5 interesting penny stocks to watch for 2018

Hemisphere Media Group Inc. (NASDAQ: HMTV )

Founded in 2013, Hemisphere Media Group is a leading U.S. Spanish-language media company serving the U.S. Hispanic and Latin American markets. The Hemisphere Media Group is the only public company with a focus on Hispanic people living in the US and it also serves many Latina American countries.

Pay-TV subscribers in Latin America, not including Brazil,  grew by 44% from 2012 to 2016, and are projected to grow an additional 15 million
from 53 million in 2016 to 69 million by 2021 representing projected growth of over 28%, while the U.S. census bureau estimates that the Hispanic population  in the United States will grow to 70 million by 2025. The network has over 50 million subscribers and the management estimate that user base will continue to grow.

Advertising revenues and retransmission/subscriber fees are the main sources of revenues and it is important to monitor these two variables, as they have an impact on the stock price.

Technically, HMTV is in a sideline channel and in November it hits a low at $11, a lever which played as support in the last three years.

HMTV stock on a daily chart. Credit: Yahoo finance

 Accelerize Inc. (OTCBB: ACLZ)

Accelerize Inc. a technology company that operates in the cloud business and offers software solutions for businesses interested in expanding their online advertising spend. Accelerize is primarily focused on Enterprise process
apps and in 2016 its Global SaaS software reached $106b revenues, with an increase of 21% over the 2015. In a nine-months period ended September 30 the revenues increased from $17.883.105 to $18.016.552 while the cost of every single voice (Cost of Revenues; Sales and Marketing Expenses;  General and Administrative Expenses;  and other expenses) increased about 30%.

The company has an history of losses and has a substantial amount of indebtedness, while the management estimates the Costs of Revenues will continue to increase in the next months. If the management will be able to secure the company’s line of credits and to lift the company’s cost structure is highly probable that the stock price will climb over 1$ again.

Accelerize’s stock is sitting on its all time low from more than 2 year and the prices are moving in a sideline channel range of 0,55-0,25.

ACLZ
ACLZ chart on a daily timeframe. Credit: YahooFinanceChart

Netlist Inc. (NASDAQ:NLST)

Founded in 2000 by Jayesh Bhakta, Chun Ki Hong, and Christopher Lopes, Netlist’s main business is memory subsystems designed for datacenter server, high performance computing and communications markets.

The company has introduced over the years many disruptive products and in 2015 signed an a strategic partnership with Samsung  to produce a new class of NVDIMM-P (NV-P) memory solutions. 

Netlist incurred over a nine-months period ending in September 30 a net loss of $10.3 million and the company has an accumulated deficit of $154.913 million. The management believes the Company’s existing cash balance,
together with cash provided by the Company’s operations, will be enough to t to meet the Company’s anticipated cash needs for at least the next 12 months, but if the funds will be inadequate the Company will have to significantly modify its business model and/or reduce or cease its operations.

The stock is near its all time low and usually a rebound may occurs from this level.

NLST
NLST monthly chart on the long period.
Credit:YahooFinanceChart

NII Holdings Inc. (NASDAQ:SIEB)

Founded in 1995, NII Holdings is a provider of wireless communication services that operates mainly in Brazil. The group, once listed in the Fortune 500, went through bankruptcy in 2014, and in the same year reached an agreement with its major stakeholders on terms on a Chapter 11 reorganization plan.

In 2017 revenues were impacted by pressure on competitive forces and the wind down of iDEN business: on a nine-months period ended in September 30, the revenues dropped from $736.6 million to $680.7 million.

The company is still sitting on an big debt and it still failing to generate enough operating cash flows and earnings to cover annual interest expenses and there are risks of a new bankruptcy.

The stock is at its all time low and at the moment there are no signs of rebound. For this reason we recommend to wait next quarter and see if NII’s financial situation starts to recover.

NIHD
NIHD monthly chart. Credit: YahooFinanceChart

Repros Therapeutics Inc. 

Founded in  1987 as Zonagen, Repros Therapeutics is a US-based pharmaceutical company focused on the development of oral small molecule drugs to address hormonal and reproductive system disorders.

