Companies featured in the current edition of the newsletter: ACTC, CETG, CVM, ENZ, ETGF, GNBT, MNDL, PLKH, SWYV
It was another volatile week on Wall Street as markets continued to search for direction, declining early in the week then rallying by the close on Friday. All told, the Dow ended down moderately, losing 193 points to close at 8635, extending its year to date losses to 34.9%. The tech heavy NASDAQ fared slightly better, losing 26 points, or 1.7% to close at 1509, bringing its year to date loss to 43%. The S&P 500 and Russell 2000 declined 2.3% and 2.5% respectively, bringing their year to date loses to near 40%.
Investors were faced with some tough economic reports this week, headlined by Friday’s news that nonfarm payrolls declined by 533,000 in November, the largest monthly decline since December 1974. Downward revisions were also made to the September and October reports, bringing the cumulative three month job loss to 1.28 million. Unemployment for November rose to 6.7% from 6.5%. Among the other dour economic headlines was the announcement that the US has officially been in a recession since late 2007. The declaration helped spur a selloff of 8.9% on Monday, despite the fact that many had reached this conclusion long ago.
Despite the tough economic news, the market reacted resiliently as investors shook off most of the negativity and seemed to focus on the few positive announcements the week had to offer. Mortgage applications soared 112% from the previous week, Black Friday sales were stronger than expected and the European Central Bank and Bank of England made aggressive cuts to their key lending rates. Considering the escalation of dire economic reports over the course of the week, it was a moral victory of sorts that the market was able to recoup a significant portion of the losses sustained during Monday’s selloff. More impressively, the financial sector, as reflected by a gain of 0.7% in the Financial ETF (XLF) for the week bucked the overall decline in the market. Since reaching an all-time low on November 21, the Index is up an eye-catching 47.7%!
What should investors look for in the upcoming week? The earnings calendar will be relatively light again, but look for results from Autozone (NYSE: AZO) and supermarket operator Kroger Co. (NYSE: KRO) before the bell on Tuesday. Costco (NYSE: COST) is scheduled to report on Thursday before the open. Delta Airlines (NYSE: DAL) and Agilent Technologies (NYSE: A) meet with analysts on Tuesday. Proctor & Gamble (NYSE: PG) and United Technologies (NYSE: UTX) meet with analysts on Thursday.
Economic data for the week begins with Pending Home Sales for October due out at 10:00 a.m. Tuesday morning. On Wednesday, look for the October Wholesale Inventory Report at 10:00 a.m. followed by Weekly Crude Inventories at 10:35 a.m. and the Treasury Budget for November at 2:00 p.m. November Import/Export Prices and Trade Balance data for October will be released at 8:30 a.m. Thursday, along with Weekly Initial Jobless Claims. November PPI, Core PPI and Retail Sales for November will all be released at 8:30 a.m. Friday. The week finishes up with October Business Inventories and the Preliminary Michigan Sentiment Index for December both scheduled to be released at 10:00 a.m. Friday morning.
The conference schedule for the week kicks off with the Credit Suisse Private Equity Fund-of-Funds Conference in New York on Monday. The two day IBC Life Sciences Biopharmaceutical Manufacturing and Development Summit in Durham, NC also begins on Monday, as does the Capital One Southcoast Energy Conference in New Orleans. UBS hosts a Global Media and Communications Conference on Wednesday in New York. Barclays Capital holds a two-day Global Tech Conference in San Francisco beginning Wednesday.
Earnings Preview: Enzo Biochem (NYSE: ENZ) is scheduled to report Q1 earnings for the period ended October, 2008 on Wednesday after the market closes and hold a conference call on Thursday morning. Since releasing year-end results in mid-October, shares are down approximately 25%, in line with the broad weakness in small-cap stocks. There are no published estimates on the company since the analyst covering the sector is no longer employed by Lazard. For fiscal 2008, total revenue rose 47%, to an all-time high of $77.8 million, from $52.9 million, reflecting both organic growth and the benefits of recent Life Science acquisitions. The company also had cash and investments of $78.3 million and no debt. Investors will be looking primarily for signs of strength in ENZ’s life sciences business as it has had another quarter to integrate the Axxora and Biomol acquisitions, as well as the strength of its clinical labs operations. Shares ended the week at $5.10, up 1 cent.
Volume Alert: Shares of drug delivery company Generex Biotechnology Corporation (NASDAQ: GNBT) surged 28% on more than twice average volume following an announcement that the results of a recent study suggest that MetControl, the company’s Metformin chewing gum product, is therapeutically equivalent to traditional Metformin tablets. Metformin is a generic drug used to regulate blood glucose levels and is the most prescribed drug for treatment of Type II Diabetes. Due to gastrointestinal side effects, large pill size and bitter taste, there are millions of patients who choose not to use it however, despite its effectiveness and popularity among clinicians treating the disease. By delivering Metformin in a pleasant tasting chewing gum, the company hopes to make the drug more acceptable to those abstaining from this popular and effective course of treatment. Shares closed at $0.60 on the week, gaining $0.17.
