big declines following the closing of a $30 million financing. It continued to decline even after first-quarter results were issued. For the first quarter of 2014, the company reported revenue of $4.8 million versus approximately $900,000 in the year-earlier period. Net Element was also cash flow positive but still recorded a multi-million-dollar loss and was drowning in total liabilities of $34 million. The bottom line is that the results were improved but they didn’t knock the ball out of the park. To its credit, management secured a $10 million financing earlier this month to help with its capital and growth needs, but potential dilution must have spooked investors as another sell-off ensued.
A new buy recommendation with a $3.47 price target from a small research house sparked the tiny float stock (500,000+ shares) to soar on more than 10x average daily volume. Look at the big picture and it is easy to see that with a low float and in a hot space, these shares could reach a peak price of $4.50 again on positive news, which will likely be in the form of the second-quarter results, expected next month. Still, Net Element is one of the most volatile stocks we have come across and investors should be aware that these shares are prone to big swings. But, if played right, quick trading profits can be yours.
A few weeks ago, we touted energy and especially the oil and gas segment as a likely outperformer in July. We could not have been more wrong as the price of oil and most related stocks have stunk up the joint during the past three weeks. Amazingly, oil services company Enservco Corporation (NASDAQ – ENSV - $3.40) has mysteriously bucked this trend in recent days and looks like a great stock to own in this conflicted market, regardless of industry affiliation.
According to its website, Enservco is one of the energy service industry's leading providers of hot oiling, acidizing, frac-water heating and fluid management services. The company owns and operates a fleet of more than 230 specialized trucks, trailers, frac tanks and related well-site equipment. ENSERVCO serves customers in seven major domestic oil and gas fields, and operates in Colorado, Kansas, Montana, New Mexico, North Dakota, Oklahoma, Pennsylvania, Ohio, Texas, Wyoming and West Virginia.
After the big sell-off on Thursday, the bears were out in force proclaiming that the bubble had finally burst.
Frankly, it has been stated so often of late that these prognosticators are being mistaken for Chicken Little and The Boy Who Cried Wolf. Still, only an eternal optimist or one wearing rose-colored glasses would deny that the correction storm is building off of Wall Street’s coast. It just hasn’t yet hit that dreaded Category I hurricane status.
I have talked quite a bit on what do and how to prepare for the inevitable. In today’s blog post, it is time to discuss what to do during the correction itself. After all, I should hope you won’t do your best Nero impression and play the fiddle while Rome burns.
As someone that has capital at risk via investments in the equities market, I must admit that I am very concerned, and you should be too.
Stocks, particularly in NASDAQ and over-the-counter, are not trading properly due to fear and lack of conviction by market makers and investors alike. Moreover, the mainstream press has used essentially the same fear-mongering headline for what seems like five days in a row, exacerbating the trading issues even more. I think it would be wise to lighten up on your stock holdings until the issues outlined below are reversed.