Is the Worst over at Syntax-Brillian?

I think so.

Syntax-Brillian (BRLC) is still over 60% off of its all-time highs reached one year ago. 2007 was certainly an awful year for any stubborn BRLC long. (Thankfully, as I've noted before, I was on the sidelines for most of the decline.)

I jumped back in with long stock and call options when the stock was around $2.75 just about one week ago. I figured I'd give BRLC one last chance.

There's a few reasons why I think now is a fine time to buy back in. As I've previously posted, there was some speculation that there could be a buyout or merger that may affect BRLC, whether with Vizio or another company. Those whispers have settled down, but since the stock price is so depressed, it's still an attractive takeover target.

The stock is so cheap. It's current price/sales ratio is just .4 - compare that to the 14 p/s ration of Google. The unbelievable p/s ratio shows that the stock has plenty of room to run. Anything under 1 is dirt-cheap, while a high-growth stock like BRLC can have an acceptable ratio with a low-single-digit figure.

During late 2007, the stock price was probably depressed even further by tax-loss sellers. During December, lots of the negative and sideways price action was due to these chronic sellers.

The price of BRLC shares have started to tick up in the last few sessions. Coming off of a low around $2.50 on December 19th, Syntax shares are up over 20%. Each of the last six sessions have been positive. It's clear that this is BRLC's most significant, long-lasting upward action since it began its final downward slide this fall. Excluding the $1 one-day bounce in October, there had been no serious upward action whatsoever. But now, the stock has strung together a week of gains and just crossed through the 50-day moving average. Based on a history of BRLC, seen below, this may be very significant.

BRLC has clearly had its ups and downs over the years. But one pattern is undeniable; once BRLC breaks through the 50-day moving average (the blue line) after a long drop, it doesn't look back. In both the spring of 2005 and summer of 2006, BRLC lost much of its value, crossed the 50-day, and went on to set a new all-time high. I'm not going to start saying that BRLC will be at $15 in three months, but this does seem to signal the end of the bearish cycles.

All of that is just tecnical, too. It ignores the chance of BRLC blowing away holiday sales statistics or any other positive news. So there's many reasons for BRLC to trek up from this point; cheap valuation, buyout potential, positive earnings potential, the change in charting indicators, and the fact that it's still down so significantly from its high. BRLC had been tossed around (rightly so, at some points, when management failed shareholders) for a long time; now, it's time to turn its act around.

I can see BRLC doubling in 2008. Is it guaranteed? Certainly not. Is it possible? All signs point to yes.





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Recent Happenings

As I stated in my last post, I currently have carpal tunnel (or some similar injury) so I can't type at length right now. But I wanted to update on some of my recent happenings:

I bought some Vonage (VN) at $1.00. It was up $.12 today, to $1.15. I think it's both a decent long term prospect, and i'm playing the bounce. If it continues upward quickly, I may dump and profit-take.

Our old friend Syntax-Brillian (BRLC) was interestingly up 25% out of nowhere today. Though I'm long, I suspect today's gain was due to a short squeeze, and may be short lived. But I hope I'm wrong.

I also purchased some Pantry (PTRY). Its stock has been up like an unbelievable 1000% or something over the last few years; I read lots of articles about it maybe six months ago. Now, it's down off of its 52-week high of 60, and only a couple bucks off of its low, and at a P/E of 13, this growth stock is now looking cheap.

I also picked up just once contract of November Calls for Nutrisystem (NTRI). They're the company that runs ads with Dan Marino and other jocks, with the pre-made food. They missed earnings and revised downward a little bit, and the stock fell 33%. It is an overreaction, to a growing brand, and I'm looking for both a bounce and a long-term gain.

Lastly, I'm currently long some ConocoPhillips (COP) puts. The company has already moved significantly, and the options are in the money. If the price of oil eases a little, it could drop like a rock. If oil keeps facing resistance at $80, I'm going to profit-take soon... I don't want to be blindsided by a hurricane or Iranian air strike that causes oil to go to $100/barrel.

That's all for now,
Stephen

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Last Week Review

Last week was a very big week for me; my positions in my portfolio changed significantly.

I sold my long position in Hovnanian, as it was up 50% in three sessions, to a price that I felt was inflated. (So far, I was correct, as the price has fallen almost $2 from when I executed my sell order).

I was also long in some Hovnanian 12.5 September calls, which thankfully, I was able to sell for a nice little profit. I also had some Abercrombie 80 September calls, which I sold for a little more than break-even.