Proellex, a drug designed to treat symptoms linked to uterine fibroids and endometriosis, is still in Phase II development and the Food and Drug Administration (FDA) has put the drug under partial clinical hold.

Enclomiphene, another drug in Repros’ pipeline, is it not likely to receive a positive response to its marketing application by the European Medicines Agency’s advisory group.

Repros Therapeutics has been recently acquired by Allergan, but the deal is under investigation by Monteverde & Associates PC.

The company’s stock is on its all time low and much will depend on the product’s pipeline approval and on the future plans of Allergan.

RPRX monthly chart. Credit: YahooFinanceChart

 

Nintendo Switch’s sales push stock to 2008 levels

Nintendo can forget the Wii U’s colossal flop and celebrate 2017 as one of the best year ever, as the newborn Nintendo Switch’s sales soar over 10 million units.

Nintendo Switch is selling as fast as Sony Playstation 4 and is about to reach its old brother Nintendo Wii U, which sold 13,56 million units in its four-year life span. The Japanese company predicts to sell over 16 million Switch by the end of March 2018 and Nintendo plans to produce 25-30 million Switch in the next fiscal year (April 2018 through March 2019).

Nintendo’s stock ( XTKS:7974 ) is on 2008 levels, coming from a rally started on June 2016 with Pokemon Go phenomena. Technically speaking, prices made a throwback on 2008 lows after the 2010 high’s breakout, and in the short-mid term the stock is still in a up-trend (see picture below). However, much will depend on Nintendo Switch’s sales as well as Nintendo plans to replace Nintendo 3DS.

Nintendo stock
Nintendo stock on a monthly chart, updated to 12th December 2017 – Technician

 

Strong Euro and weak Dollar: why they will not last for too long

Recently, the Euro-Dollar has hit values that we didn’t see from January 2015. The pair breakup the 1,20 on 6 September and the day after it reached an high at 1,2095.

The week US dollar and the super Euro have become a factor of nervousness for many actors. Especially in the European Union, where the recovery of peripheral countries is still very week. A stronger Euro is a source of worries for many European companies. The appreciation of the Euro will damage the export of those companies which have a weak international position. It means that the economic recovery will slow down again in some countries. Even ECB’s number one Mario Draghi has expressed concern over a stronger Euro. He remarked that a value of 1,20 is still sustainable but a further appreciation will damage his plans.

It was less then a year ago when many analysts announced the parity between the Euro and the US Dollar. And on December 2016 the exchange rate arrived quite near this level: it touched a low at 1,03522 on December 20 and then a new low at 1,03403 on January 3. But the parity became an illusion when in March the pair inverted the direction. We are now within an upward channel and the bullish trend doesn’t give any signs of weakness.

Why the US Dollar is getting weak and the Euro is getting strong

There are two main reasons on why the exchange rate changes its course. First of all, the monetary policies of the ECB and the FED aren’t too divergent anymore. One year ago the expectations were quite different: the FED should have been rise the interest rates quite fast due to the US recovery while the ECB would have keep the quantitative easing programme for some time. The European Union was also seen quite unstable due to the populist movements that threatened the union.

However in a few months the picture has changed. Good economic data begin to arrive and the recovery in Europe seems more convincing. At the same time, the populist parties have been beaten one by one in their respective countries. The turning point was in May, when Emmanuel Macron won the presidential elections, pulling away the spectre of Marine Le Pen. It was then when the Euro accelerated upward. The rise of oil’s prices also gave an hand to Mario Draghi to stimulate the inflation within the Eurozone.

With the populists in a corner, the economic recovery in action and the inflation near the target level, the European Union looks now more stable. At the opposite, there is some uncertainty in the United States, despite the economic rebound. It’s becoming evident that it will not be easy for the President Trump to make the fiscal reforms that he promised during the campaign. It will be difficult with such administration to translate words in action. Since Trump took office at the White House  at least 10 top-level people have been fired or resigned. 

What the technical analysis can tell us

Euro-US Dollar, 11-09-2017
Euro-US Dollar’s monthly chart updated to the 11-09-2017. Credit: TBGlobalist/XTB

 

The Euro-US Dollar has completed a pullback on the 2012’s low. The pair has broke the horizontal channel and it is now approaching the trend line drawn from the highs of 2008, 2011 and 2014. So, we can expect in the short term a further appreciation of the Euro. The change Euro-US Dollar will continue to rise in case of breakup. In this scenario the change could rise in the range 1,30-1,40.

