|
Sell Zi Corp. (ZICA:NASDAQ) above US$39 —
Lock in a 421% profit in less than six months
by Christian DeHaemer
It's been a great run. If you didn't get my hotline last week, it's time to take profits. A recent article in a couple of newsletters as well as a push from Lehman Brothers has brought in a wave of new buyers. I believe that this is the blow off top we've been expecting.
Zi Corp. now has a market cap over US$1 billion. In March, the company will report quarterly revenues of US$3 million. This announcement will throw a cold bucket of water on this fire.
I might be a little out of it, but a Canadian company that changed its mission three times, lost a patent fight, and whose major trading partner is communist doesn't deserve a market cap of US$1.2 billion nor to trade at 1,187 times sales. But then again, maybe it's just me.
Zi Corp. has been a great story stock from the beginning. That story is now widely disseminated. The downside from this level greatly outweighs the upside. It's time to pat yourself on the back and seek opportunities elsewhere. Sell Zi Corp. now! Lock in profits.
The comeback of kitsch
MDA went on a rampage yesterday, shooting up to US$7.75. It picked up a couple of buy recommendations, but my feeling is that the rapid rise was mostly based on misplaced B2B Internet hype.
 The company still has decent fundamentals and put in a strong Q3 — surprising analysts by 27%. One of the buy recommendations from a less than top name broker put a 12-month price target at US$20.
I don't have a lot of trust in this company's management. However, as long as Jesus freaks and crystal worshipers continue to buy the art, I'm willing to hang on.
That said, I don't want to follow it down in the current market climate. Put a stop in at US$6 and we will keep a close eye on her. I'll come back to this on the hotline.
Talk.com remains a buy under US$18
Talk.com is the low-cost producer of long distance service. You can't beat 5 cents a minute, all the time, anywhere in the United States. In fact, I am a customer. If you knew how much my wife jabbered away on the phone you'd understand why.
Last week, Talk.com (TALK:NASDAQ) reported earnings which were exactly in line with expectations. Talk.com Inc., announced 4Q EPS US$0.25 vs. loss of US$1.56 and annual EPS US$0.90 vs. loss of US$5.20. 1999 online revenue grew 78% and gross profit more than doubled.
 These are great numbers for a company that trades at valuations which are half its industry. However, the announcement was not enough to blow out the short position. There are 7.8 million shorts (32 percent of the float!) priced in at US$11.
The possibility for a short squeeze is very real.
Unless you believe that free long distance is coming you have to be a buyer in Talk.com. The free services I've seen aren't worth the aggravation of listening to advertisements. The other option would be free over the Internet. I simply don't believe that people will forego the ease of a wireless telephone, for the rigmarole of sitting at a desk with a dial-up modem.
Talk remains a strong buy.
In addition to his duties at Taipan, Chris DeHaemer is the editor of The Hammer.
|
