As discussed yesterday, tonight I’m going to cover some potential long trades for the week. First, we need to briefly discuss today’s action. Euro scares once again punished the market early and everyone else quickly focused their attention on what the results of Tuesday and Wednesday’s Fed meeting might be. This will make for some sideways action until those results come out, but tonight Italy just received a credit downgrade from S&P, which could create more downside risk tomorrow. The good news is as I’m writing this, gold is only up about $4, so the downgrade may not be that big of a deal to most. I’d expect gold would be up much higher if the market was to digest this with fear.
With that said and echoing yesterday’s concerns, we should still keep positions smaller and with a tighter leash than normal. This is not a healthy market, so we must not bet recklessly.
Yahoo finance describes MFN:
Minefinders Corporation Ltd. engages in the exploration, development, and mining of precious and base metal properties. The companys principal project includes the Dolores gold and silver mine, which consists of 7 claims in 3 concessions totaling an area of 27,700 hectares, located in the Madera Mining District in the state of Chihuahua, Mexico. It also has property interests in Sonora, Mexico; and in Nevada and Arizona, the United States. The company was formerly known as Twentieth Century Explorations Inc. and changed its name to Minefinders Corporation Ltd. in May 1979. Minefinders Corporation Ltd. was founded in 1975 and is headquartered in Vancouver, Canada.
Fundamentally, according to yahoo finance, MFN has only a forward P/E of 12.45 and 5 year PEG ratio of .33. They also have about three times the amount of cash to debt with cash at about $221 million to just under $80 million in debt.
Technically, MFN is in a nice uptrend even as the market is uncertain. The trade is to look to buy near the bottom of the trading range (see chart) around $17 with a stop no lower than around $16.50. The other option is to buy on a strong volume move above $17.71 with anticipation we will breakout above resistance around $18.25.
Yahoo finance describes VIV:
Telecomunicacoes de Sao Paulo S.A.-TELESP provides fixed-line telecommunications services to residential and commercial customers in the state of Sao Paulo, Brazil. Its services include local voice services, such as activation, monthly subscription, measured service, and public telephones; intraregional, interregional, and international long-distance voice services; data services comprising broadband services; pay TV services through direct to home satellite technology and land based wireless technology multichannel multipoint distribution service; and network services, such as interconnection and rental of facilities, as well as other services consisting of extended maintenance, caller identification, voice mail, cell phone blockers, computer support, and antivirus for Internet service subscribers. The company also offers multimedia communication services, such as audio, data, voice and other sounds, images, and texts and other information. In addition, it provides interconnection services to cellular service providers and other fixed telecommunications companies through the use of its network. Further, the company offers telecommunications solutions and IT support designed to address the needs and requirements of companies operating various types of industries, including retail, manufacturing, services, financial institutions, and government. Telecomunicacoes de Sao Paulo S.A.-TELESP provides its products and services through person-to-person sales, telesales, indirect channels, Internet, and door-to-door sales. As of December 31, 2010, its telephone network included 11.3 million fixed lines in service, including residential, commercial, and public telephone lines; 3.3 million broadband clients; and 0.5 million pay TV clients. The company was founded in 1998 and is headquartered in Sao Paulo, Brazil. Telecomunicacoes de Sao Paulo S.A.-TELESP is a subsidiary of Telefonica S.A.
Fundamentally, VIV is yielding about a 12% dividend. According to yahoo finance, VIV has a forward P/E of 10.47 and about $1.5 billion in cash but about $3.4 billion in debt. In February, Barlays Capital placed a price target of $42 on VIV.
Technically, VIV is making higher highs and higher lows nearing the bottom of its current trading range. VIV is also forming a W-Pattern which would mean a breakout on the next test of resistance tocompletethe pattern. The trade is to buy VIV on a light volume move towards $29 with a stop just below $28.21. The other option is to buy on a high volume move above $30.61 as it would look ready to test resistance around $31.91 and $32.14.
GST is well defined by my article on SeekingAlpha.
Technically, GST is consolidating nicely and looking for a breakout above $4.35. Due to the higher risk of this small-cap and lack of liquidity on some days, the trade is to buy on a pullback near $4 only if you can hold for a few weeks in case it takes time to build from there. Ideally, look to buy on a breakout this week above $4.35 that shows an increased amount of volume. As I just stated, this trade is a bit risker because GST has many bouts of low volume that create large price moves that could trigger stop losses early. Adjust your strategy accordingly. This is still a long-term holding for me but I’m continuing to trade around a core position to lock in profits when I can.
As always, do your own homework to see if you agree. Good luck out there.
Mike
At the time of publication, Kudrna was long GST but positions may change at any time.
(GST: 4.27 0.00 0.00%, vol: 0, avg vol: 515,977, 50-day: 4.08, 200-day: 4.02, yield: N/A, cap: 269.6M, short ratio 7.40, 52wk: 3.07 – 5.44, 1yr target: 6.08)
(VIV: 29.53 0.00 0.00%, vol: 0, avg vol: 1,253,460, 50-day: 29.54, 200-day: 27.97, yield: 9.43, cap: 33.227B, short ratio 1.30, 52wk: 22.57 – 32.14, 1yr target: 31.46)
(MFN: 17.18 0.00 0.00%, vol: 0, avg vol: 679,478, 50-day: 16.30, 200-day: 14.13, yield: N/A, cap: 1.395B, short ratio 3.90, 52wk: 8.47 – 18.25, 1yr target: 19.36)