I'm looking to re-initiate a long position in a homebuilder at some point, once the market settles down a little bit - with earnings being reported from a couple builders this week, the potential volitility is a little more than I am comfortable with. I may or may not choose Hovnanian again; I might choose a safer play. as Hovnanian is probably one of more-endangered builders. However, I still do think HOV will not go bankrupt, and it will trade at two, three, or four times today's price, but I don't know if I want to reintroduce that risk to my porfolio now.

In other news, Syntax-Brillian (BRLC) finally bounced a little bit; I initiated long-term options position $2.50 calls, expiring January), increasing my exposure to the company with some deep-in-the-money, limited-risk calls.

Heelys (HLYS) also finally had a few positive sessions; once again, I reiterate that the company currently looks fundamentally cheap. It's a very long-term hold.

Now that I've pretty much eliminated all short-term plays from my portfolio... its time to get a new one! And for the first time in my life, I'm looking to go short and/or buy puts.

Look at the next post for what I'm thinking about.

Christmas in December: Fed Aftermath

Investors that held long positions as of 2:14 Tuesday should appreciate Mr. Bernanke's decisions. The interest rate cut catalyzed a rally that has now lasted two sessions and 3-4%.

I personally can thank him for some investing success. I had purchased September calls for Abercrombie (ANF) and Hovnanian (HOV) about a month ago, when they were both close to the respective strike prices (80 and 12.5). In the month, they were flat or down, and my options were going to expire worthless.

However, Mr. Bernanke came to the rescue and surprised the market with a 50 basis point cut. Both Abercrombie and Hovnanian shot up, and the contracts became in-the-money. (Interestingly, I half-jokingly predicted with almost 100% accuracy the Hovnanian gains; read my post here.)

Anyway, just because I should disclose this anyway, I sold my options in both Abercrombie and Hovnanian, and I sold my equity position in Hovnanian today with a well-executed stop-loss order. For the record, I still love the homebuilder's prospect's for the future; I will be looking for a lower reentry point sometime very soon. However, I feel the run-up to 15 was largely unmerited and a bit of a chain-reaction, so I'm currently waiting on the sidelines for things to settle down.

Thanks to Mr. Bernanke, my personal portfolio was up 10% on Tuesday, and I am now exactly even for the quarter. (Prior losses in Hovnanian, Syntax-Brillian, and others had hurt my performance).

Looking ahead, I am uncertain; the crystal ball that I used to predict the rally Tuesday is now out of commission. I watched Mad Money tonight for the first time in a while, and Cramer predicted that this is just the beginning of a huge bull market. I can't say that I agree with taht statement; with still-unresolved (and possibly still worsening) housing/credit problems in the United States and Europe, I don't think the world markets are financially sound enough to have an organic, fundamentally-based rally. The euphoria from the interest rate cuts may last a few more sessions, then people will probably start to profit-take.

My advice? Keep your eyes on the long-term prize. I'm long Toyota (it's the biggest position in my portfolio, at about 20% of assets). It is down a couple bucks from where I bought it in the middle of the summer, and frankly, I'm not too sure it's going to go up significantly anytime soon (due to the possibly-weakening economy, tight credit, etc). However, I'm 97% sure that in two or three years, based simply on fundamentals, Toyota could easily be a $200 stock.

Trying to profit from volatility is tempting, and if you succeed, congratulations. But if you look at the world's greatest investors - people like Warren Buffet - they seek out great values, and great companies, and reap great returns.

Weekly Wrapup: September 10-14

It was a great week for the market; the major indexes all enjoyed gains of at least one percent. Here are weekly charts, courtesy of Marketwatch.com:

Dow Chart 9/10-9/14

NASDAQ Chart 9/10-9/14

S&P 500 9/14-9/14

As the charts show, each index posted gains for the week... and if measured from the bottom of the lows on Monday, the weekly increases are even more impressive.

Moving on:

A few interesting things happened with the stocks I own or watch this week. Syntax-Brillian (BRLC), which I had a small speculative position in, first delayed earnings, then disappointed the street by revising its future outlook downward. It fell from almost $7 on Monday to $4 this Friday.

Obviously, the company should be a little cheaper, because it did revise its future estimates. However, I do not believe that this stock deserved the downfall, or will trade at this price forever. Along with the quarterly results, BRLC reported yearlong earnings of $.48/share. At the current share price, BRLC is an 8 P/E stock, which is utterly unheard-of for such a small, high-growth company. Revenue and income continues to grow quickly (just not as quickly as expected), with demand out pacing the company's ability to supply.