CEL-SCI Corporation (AMEX: CVM), a company engaged in research and development of drugs and vaccines used in the treatment of cancer, provided additional details on its new manufacturing facilities last week by releasing details on its website. The manufacturing facility was built to supply product for the upcoming FDA cleared Phase III clinical trial of Multikine, the company’s product for treatment of head and neck cancer, as well as to manufacture the product for future use if it is commercialized. Shares gained three cents on the week to close at $0.33
Capital City Energy Group, Inc. (OTCBB: CETG), a diversified oil and natural gas company with three separate divisions, continues to demonstrate strong growth, as the company released an operational update highlighting increases in production and reserves. Total net oil and gas production generated by principal investments was 10,439 barrels of oil and 63,136 thousand cubic feet (MCF) of natural gas for the first nine months of 2008, resulting in net revenue exceeding $2 million for the period. The proved and producing reserves increased to more than $9.9 million at the end of September. For the 2008 third quarter, oil and gas revenue increased to more than $760,000 from $28,000 in the same period one year ago. Avanti Energy Partners, a wholly-owned subsidiary of CETG recently acquired several thousand acres in northeastern Ohio for various drilling programs and anticipates operating more than 250 wells within the target area with plans to complete 50 wells in 2009. Based on today’s current natural gas prices and surrounding well-production data, 50 completed wells could generate gross revenues of $10 million in the first year of production, positioning Capital City for strong growth in the coming quarters. The stock ended the week at $2.10, gaining $0.23.
Element 21 Golf Company (OTCBB: ETGF), the manufacturer of advanced Scandium Alloy golf and fishing equipment, continues to expand their distribution network throughout the US at a remarkable pace. ETGF’s unique line of golf and fishing products are now being distributed in over 450 stores, with more major retailers slated to begin carrying the company’s products in 2009. The announcement marks a significant increase in ETGF’s distribution network over the past few months, as the company’s products were available in only 175 stores at the end of June signifying an increase of 250% since that time. This rapid growth in distributors coupled with the fact that the company’s products have achieved market penetration in only 30% of the nation’s geographic regions to date suggests that sales of ETGF will continue to grow at a rapid pace as they further their expansion into new territories. Shares gained 9 cents on the week, closing at $0.29.
Mandalay Media, Inc. (OTCBB: MNDL), an emerging new media distribution and content company, achieved a milestone recently, announcing that its subsidiary, Twistbox Entertainment Inc.’s mobile play-for-prizes platform has hosted 75 million game play sessions. The platform allows users to play their favorite classic games from different publishers from their mobile phones on a subscription basis and compete with other users for prizes from retailers including Amazon, Starbucks, Best Buy and Apple. Twistbox has a pipeline of new mobile operators and game publishers being launched for the holiday season and throughout 2009. Shares ended the week at $1.75, up a quarter.
Prolink Holdings Corp. (OTCBB: PLKH), the world’s leading provider of Global Positioning Satellite golf course management systems and digital out-of-home on-course advertising, continues to build its roster of domestic partners, adding Indian Wells Golf Club in Garden City, SC and The University Club at LSU, located in Baton Rouge, LA, to its collection of upscale golf courses that feature the Prolinks GPS system. Indian Wells Golf Club is a staple of the Myrtle Beach golfing community, being a favorite of both locals and tourists alike, while the University Club is the home course of LSU’s nationally ranked men’s and women’s golf teams. The addition of these two prestigious courses helps to further solidify Prolink’s position as the world leader in GPS management systems, in addition to expanding their worldwide digital advertising network. The stock remained unchanged at $0.07 for the week.
Seaway Valley Capital Corporation (OTCBB: SWYV), a diversified holding company, reported that sales of its wholly-owned subsidiary, Patrick Hackett Hardware Company, a full line department store specializing in name brand merchandise and full service hardware, posted company-wide sales increases of over 17% on the Friday through Sunday following Thanksgiving. The company attributed the increase in sales to the opening of three new stores since last year, and the addition of three others which are still in transitional phases. SWYV also announced last week that Alteri Bakery, another wholly-owned subsidiary, has been awarded multiple contracts to supply school districts in upstate New York with fresh baked goods on a daily basis. The company expects to see revenues in the hundreds of thousands of dollars resulting from these contracts. The stock closed unchanged, remaining at less than $0.01 on the week.
Advanced Cell Technology (OTC: ACTC) , a developer of stem cell based treatments, continues to seek new applications for their stem cell based technologies, as the company announced the formation of a new international joint venture with CHA Biotech Co., a leading Korean-based biotechnology company focusing on similar goals. The new company, Allied Cell Technology, will develop human blood cells and other clinical therapies based on ACTC’s proprietary hemangioblast cell technology. ACTC will exclusively license all of its hemangioblast technology to the joint venture, in exchange for a $500,000 licensing fee. CHA will contribute working capital, and will be the majority owner of the venture. The partnership has already produced significant results, as the company also announced last week that a study conducted by the Director of Differentiation for the venture, Dr. Shi-Jiang Lu, has been formally published in the prestigious medical journal Blood, the leading publication in the field of hematology. The study focused on the feasibility of producing functional, oxygen-carrying red blood cells from mature human embryonic stem cells, and found that not only could the team produce red blood cells, but they were able to create cells with the functional properties of their naturally occurring counterparts. The study suggests that one day the company may be able to produce blood for transfusion, eliminating the need to rely on the donor system. While the research is still in its relative infancy, it is worth considering the potentially massive global implications of a technology such as the one which ACTC is presently developing. Shares lost half a cent to close just above $0.02.
