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Stocks Watch List - REDE, MTEX, CALD, LTON

(May 18, 2004)

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Valuation looks attractive here.  Approximately three dollars per share in cash and short-term investments with no debt.  Company continues to grow and it looks like it has solved its execution problems (they had no execution problems during the period immediately before Valentine's Day) dating back to Christmas.  Insiders currently own 34.29% of the company while institutions own 17.38% - a very good ratio in terms of long-term success and potential capital appreciation

Moreover, insiders have also started buying back the stock, purchasing a total of 5,500 shares of the stock so far on May 14, 2004:

Technicals still not suggesting this is a good time to buy but insider buying and the lack of insider selling (hopefully) should be a good support of the stock in the near term.

The growth in this business and in the wellness and nutrition industry continues to grow strongly.  In the last fiscal quarter, sales and net income increased 44.3% and 118.8%, respectively:

Technicals also look okay here, as the stock continues to consolidate at its 40-week moving average.  There has also been some insider buying - the tune of 17,000 shares over the last two months.

A recent IPO which just debuted in November of last year.  Hugely oversold stock here per the technicals:

First insider buying occurred on April 29, as the CEO of the company bought 3,100 shares at prices ranging from $7.15 to $7.19 a share.  Cash levels of over $3 per share; and a first quarter miss in earnings may only prove to be a temporary problem:

Valuations, insider buying, and a huge oversold condition makes this stock a compelling buy.

After a positive reaction to its latest earnings report, the enthusiasm over Linktone has calmed down a bit:

After debuting on the NASDAQ in early March at $19.50, this Chinese pure-play wireless company (a provider of Chinese mobile games) traded as low as $7.37 last Monday before it released its blockbuster report the day after.

As the Bank of China decides to slow down growth in the country, both Chinese equities and the Chinese IPO market has substantially deflated.  The recent downdraft of companies like LTON reflects a growing negative sentiment not just about the Chinese market but about the general emerging markets overall.  There could be more consolidation here but the valuation in this stock looks compelling here.

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