I doubled my tiny position around $4 a share, and I believe that this stock will trade much higher than it does today. Unless there is some massive scandal or other major unforeseen problem, based on the current numbers and market conditions, I feel as though BRLC is beaten-up and undervalued in the long term. I don't know if it's going to "pop" anytime in the near-term, but in a year, I would not be surprised if it was at $8 or $10 per share.

Another interesting happening:
I purchased a tiny position (500 shares at $.56) of an even smaller TV maker, Soyo (SOYO.OB). Other than some news about a very small stock purchase by the CEO, information about sponsorship of a fighting candidate, and a reiteration of earnings guidence (of 7+ cents/share for the year), there wasn't much news; however, the stock shot up to $.92 on Friday, before closing in the 70-cent range.

Generally, I don't invest in "penny" stocks because it's unpredictable and more like gambling than investing. However, whenever I discovered Soyo, I researched it and really liked the company - it started as a company making specialty motherboards for gaming computers, and eventually got into the LCD TV market. Now, they produce a 24" TV that has 50% market share at that size, and signed a long-term contract to distribute products under the widely-respected Honeywell brand name, starting with portable USB drives this year and including big-screen HD LCD TVs next year. I like this little company in the long run; I could care less about the daily volatility and short term gains, becuase if this work out well, this company could be worth much more in the long run.

Along with the rest of the market, most of my other positions were up, including Marathon Oil (MRO), Electronic Arts (ERTS), and Sun Microsystems (JAVA).


For the upcoming week, markets will be focused on the Fed meeting on Tuesday. The decisions concerning interest rates will surely set the tone for the week. One of my positions, Hovnanian (HOV), will definitely be effected; I'm going to have a full-article writeup about it posted later tonight or tomorrow.



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9/13 Wrapup: BRLC, SOYO, and more

The Dow was pleasantly up 130 points today, along with an almost 1% gain in the S&P 500 and a more modest 1/3% gain for the NASDAQ. The Dow was lead by Countrywide Financial, the struggling mortgage company. Today they announced that they secured an additional 12 billion dollars in financing, allowing the company to basically keep its doors open.

McDonalds was also up very strongly, continuing a multiple-session rally. To be honest, I was thinking about buying them a week ago at 48, but felt like waiting because I thought they may be overvalued... now I am uncomfortable buying at the current level. However, they just raised their dividend by 50%, adding valuation to the shares.

In my portfolio, Sun Microsystems continued its rally to close up another 3%. Marathon Oil was also strong today because of higher energy prices. Electronic Arts was up a few percent, as was CIT, a financial company that has nothing to do with subprime lending that was hurt by the financial crash during the early subprime crisis.

Heelys declined, but that's a long term play, so I'm not worried. My tiny position in BRLC, arguably the worst short-term decision I've ever made, fell additionally in the open market today after being down 25% after-hours today. However, I went with my investing instincts and doubled my position today, lowering my cost. Once again, I think this stock is super risky, but for dumb reasons; it's a solid company, but day traders and short sellers really manipulate the price and make it trade irrationally. The earnings for this year were $.48/share; it's now less than a 10 P/E company... and for such a high-growth company, I'm willing to take the risk, because BRLC shouldn't stay at this valuation once it starts behaving rationally again.

Right now, I've got September calls in Harley Davidson (HOG) and Abercrombie (ANF). Abercrombie was up nicely today, and hopefully I'll be able to get out of those profitably (I bought the contracts a few weeks ago, and the stock was marginally down for the time in between the purchase and now). HOG is simply a play on the utter destruction of that stock over the past few sessions; they altered guidance, and shares fell almost 20%. I'm hoping the price stabilizes, and I can make a small short-term gain.

Edit: Almost forgot about my new interesting little company, The Soyo Group (SOYO.OB). Yes, it's traded over the counter, but its an established company; it used to focus on making motherboards for certain gaming computers, but now it makes the most popular LCD at the 24 inch size with a whopping 50% of market share; check out the article here.

They're making money, which is very impressive for such a little company. They have big plans for the future; they're supposed to start making huge-screen HD TV's under the brand name Honeywell for 2008.

I bought a tiny position for $.56 yesterday; it closed at $.71. I was surprised by the huge jump on no news, and I'm sure its going to give up its gains in the next few sessions. But this is going to be on my long-term radar; if they can continue to grow, while producing good product, this could be a great long-term play. Look past the penny-stock assumptions; it's a real, established company that's turning a profit, not some pump-and-dump scheme like other comparably-priced offerings.

