10:30am
Good morning readers. We are seeing some selling pressure today and I feel we could see a significant drop just as quickly as we saw those significant jumps. When the market jumps high on low volume, it always has the potential to drop significantly like a slingshot. February consumer confidence came in at 46 versus a consensus of about 55. That is a very poor number and actually, I expected the market to be down more. As I stated before, the economy is not as strong as CNBC likes to state it is. Good earnings does not always indicate a strong economy as we have some low expectations in many companies and have been able to surpass those. I am very reluctant to add to my larger cap positions right now until we see some more consolidation. Smaller caps are still trading under the radar of the general market so I will continue to add to those on favorable prices.
In portfolio news, Cord Blood America, Inc (CBAI) was up about 8% yesterday and settling to support levels today after an interview with CEO Matt Schissler was made public. I’m not taking any action in this alert at the moment. Matt was away on business in China recently. His feedback from that trip stated he’s come to realize China is possibly a larger market for stem cell storage than America, which is a strong market in itself now that President Obama has given his approval for further research. That will be great news if CBAI can tap into China’s market. Recently, CBAI has acquired an agreement from a Latin American firm to store their stem cells at the newly established Las Vegas laboratory. This is a new revenue stream to help boost the bottom line of CBAI in a fast growing stem cell market. For those reasons alone, I am bullish on CBAI this year.
However, that is not all. CBAI still flies under the radar of most individuals. CBAI is considered a “stealth” stock to some which will gain upside momentum upon more media coverage. This won’t happen overnight though so keep your expectations in check. Due to the recent popularity of stem cells, I’m betting this will happen sooner than later though. More stem cell companies will pop up over the next few years and they will need storage. Who better to ask than CBAI?
Matt has also stated he is looking to make an acquisition and that can be a major catalyst to the bottom line if priced correctly but also to gaining more media coverage. I also like how CBAI is going to add different types of items to their storage capabilities ranging from stem cells to adipose tissue, placenta, bone marrow, and others. This will allow them to sell their storage to a wider range of companies therefore improving the bottom line.
All in all, this only solidifies my belief in CBAI over the course of this year but possibly longer. I won’t confirm that long term thesis until I see more cards on the table and I can make a more educated judgment call. The potential of this stock is very significant though and I feel at the current market value, it is undervalued. As I write often, the market is an irrational beast and does not always value a stock the way it should be valued. CBAI has a good amount of debt that it will need to reduce, and I believe they will, which will make the bottom line look significantly better therefore attracting more investors.
I’m going to look to increase my position in the near future but will wait to see how this news settles on the stock before adding to my position. The link to the entire interview can be seen here. In other news, I’m looking to add to Sirius XM (SIRI) if we dip closer to $1. I think the selling is becoming overdone and the earnings report this week could give a short term boost to PPS to which I’ll sell some of my position into. I expected a run-up into earnings to which I might sell into but instead I’m able to buy some cheaper shares so I I’ll look into doing so.
Thanks for reading Kudrna’s Stock Market Blog. I am currently working to add additional authors and content to the site so expect some great changes in the near future. Thanks for all the support. Good luck out there.
Mike
At the time of publication, Kudrna was Long SIRI and CBAI but positions can change at any time.
