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Varchild2008 (83.75)

AgFeed knocks earnings estimates out of the ballpark... stock surges up 21 cents?



August 11, 2008 – Comments (2) | RELATED TICKERS: FEEDQ

Baffling to watch (FEED) after it's amazing earnings report start at $15 a share and slowly collapse to $12.71!  And then at $12.50 in after hours trading!

Granted... It's profit taking and short selling and so on.  I don't care.  With an earnings report like that I took the collapse to my advantage and bought FEED back down to $12.71.  (25 shares bought at $13.48 and 25 more shares bought at $12.97).

If this has a lack luster performance out of the gate tomorrow I'll nearly double my stake in FEED or at least consider it.  How long will FEED remain a $12 stock given it's great track record so far?

It will only take an analyst upgrade on the stock to squeeze out the shorts and get this stock back to $15 a share.  The reality is this thing should be trading at $18 a share right now especially considering next quarters earnings expectations along with their 1 million hogs expectations for next year.

Some people argue FEED is not an investment, just a trade.  I laugh at that notion. I couldn't care less about cycling this stock (although I have cycled it once or twice). As long as this company continues to knock the cover off the ball on earnings reports, I know that share price appreciation will keep this stock going for many years to come.  It's up almost 50% year to date and that is probably why we aren't seeing anything spectacular.  It's already had a spectacular ride.

I'm more interested on how this stock appreciates next year because +50% of $12.71 is 19.06 and FEED ought to reach $19.06 in due time.

2 Comments – Post Your Own

#1) On August 11, 2008 at 10:45 PM, russiangambit (28.88) wrote:

The more I play this market the more I realize that it is completely driven , 100% by big players like hedge, mutual, pension funds. And the way they operate is by sectors. You have to figure out which sectors they pick.

For example, oil stocks are dirt cheap right now, but they are not buying them because they decided that they want to be out of commodities. The same for emerging markets, the bug money started moving out of the emergin markets about 2 months ago. Many Chinese ADRs sport P/E of 5-6, down 50% from their highs just a few months ago.

You can't win this game. If you beleive  in a stock, and it is not from a preferred sector, then you have to be willing to hold it a few months until the secot comes back into play.

Another good example is solar stocks. They were all the rage 2 months ago. Now, they report huge earnings and nobody wants them.

It seems irrational, but it actually makes a lot of sense from the shortterm perspective. There are simply too many momentum players in this market these days.

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#2) On August 12, 2008 at 8:14 PM, Varchild2008 (83.75) wrote:

True...  But... On the bright side in terms of FEED you have to go back to the fact that they got placed on those Russel Indexes.  If they can continue to get onto indexes and such then that helps as well as getting placed onto mutual funds.

They are going to market themselves to Merryl Lynch in an investment meeting of sorts September 1st.  That's going to be huge for this stock.  It clearly needs more buyers because the "Short Sellers" and "Naked Short Sellers" are totally pouncing all over the Agriculture sector right now.

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