Euro-US Dollar, daily chart 11-09-2017
Euro-US Dollar’s daily chart updated to the 11-09-2017.
Credit: TBGlobalist/XTB

 

We can see the bullish trend clearly on the daily chart. The change is in this upward channel since April 2017 and as long as it stays in this channel we can’t expect a trend change. 

In short, from a technical point of view, the Euro should continue to appreciate in the short term against the US Dollar. Soon we can expect a throwback on the breakup of the horizontal channel. However, the change will fill the April’s gap only after the breakdown of the upward channel.

 

US stocks: the rally will continue? Why going short is a suicide move

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When I wrote for the Italian edition of International Business Times, I’ve alarmed many times the investors to not going short on the US market. There were no reasons for doing so. I felt obligated to wrote these articles since many “gurus” warned that the market was about to collapse. They said so in 2011 and then in 2015, when the Chinese economy gave some signs of slowdown. And now they are doing it again.

Since Trump arrives at the White House the US stocks gained momentum (again). And then again many start to warn for an imminent sell-off. Is this another false alarm or it is really going to happen?

Should we go short? What the monthly charts tell us

The Trump’s rally may looks impressive but if we open a monthly chart we can realise that it is coherent with the medium-term trend. Let’s have a look at the monthly chart of S&P 500.

S&P 500, monthly chart - 22/08/2017
The monthly chart of S&P 500 updated to 22/08/2017.
Credit: TBGlobalist / XTB

 

As we can see, the S&P 500 index is moving within an upward trend channel since 2008. The prices tend to remain within this channel: when it hits the lower trend line we have a rebound; otherwise, when it hits the upper trend line we have a little correction. But we have never seen a trend change. The same goes for Nasdaq and Dow Jones.

Back in 2015 the bullish trend lost momentum and the indexes started to go sideline. It was in August when the investors began to worry for a China’s market crash. Back then, I was quite surprise to read such alarming articles on many important newspapers. This article of The Economist, for example, is full of negative rhetoric. It forgot to mention that in the summer the low volumes could amplify the movements. All experienced traders know that. If we look again at the monthly chart we see that the drop was significant but not to the extend to reverse the trend. Indeed, the indexes remain within the bullish channel.

In 2016 the US equity markets recorded their worst start to a year record. And we had many good reasons to be worried: the Brexit referendum; the instability within Europe; the world economy slowdown. Then again it was like a market crash was imminent. However, people who focused on bad news lost a big opportunity to jump in the market.

Go with the trend, never go against it

This is a basic rule in trade but it is also the most easy to forget. I’ve seen many trying to anticipate the market, despite they were already familiar with trading. They start to accumulate short positions in the hope to catch the big drop. But it is a path which leads to ruin.

Now let’s back to the monthly chart of the S&P 500 and focus on the last two candles. Do you see some signs of reverse? There is absolutely nothing here. The body of the last candle is still within the previous one. The index need to break the lower trend line to reverse the trend and we are still far from this level.

What can we expect in the next few months?

If we look closely at the monthly charts we see that the S&P 500 is about to test the upper trend line, while the Dow Jones is testing it and the Nasdaq has already broke it.

Dow Jones, monthly chart 23/08/2017
Monthly chart of the Dow Jones updated to the 23/08/2017.
Credit: TBGlobalist / XTB

 

Nasdaq, monthly chart 23/08/2017
Monthly chart of Nasdaq updated to the 23/08/2017.
Credit: TBGlobalist / XTB

 

This bring us to think at two possible movements: the S&P 500 breaks the upper resistance and the bullish trend accelerates; the S&P 500 hits the resistance and we enter into a new sideline phase. In the latter case we can expect a test of the lower trend line. But again, if we don’t have the breakup of this support there’s no meaning to talk about the bear market.

It is true that we have many reasons to worry and the summer is not over yet. I’ve already expressed my pessimism on the US economy in this article, but the market doesn’t works like that. I will come back on this later and I will explain why the market goes up despite many variables many point to a crash. Meanwhile, stay safe, stay with the trend.