I DON'T KNOW WHAT I'M DOING

A

I can’t believe I am doing this. I took a small position on A, a true dog nobody wants at this point. I thought A has bottomed here and it has stopped going down and moved up smartly. It unlikely to get worse from here. Input costs could improve slightly, along with modest increase of pulp price, could move this dog above five in the next few months. However, industry fundamentals are still against this firm (over-capacity, high labor costs, raising C$, increasing competition, declining newsprint usage, not to mention one of the poorest management team I have never witnessed, Need I say more?). Therefore, this is only a TRADE. I would like to get out at any level above five. If it break four again, I shall take my loss. In the short term, it needs to overcome its 50-day SMA of 4.58.

CMED

Man, I hope I know what I am doing. I just bought some CMED @24.50, after a 10% jump today. It has a tremendous quarter, revenues up by close 81%, and 43% sequentially, and EPS up by 61% and 43% sequentially. Based on my back of envelop calculation, it shall make about 0.95 this year (03/06) and based on 50% growth rate, 1.46 next year (03/07). It is traded at 17X of next year EPS and growing at 61%. The growth rate is GOOGLEish and the share is certain not. Using 20X of next year’s earning, it should be trade at 30, which is 22% return. The same stock would have been traded at least 25X if it is a US-based company, which would make it 36.5 stock. I am not even talking about BADU. The stock remains under-covered by the Street I believe it is still early to own this one, although it appears I could have bought with much lower entry price.