It was another wild week for Poised To Triple. Our latest pick (Pixelworks – PXLW) hit a 3-year high of $4.80, 40% above our initiation price, just a couple of weeks ago. It has since come back down. The stock has been on a rollercoaster ride, largely driven by day traders. They’ve been waging a war of words on Twitter, arguing over whether this is a “real pick” or a fraud, also known as a “pump and dump”.
Before I get to the meat of this week’s PTT Insider article that was sent to our subscribers yesterday, allow me to address this topic.
The Good News: As the analyst who started this PXLW madness, I can tell you that this is not a pump and dump pick. I’ve been picking stocks for over 20 years and my track record is on public display. Many of my picks have been acquired. Others are very well-known companies. My last pick (Himax – HIMX) was called a pump and dump, but before long, many Wall Street analysts came out and validated my initial claims.
These are not the characteristics of pump and dump stocks. Pump and dump stocks don’t get acquired or validated by Wall Street analysts for a simple reason – pump and dump companies are almost always egregiously overvalued. Most exist for no other reason except to defraud investors.
In contrast, some of my picks are considered speculative (a.k.a. “a spec”). To the untrained eye, a spec can look like a pump and dump. However, with a little homework you can see that these are real companies generating millions in revenue. True specs have the greatest real chance to triple in value (or get acquired before they do) as the company proves that it is real by doing one simple thing — growing.
However, if the company fails to do so, the stock will follow suit. Because of this risk, I believe that investors should cut their losses if one of my picks falls 20% from the time of my initial report. This limits your potential loss to 20%. Considering that my picks tend to double in value, 20% isn’t a bad loss to take on the losers. If you look at my track record, you’ll see winners AND losers. Handling the losers properly is the key to long-term success.
The Bad News: I’m not going to constantly campaign for my picks (your investments) to go up in price. That’s what pump and dump artists do. Our philosophy is to do our homework, make our picks, and give the companies time to prove themselves. Once my initial report is released, most of our work is done (though we will surely update you on positive and negative events when it is warranted).
You should understand that specs can experience volatility, especially when untrusting souls accuse the analyst of perpetrating a fraud. I don’t blame them. There are frauds abound in the market. However, most of these people don’t research the picks or the analyst’s background. This is where you can gain a key advantage.
Legally, I can’t advise you on what to do about all this, but here’s what I do: When one of my picks goes up too far and too fast, I sell some. When it goes down too far and too fast, I add to my position. Simple…and very profitable.
One last thing — As I’ve discussed countless times, I’m not a day trader. My picks aren’t meant to triple overnight. They’re supposed to double, triple, or be acquired over time, usually 12-24 months. Keep that in mind. Many people confuse a sharp stock movement with a change in the company’s fortunes. Companies’ fortunes almost never change that quickly. Keep that in mind.
OK…without further ado, here’s the meat of this week’s PTT Insider!
New Russell 2000 Stocks To Consider
On June 28, over a hundred new stocks will be added to the Russell 2000 index. This is big news for many of them. By being added to the Russell, dozens of portfolio managers will be required to buy large percentage of their outstanding shares (in many cases, equaling over 5% of the entire company).
Back in March we offered our special picks for 2013. Our latest update shows that those picks have returned an average of 25% in just 3 months!
Aside from those picks, there are a few other stocks that might do well between now and June 28. Because of the short time frame, anything can happen. Thus, we are notofficially recommending them. However, I personally know each of these companies well and invested some of my own money in them. They are:
eGain (EGAN) - eGain develops and sells Internet customer service software. When you get customer service on a website, there’s a chance you are using EGAN’s product. RightNow used to be #1 in this market. However, they were acquired and have since lost their way. EGAN has been working hard to take over and Gartner Group (who acquired my former employer, AMR Research) says they are doing so.
Marketo (MKTO) - Marketo went public a couple months ago. Their customers love them, but the stock got rocked when Salesforce.com’s (CRM) acquired ExactTarget. This deal creates a threat to MKTO’s business, but the impact may actually be good for MKTO in the short-term. As customers wait to see what CRM will do with ExactTarget, they may opt to go with the more certain choice, MKTO.
Planet Payment (PLPM) - Planet Payment specializes in international multi-currency payment processing. They earn about $50 million in annual revenue and are growing at 20% annually. This SeekingAlpha article provided a more detailed overview of PLPM. I wasn’t sure they were going to get in, but told folks that it was worth a bet. Sure enough, they were officially selected last week. Because they weren’t an obvious choice, the stock may get a nicer boost than most between now and June 28 when the new Russell 2000 officially goes into effect.
If you buy into any of these picks, there’s some important information you will need to know before June 28. It’s something most investors don’t think of and requires watching how these stocks trade between now and next Friday.
I’ll make sure the subscribers to my free PTT Insider newsletter are the first to know, so stay tuned!
By: Mark Gomes, CEO