Schmacko (96.90)

Digital Ally and the wackiness of stock of the day suggestions

May 22, 2008 – Comments (0) | RELATED TICKERS: DGLY

Yesterday CAPS decided Digital Ally (DGLY) was my personalized stock pick of the day.  I had never heard of this company but it instantly made me think of Alli the diet drug, that works by making you poop your pants, only digitized(!) and so better.  Apparently though it's a company that makes law enforcement doohickeys and isn't involved with digitized pants pooping weight loss therapies at all :(  Law enforcement doohickeys is probably a more stable if slightly more boring line of work.  I used to think the stock pick of the day was based on sectors/industries I had already made picks on.  For instance petrochina was my stock pick of the day on Monday.  I have PBR as a pick (I own shares of PBR and I think PBR OMGWTFBBQP0WNZ PTR... in the face!) so it made sense to me that PTR would be a reccomendation.  As far as I know I have no picks regarding law enforcement and so I'm not really sure where this was coming from.

So I looked up Digital Ally.... the stocks performance has been pretty amazing and it's balance sheet looks pretty good.  It comes off as an undiscovered company with great growth potential.  All of the news I can find on this company though comes from PRNewswire, which is a PR/News agency hired by companies to say good things about the company.  CAPs has DGLY listed as a 5 star pick, however only 55 players have rated the company and the top bull pitch is by a "player" named "Digital Ally" whose only pick is Digital Ally.  The highest rated player to actually comment on the stock has mentioned he might buy the stock if it gets back to it's $10 support.  I don't see support at $10.  I see it at $9 and then $7.  The stock was @ $10.50 when CAPS reccommended it yesterday it currently is bouncing around that $9 support line I see being + - $0.20 depending on when I look at it.  Giving up 14% in a little over 24 hours on no news whatsoever makes me think this stock might be a little too roller coaster for me.  The most turbulent stock I currently own is SunTech Power (STP) but even in it's ups and downs I can be conforted by the fact that 82.3% of the known universe lives in China and the people there do apparently like electricity. 

There are no analyst ratings on the MSN money page for the stock however the Street.com and Market edge both rate it as buys.  I think it has short-medium term growth potential but I see a lot of red flags that make me wary.  I'm also curious as to what the barriers to of entry for law enforcement digital recording devices are?  I'm thinking not too high.  I could see the stock dropping lower in the very short term and then popping by year end on quarterly reports... assuming the stock does live up to PRNewswires hype.  I don't feel strongly enough about the stock either way at the moment to give it a thumbs up or down though, I'm just adding it to my watchlist.  Who knows it could be a really good speculative play.