Camelot Soars on ABC Family Agreement

Camelot Entertainment Group, Inc. (CMGR, Free Analysis), a provider of motion picture infrastructure and development, soared more than 3,000% after signing a deal with ABC Family for its animated classic “Puff the Magic Dragon.” The program is scheduled to air as part of the network’s annual 25 Days of Christmas event, the biggest programming event on cable.

Despite the optimism among traders, few details of the deal were announced publicly, leaving a lot to speculation. Last quarter, the company reported revenues of $23,338 and a net loss of $4,501,784, while its balance sheet contained just $155,688 in current assets compared to more than $6.3 million in current liabilities, suggesting it may need to raise additional capital moving forward.

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Traders Push EcoSystem to New Highs Intraday

EcoSystem Corporation (ESYR, Free Analysis), a provider of clean energy technologies and solutions, jumped more than 500% as day traders pushed the stock higher, before short sellers sent it lower, during today’s session. Many low float stocks have been the subject of sudden and explosive manipulation due to lower transactional volumes during the summer months.

Since its inception, the clean energy company has reported no revenues and accumulated a deficit of more than $10 million. Meanwhile, the firm has just $561 in current assets compared to current liabilities of more than $2.26 million, suggesting that it may need to raise additional capital in order to maintain its operations.

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Aquastar Extends Rally on High Volume Day

Aquastar Holdings Inc. (RPPR, Free Analysis), now called Real Paper Displays, is a producer of real paper displays that reduce risk and help new companies grow. The company also recently designed a completely green air conditioner that exceeds environmental regulations and set a challenging new standard for ultra-efficiency ratings, a full 60% more efficient than conventional systems.

Since its inception in May 2006, the company has reported no revenues and a net loss of more than $4.48 million. Meanwhile, the firm reported total assets of just $17 in total assets and more than $3 million in current liabilities, suggesting that it may need to raise additional funds moving forward in order to sustain its operations.

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Kingtone Wirelessinfo Solution Holding Ltd. (KONE, Free Analysis) is a leading China-based software solutions developer focused on wirelessly enabling businesses and government agencies to more efficiently manage their operations. By extending clients’ existing infrastructures to include mobile participants, the company can do everything from improve communication to enable greater sharing.

For instance, Yan-An’s police department implemented the solution to increase the effectiveness of patrolling and case reporting. Among other things, the wireless system enabled patrol officers, community police and investigators to more efficiently share information, while also expediting case time, improving cooperation between forces and enhancing information sharing.

As the first Chinese company focused predominantly on developing mobile enterprise solutions, the firm has already completed more than 130 successful client installations and has accumulated special knowledge and expertise that directly resulted in the creation and development of its proprietary adaptable middleware platform and array of software applications.

During the full year 2009, these attributes helped Kingtone report sales that grew 162% to $11.24 million as its net income jumped 421.9% to approximately $5.3 million, or $0.48 per share. Despite the rapid growth, the company’s stock trades at just $2.20, which represents a price-earnings ratio of just 4.58x. Assuming just 20% growth rates, its share price should be closer to $9.60 per share.

Meanwhile, the company has also maintained a strong financial position with $15.9 million, or $1.14 per share in cash, representing approximately half of its market capitalization. Subtracting this from its share price yields an adjusted price-earnings multiple of 2.2x its 2009 earnings, making it significantly undervalued even by very conservative standards.

In the end, Kingtone represents a play on China’s growing wireless infrastructure that appears to be significantly undervalued. And with high barriers to entry and a very stable customer base with high profile and government organizations, this stock is likely to continue its move higher over the long-term.

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Amidst negative U.S. GDP revisions and concerns about a slowdown in China, India quietly announced that its economy accelerated last quarter from sharp increases in its manufacturing, mining and service sectors. In total, the country’s economy grew at a rate of 6.8 percent during the quarter ended March 2010, making it one of the fastest growing economies in the world.

While some portions of the economy, such as industrial production and exports have showed signs of slowing this quarter, many other sectors like banking, technology and telecom seem to be quite robust. Many investors are therefore seeking high returns by targeting large cap stocks within these sectors, which are poised to grow with the country’s young population and ambitious leadership.

India’s Banking Giant Reports Solid Gains

ICICI Bank Limited (IBN, Free Analysis) is a leading provider of financial services in India’s rapidly growing economy, which puts it in a strong position to profit if the trend continues. Even as the country moves from rapid growth to sustainable growth down the road, the banking sector stands to benefit from higher consumer income, a steadily growing GDP and strong demand for loans.

Last quarter, the Indian banking giant reported revenues that increased 17% year-over-year from $189 million to $221 million, while its non-performing asset ratio fell to 1.62% from 2.19%, indicating a higher quality portfolio of loans. And with a strong capital adequacy ratio of 20.2% and Tier-1 adequacy of 14%, investors can be assured that this bank will be around for the long haul.

