NICH

[David Randolph]

NICH has a very interesting story. The stock never got investor's attention, because its public float was so small that there was almost zero liquidity in shares.

But the company's fundamentals kept improving. Nobody cared anyway, you couldn't buy 10,000 shares without driving the price up to the moon.

So, on the 19th of December the company did this: Nitches, Inc. Announces 200% Stock Dividend

Instead of selling shares in the open market, driving the price down but increasing liquidity, or making a private placement to issue some more shares and get money from selected investors at special conditions, it rewarded all shareholders by giving them 2 new shares for each they owned.

Still, the stock barely moved ... Only on January 10, when people got their stock dividend (also on this news: Nitches, Inc. Announces License for Dockers(R) T-shirts and Swimwear , the  stock made a move with 357,000 shares traded. Then, on January 20th, NICH rose 138% on this news:

Nitches, Inc. Announces First Quarter Fiscal 2006 Results

And yesterday, another 51% with no news to new all time highs.

Still, just a $30.97M market cap. Without a one time charge, net income for the first quarter fiscal 2006 was $936,000. If we annualize this, and we can do it because the order backlog increased from $13M to $23.4M, we get $3,744,000 in net income for full fiscal 2006, so the earnings multiple is 8.27.

Revenue growth was 132% and order backlog rose 80% from year ago levels. Still, the earnings multiple is just 8.27 and market cap is $31M. We can be almost sure the company won't dilute earnings, because they haven't done it in the past when they weren't profitable.

All in all, I'm not afraid to buy NICH this high, because I feel it should rise an additional 100% from current levels. The problem is if the open is too high (maybe not, since the stock rose so much yesterday, perhaps we'll have a lower open).

So, my trading plan is as follows: buy NICH around the open if there's no gap up (open must be below $7.94) - or else pass. If I can buy and I instantly have a 20% profit, I'll take it. If not, I'll continue holding.

[calguy]

It certainly had a nice day yesterday. Too bad we didn't know about it yesterday morning....LOLOLOL.
I'll watch this one close but I would be very careful about a sharp pullback.
Look at CTTY yesterday. I missed the rally but shorted the crash for a nice gain.
Good LUCK!!!

[stocky]

Bought this intimate stock near high of days,

Feel like looser now

[stocky]

In my limited technical analysis I think NICH should hold 6.10 in next week to be considered for any hope for recovery. In the face of 51% gain on Thursday, I think 8% loss on Friday seems not too alarming. But will hold unless NICH closes below 6.10 on above avg volume.

[David Randolph]

It certainly had a nice day yesterday. Too bad we didn't know about it yesterday morning....LOLOLOL.
I'll watch this one close but I would be very careful about a sharp pullback.
Look at CTTY yesterday. I missed the rally but shorted the crash for a nice gain.
Good LUCK!!!

CTTY is also an interesting momentum stock, with an exceptionally low market cap of just $17M. But I would be carefull shorting this, if fundamentals improve a bit more this thing can fly to $100 without any problem.

But there are many differences between CTTY and NICH, on a fundamental and technical perspective, this is why I expect NICH to continue to push higher:

1) NICH has a $28M market cap, CTTY is $17M;
2) NICH had $33M in revenues over the last 4 quarters, CTTY had $0.26M;
3) NICH is profitable, CTTY is losing money. NICH pays dividends;
4) NICH is trading near all time highs, CTTY is 63% below its all time high.

Considering all this I think NICH is worth much more than CTTY, probably 5 times more.

Bought this intimate stock near high of days,

Feel like looser now

I believe you did well and that high you bought will probably be a low sometime soon.

Yes, bulls were resting on Friday after pushing NICH up 51%, but the day was still constructive and fundamentals warrant a much higher price.

There are three supports, prior resistance levels, and NICH closed above the three of them. I expect this stock to make new highs above $8.34 soon, possibly as soon as today.

I'll continue holding NICH.

[shawFund]

I bought NICH at $5.25 a while ago at support but was shaken out during its down to $4.50.
Out at $5.15.

Another lesson to be learned: before a stock to fly, mm first wants to shake out many weak hands by pushing the stock down.

Two ways to deal with such situation:

1. hold it, even add position at lower price if you believe that its fundamental is sound, undervalued;
2. exit it to take a small loss but constantly watching it and re-take position on its way back.

[shawFund]

There are three supports, prior resistance levels, and NICH closed above the three of them. I expect this stock to make new highs above $8.34 soon, possibly as soon as today.

It did. Good prediction.

[minkielover]

Once again, great job David!
I'm glad I bought it at 6.80    (lower than your purchasing price *^^*)
Thanks for the great work!

[stocky]

Thanks David, I was down big time on this one. Today I sold NICH with modest profit and heck I am happy about it.

Applaud David and personally thanks.   

[Lucas Scott]

Stocky, why sell so quick? The chart looks poised for a strong move. I will look to buy tomorrow with a short-term target of $13. I think I've found my NICHe - making money in the markets. 

[stocky]

NICH reminds me of moves like in FORD and XWG. I do think that this one is going to move higher, but I had not been discplined with this trade and put a heck lot of %age in it. So for me sitting on the sidelines would be ok.

[David Randolph]

I'm glad stocky could get out of NICH with a profit. This is why it is important to have some fundamental background, even on technical picks.

We have news that an insider sold 50,000 shares yesterday. The stock gave me the chance to take the 20% fast profit that I wanted to get confidence back up, but I didn't take it yesterday.

If the stock trades down to $6 or so again it could damage my coming back to above average performance.

But still, the stock is fundamentally undervalued and the chart remains extremely bullish.

I'll give it a chance and hold it, expecting higher prices to come.

[netfishmademerich]

Does it still take courage to buy this now?  Not anymore I think.  It looks like it will make new highs very soon.

[Lucas Scott]

The title of this thread is scary. I wish David had used the word "rocket" instead of "bomb".  I want my stocks to rocket, not bomb! I bought this morning at $8.03. I must be very courageous.

[stocky]

Luke I mustered the courage at exactly the same 8.03 when I bought it few days back.

Had I not been scared of market I would have been buying back this stock. Just watch for support at 7.10. No resistance overhead.

Goodluck.