3SOF

1. Introduction

AussieTrader suggested that I should take a look at BFLY, and I've learned the hard way to pay attention when he makes a call (SKNN is just one example).

2. Profile

Founded in 1998, Bluefly, Inc. (NASDAQ SmallCap: BFLY) is a leading online retailer of designer brands, fashion trends and superior value. Bluefly is headquartered at 42 West 39th Street in New York City, in the heart of the Fashion District. For more information, please visit www.bluefly.com.

3. Technical Analysis
3.1. All History Chart



BFLY stock has been dead since late 2003. The stock was only able to make temporary spikes in the past, because it wasn't profitable. But probably that's about to change now and perhaps it can make a more sustainable rise.

3.2. Medium Term Chart



This is what we call a bearish trend. But in 2006 the stock was able to build a base and it is above the 50 and 200 days moving averages now.

3.3. Short Term Chart



The short term trend is bullish, after that big white marubozu that was due to this news: Bluefly Monthly Sales Increase

There was some consolidation over the past four days, which didn't damage the positive short term technical picture. And with this news out yesterday (Bluefly.com Has First Million Dollar Day) I expect the stock to blow out this consolidation phase, breaking through the $1.23 recent intraday high.

4. Fundamental Analysis
4.1. Number of Shares Outstanding



You can see there was an enormous increase in the number of shares outstanding in 2006. That was due to a conversion of preferred shares from George Soros' funds and other institutional investors. The current capital structure stands like this:



4.2. Liquidity



BFLY's balance sheet looks strong.

4.3. Revenues



Revenues are growing 28% a year, on average, since 2000. I expect revenues of $75 M for the full year 2006. If this growth rate is maintained for the next 10 years (which I think is entirely possible), revenues in 2016 will be $885 M (but recent news tell me the revenue growth is accelerating, and that would change all this a lot, to the better, of course. But I need to be somewhat conservative).

Apply the current sales multiple of 2 and get a $1.77 B market cap company in 2016, which translates into $13.73 for the stock price. Considering yesterday's close of $1.15, this implies an average annual rise of 28%.

I think that's an attractive long term proposition.

4.4. Net Income



I don't like the fact that the company is still losing money, but, if it were profitable already probably the market cap would be a lot higher. The gross margin is improving rapidly, so perhaps they will turn a profit in 2007, they should:



4.5. Recent News

• Bluefly.com Has First Million Dollar Day
Business Wire (Wed 8:00am)

• Bluefly Monthly Sales Increase
AP (Thu, Dec 7)

• Fashion Retailer Bluefly Selects ATG Commerce
Business Wire (Mon, Dec 4)

5. General Overview

I love the business model of selling fashion apparel online. Personally I don't like to go to the stores, shopping. I have no patience at all (of course my wife loves it).

I think the business is getting even more traction, and revenues may very well accelerate from a 28% average annual growth rate to a 35% growth rate or more in the coming years. Gross margin is improving and I guess they will turn in a profit for full fiscal 2007 (maybe a small net income positive for the 4th quarter of 2006, since sales are surging).

Technically the stock is moving higher on a short term basis. I believe the recent run won't stop south of $1.50, at least.

6. Trading Plan

Buy BFLY today between $1.15 and $1.20, 6.66% of equity as usual.

(I updated the post, I forgot the charts the first time, sorry)

I'M SO PISSED!!!

I had to call scottrade to place the order due to some CR1 bullsh!t...watched it go from 1.15 to 1.35 while on hold.

Cussed 'em...

Up 19% already, you want it, you got it !

I don't want to believe it!!! I lost it by 1 lousy cent 

Quote from: David Randolph on December 14, 2006, 09:45:57 AM
Up 19% already, you want it, you got it !

Applaud David!  I got in at 1.19 and then went to take a shower, came back and honestly didnt believe my eyes at first!  Niiiiiice!!!!  

I missed the market open too and do not want to buy at $1.40...I have an intraday buy order for $1.25.  David, if BFLY hangs on to its big gain today can you give those of us who missed the small window an idea for a possible entry point?  Thanks!

Quote from: 422fwhp on December 14, 2006, 09:45:41 AM
I'M SO PISSED!!!

I had to call scottrade to place the order due to some CR1 bullsh!t...watched it go from 1.15 to 1.35 while on hold.

Cussed 'em...

Don't worry about those slight misses guys, there will be more of these, as I agree with you, the 3 Stocks on Fire Portfolio needs long term value and short term momentum plays to satisfy everybody.

Next time, forget about ticks, and buy it. The plan was "buy between $1.15 and $1.20". Anyway, don't worry, I expect more of these fast plays going forward.

Your showers always make you money Tokyopua, take 3 of them everyday, please

QuoteI missed the market open too and do not want to buy at $1.40...I have an intraday buy order for $1.25.  David, if BFLY hangs on to its big gain today can you give those of us who missed the small window an idea for a possible entry point?  Thanks!

I would buy on any intraday dip. I don't think it will go as low as $1.25, maybe $1.32 - $1.35? It's hard.

I guess we may have a shot at a close around $1.50 here, with the volume that's coming in.

Good luck

QuoteI would buy on any intraday dip. I don't think it will go as low as $1.25, maybe $1.32 - $1.35? It's hard.

Did you get it on the intraday dip to $1.32?

I hope so ...

David,

You think 1.5 is a good entry price?

Quote from: Dracull on December 14, 2006, 10:38:07 AM
David,

You think 1.5 is a good entry price?

Man, I don't know, I said buy on an intraday dip to $1.32 ... it's $1.53 now. Say $1.42 - $1.46 now?

Try to grab it on a dip ... I wasn't expecting such a fast rise, I don't know about day trading, for all I care it can even go to $2 today, I don't have a clue. Do I think it is worth $2? Yes I do.

Good luck

just got a small position in BFLY at $1.41. read the analysis but am more interested in the TA...looks good. break of $1.23 was critical, but the volume today can be counted amongst multi-year highs.

thanks for ur efforts on the analysis, David. 

Wow, thanks David! I got lucky and got in at 1.17 at exactly 9:30:18 seconds this morning. Already sold out when it went over $1.50. Paid for my membership for the next 6 months! Thanks again.

TT

dang...now seems ideal for an entry...right above the $1.23 breakout...I bought in higher at $1.41.

it could be this way or that...I know. but today's volume on breakout is spectacular to say the least. when price and volume run in tandem, that's when u got a winner.

now...if only the close could be better! 

Quote from: vic666 on December 14, 2006, 03:11:15 PM
dang...now seems ideal for an entry...right above the $1.23 breakout...I bought in higher at $1.41.

it could be this way or that...I know. but today's volume on breakout is spectacular to say the least. when price and volume run in tandem, that's when u got a winner.

now...if only the close could be better! 

I agree about the breakout support, so I just added to my position here at 1.27.  Usually a long upper shadow is not good, but the volume is just too much to ignore.