Earnings Watch: BRLC

Early this morning BRLC announced that they would indeed be reporting earnings today, after pushing it back yesterday. Shares were up 5% in early market trading, but have fallen flat by the time I'm posting this (1130 EST).

If they report earnings this afternoon, I still believe the earnings will meet or exceed expectations, so I'm hoping this play will pay off over the next few sessions. Like I said before, I think it's a great company in a great industry for the current economic conditions.

Obviously none of my posts are supposed to be acted upon, but I would advise against entering BRLC at this point in time. If the company reports well and the stock jumps a dollar, there's still plenty of long-term upside left. But, even though I am long in BRLC, I wouldn't be surprised if the missed earnings or re-delayed or something else happened that caused the price to collapse.


That's all for now; as of post time, the NASDAQ is up a half-percent and the other indexes are following.

Syntax Brillian Corp (BRLC) Individual Stock Analysis/Commentary

Syntax Brillian Corp (BRLC)

As a consumer, you have probably never heard of Syntax Brillian before, and have no idea what they do. However, there's a good chance you have probably seen their products, and you might even own one yourself; they make LCD High-Definition televisions, under the brand name Olevia. Olevia is a discount brand; a fully-priced Olevia high-def TV may be 30% cheaper than a Sony that's on sale.


A major reason why I'm looking at the stock is because people seem to like the TVs: here is example from cnet.com. Cnet only gives the TV a 6, but 33 reviews contradict (some directly calling out!) Cnet's rating; the average user review is an 8.3, or "Excellent." I'm not going to try to sell you a TV, so I won't provide any more examples directly. Other sites I looked at had reviews of 7s or 8s out of 10, or 4 stars out of 5. It seems to be a good product at an excellent price.

One last example of how great of a deal the TV's are: here is a page from circuit city's website, featuring LCD TV's in the medium-size range. Notice that Olevia are the cheapest, followed by another discount brand (Vizio), and then the major manufacturers are hundreds of dollars more.

So how is that going to help BRLC increase in price? Here's my train of thought:

• Short Term:
• Retailers have been doing pretty well this summer, even during the "credit crunch" and worries about a recession. TV's should mirror that trend.
• It's baseball playoff time, and the start of football season, which is a major time of HDTV purchases.
• If consumers are becoming tight on money, what kind of TV are they going to buy? The well-reviewed, discount brand that's two-thirds of the price of the competition.
• Long Term:
• They have recently swung to profitability, and their forecasts are for a continued increase in revenue and profits. The TVs are appearing at more retailers across the country; the brand has plenty of room to grow.
• The fundamentals, based on current estimates, are solid: it's forward PE is only 8, based on today's pricing and estimates. For a high-growth company, that is ridiculously low. As long as BRLC doesn't guide lower, shares should have plenty of room to grow.
• I think that many Americans will be replacing the last generation of picture-tube TVs with the new LCD or Plasma TVs over the next 10 years. BRLC's position as a discount manufacturer is excellent to capitalize on that potential trend.

Here are revenue estimates: keep in mind these could change at any time, but assuming these figures are correct, they are very promising:

Revenue Est	Current Qtr Jun-07	Next Qtr Sep-07	Current Year Jun-07	Next Year Jun-08
Avg. Estimate	198.11M	256.58M	690.47M	1.27B
No. of Analysts	5	5	5	5
Low Estimate	195.00M	228.64M	687.36M	1.12B
High Estimate	207.72M	270.70M	700.08M	1.54B
Year Ago Sales	59.81M	87.02M	192.99M	690.47M
Sales Growth (year/est)	231.3%	194.9%	257.8%	84.5%

BRLC is set to report earnings tomorrow, September 11th, after the bell. The earnings, and future guidance, will dictate much of the company's future. I honestly would not suggest getting into the company tomorrow, before the earnings come out, because that's a very risky play that could lose a significant portion of the investment. However, after the numbers and future projections come out, the picture will be clearer on whether BRLC is still the great long-term deal it appears to be today.

Plus, a very high percentage of shares are currently shorted, so if earnings are positive and the stock price goes up, a short squeeze could easily propel the price even higher. But like I said, don't enter a long position at this point; wait until earnings are released. Even if you miss some positive movement, the buying opportunity will not be lost.




I have been long on BRLC for a few days now, in anticipation of earnings, simply because the risk versus reward is worth it for me. Remember, anything written on this blog is for entertainment purposes only, and in no way is financial advice that you should act upon.