SFPI.PK.

[David Randolph]

I went on reading some news and SEC fillings of this company, but then it came to my mind that the stock game is a simple game, it is our mind that loves complexity.

SFP has one of the most easy to understand technical patterns: the ascending triangle.



The technical target of the ascending triangle breakout is $5.55, that is 50% higher than yesterday's closing price. The pattern is invalidated if the stock closes again below the breakout point, which was $3.33, so risk here is about 10%.

A reward/risk ratio of 5 is attractive. I'll jump on the bandwagon today, buying SFP for the 3 Stocks on Fire Portfolio.

The stock has a very small market cap of $42M, so it is able to move really quickly. The latest news are very bullish:

Salton Bounces on Note Truce

Salton soars; co. inks support deals w/ noteholders

Salton sees $80M from sale of Amalgamated Appliance stake  (selling a part of the company for $80 million and the market cap is just $42 million?)

(This recommendation was made by David Randolph from 3 Stocks on Fire, and he will update this analysis everyday after the close until he sells the stock. 3 Stocks on Fire is a Community of stock traders and investors. Our 3103 members exchange trading ideas and strategies on our message boards everyday. We welcome you as a new member of the 3 Stocks on Fire Community, please take 10 seconds to register and receive our free newsletter)

[AussieTrader]

Yep SFP is a good opportunity right now. For anyone buying watch the spread on the bid / ask on SFP, market makers were making it unusually large yesterday, so a market order might get you filled higher than you anticpate.

[David Randolph]

SFP had a minor pullback yesterday after the higher open (I've had to buy 5% up, I wonder why  ), but that's not a problem, just keep the plan of selling it at the technical target of $5.55.

[David Randolph]

No doubts on SFP, $5.55 is the target.

[David Randolph]

SFP is another that is coming down to retest the breakout zone, which was $3.33. The ascending trendline stands at $3.12, rising $0.055 everyday.

The company said it is selling 52% of one of its subsidiaries for R 518 682 520 (about $83.1M, a bit more than expected, which was $80M):

«On August 29, 2005, Salton announced that it has entered into a
definitive agreement to sell its 52.6% ownership interest in Amalgamated
Appliance Holdings Limited (AMAP) to a group of investors led by Interactive
Capital (Proprietary) Limited. The aggregate purchase price is R 518 682 520
(five hundred and eighteen million six hundred and eighty two thousand five
hundred and twenty rand).»

This isn't having any effect on the stock price today, but I think it is a big deal, since the market cap of SFP is just $39.93M.

My plan is to trade the asceding triangle breakout. The target of that breakout is $5.55, so  for as long as the pattern remains valid I will continue holding the stock, expecting to sell at the projected target.

[David Randolph]

The trading plan for SFP is so simple that I shouldn't even bother doing these updates on this stock. But I need to monitor it everyday before the next open, so I might as well say something about it, it won't do any harm 

The ascending triangle pattern remains valid. The technical target of the breakout is $5.55. That's all there is to know about SFP's stock.

[Michael]

Hi David

I like this pick. Fundamentally the stock is in a turn around with:

• reconstruction and reduction of their debt
• restructuring of the organisation
• focusing on their core business

The insider activity and the support from their creditors gives me confidence that the turn around is on track.

I have a little different view on the recent action of this stock: buy on the rumor, sell on the news.

The news was indeed very good and the sell pressure seems to have lost steam with the low revenue today. So I will try to buy tomorrow to enjoy the ride to triple 5

[valueseeker]

Hi Michael,

Looks like we have the same thoughts again. I bought last week so I am a bit under water. But at least we have an earning run for next week:

http://biz.yahoo.com/bw/050906/66083.html?.v=1

The stats are a bit interesting here:

http://finance.yahoo.com/q/ks?s=SFP



-Louis

[David Randolph]

Michael is in, so we got some extra points to the probability of success of this trade 

The company released this after the close:

Salton, Inc. To Announce Fourth Quarter and Year-end Results on Wednesday, September 14, 2005

The ascending trendline is at $3.30, the breakout level is $3.33 and the target is $5.55.

[David Randolph]

SFP's ascending trendline for today stands at $3.36. I think this stock will bounce if it touches that support level today. If it doesn't, if it is set to close below the ascending trendline, I'll take a small loss.

A simple trading plan to make money in a simple game over the long run.

[David Randolph]

Just 91,900 shares traded on SFP. Didn't quite touch the ascending trendline and didn't quite rebound. Results will be out next week, on Wednesday. In the meantime I'll change my plan a little bit, I don't want to see SFP closing below $3.33, the horizontal support.

I find this ascending trendline to be a bit tricky, it's hard to know the exact point ... so I'll trust the horizontal line of $3.33.

Hold it as long as it closes above this level, perhaps a positive surprise on earnings may take us to the projected $5.55 technical target.

[David Randolph]

248,500 shares traded on Friday was the highest volume over the last 6 sessions, and that's a positive technical development for SFP. This is welcome specially when we have the earnings report coming out this Wednesday.

The trading plan for SFP is now very simple, sell it at $5.55 for a big profit or sell it if it is set to close below $3.33 for a small loss. This is all about respecting RULE 13: Take Big Profits and Small Losses.

[ScottishTrader]

Took some of my gains from HYRF on Friday (absolutely amazing!!) and put them into SFP, it looks like we are set up for a very solid bounce here.  Is anyone else in on this one?

[Michael]

Hi Scotsman,

I am also in on this one as mentioned some days ago. I have however against my nature been a bit quiet on the fundamentals. The history is really a mixed bag of good and bad news. Maybe this one was too easy

The mini rally here is fueled by positive expectations to earnings due to the Insider buying. I think I will use the opportunity to sell before the earnings report.

Mike

[ScottishTrader]

Thanks for your reply Mike,

I see this one as having at least a good bit of upside pontential, and wouldn't be surprised to see it approach $4 by tomorrow afternoon.  While you can never be sure with earnings, I will probably hold for the earnings ride and see where it takes us, my impression is that the indicators (inside buying, price on 3 month turn-around) look positive.

the Scotsman