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Profit from India’s Continuing IT Boom

While the banking sector may be attractive for internal growth, one of India’s largest exports is its IT services sector that continues to drive its economy. Companies like Patni Computer Systems Limited (PTI, Free Analysis) are among those providing IT services around the world. As technology continues to advance, India’s highly educated developers are likely to remain in demand for some time.

Despite a crumbling global economy, the IT services provider reported a marginal increase in its revenues and a meaningful 10.4% increase in its bottom line net income. Meanwhile, management indicated that some of its projects may be running behind schedule, but it anticipates that its strategic investment will pay off in the mid to long run, making the firm one worth watching closely.

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Play Growth in Domestic Markets with a Telecom

With the ubiquity of mobile phones these days, Mahanagar Telephone Nigam Limited (MTE, Free Analysis) remains one of the best ways to play growth in the country’s middle class. The company is one of the largest providers of telecommunications services within the country’s largest cities of Mumbai and New Dheli, and trading with a P/E of 6.48x and a dividend yield of 3% makes it a very cheap bet.

Despite the slowdown abroad, the telecom provider reported net income that increased 2%, while the future of telecom demand in the country remains bright. Internet usage within the country has increased from 1.6% of the population in 2002 to nearly 7% of the population in 2010, while many analysts expect the industry to continue to boom during the coming years.

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Clearwire Initiated with a Buy at Kaufman Bros

Clearwire Corporation (CLWR, Free Analysis), a provider of mobile broadband access and residential voice services in communities, was initiated with a Buy and $8.50 per share price target at Kaufman Bros. At a significant 27.8% premium to the current market price, the analyst believes the company’s wireless data services are set to increase significantly in 2011.

The analyst believes the broadband provider represents a unique opportunity to invest in an early stage, pure play, next generation 4G wireless services provider that will generate significant growth beginning in 2011 and cross over into positive free cash flow sometime in 2013 with its first full year of positive free cash flow expected in 2014.

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Analysts Debate Burger King’s Takeover Value

Burger King Holdings, Inc. (BKC, Free Analysis), a fast food restaurant chain in the U.S. and abroad, jumped more than 20% ahead of the opening bell as analysts continue to debate its takeover value. UBS noted that a $19-21 per share buyout is feasible and would imply a high-teens IRR for a buyer, but CNBC reported that 3G may pay up to $24 per share in cash for the name.

The fast food chain has been embroiled in speculation following rumors of a private-equity buyout that have since been all but confirmed. The leveraged buyout comes at a time when debt issuance is cheap and readily available, enabling the small 3G private equity fund to make a multi-billion dollar offer for the ubiquitous restaurant chain.

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Alphatec Initiated with a Buy at Stifel Nicolaus

Alphatec Holdings, Inc. (ATEC, Free Analysis), a provider of medical technology focused on the surgical treatment of spine disorders, moved higher ahead of the opening bell after being initiated with a Buy and $3.25 per share price target at Stifel Nicolaus. At a 55.5% premium to the current market price, the recommendation represents a significant bullish stance on the name.

The move comes not long after the medical technology provider announced lackluster earnings and dropped more than 40% in early August. During the second quarter, the firm reported even earnings on revenues of $45.4 million, versus analyst expectations of 1 cent earnings on revenues of $53.12 million. Meanwhile, the company’s full year guidance came in far below analyst expectations.

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Stocks to Watch

• Orexigen Therapeutics, Inc. (OREX) jumped nearly 30% higher ahead of the opening bell after entering into a partnership to commercialize Contrave in North America. Orexigen will receive an upfront cash payment of $50 million from Takeda in exchange for exclusive U.S. marketing rights to the obesity drug, while the firm will also be eligible for more than $1 billion in milestone payments. Click Here: Get a Complete OREX Stock Analysis!
• Cardiome Pharma Corp (CRME) rose more than 10% in premarket trading after announcing that it earned a $30 million milestone payment from its collaboration with Merck through an affiliate. The milestone was triggered by the recently announced marketing approval of Brinavess in the E.U., Iceland and Norway. Click Here: Get a Complete CRME Stock Analysis!
• InoLife Technologies Inc. (INOL) is seeing increased interest ahead of the opening bell after rising more than 3,300% during Wednesday’s session. The company announced that it will provide and market a proprietary metabolizing test to physicians and practitioners to identify how a patient’s genetic makeup may affect the body’s response to Plavix. Click Here: Get a Complete INOL Stock Analysis!

Earnings Releases

• Before the bell: TD, UTIW, AZPN, SCMR, MEI
• After the bell: HRB, COO, ESL, ULTA, ARST, FNSR, TTWO, ZQK

Economic Indicators

• Initial claims for 8/28 at 8:30am, actual 472K, expected 475K.
• Continuing claims for 8/21 at 8:30am, actual 4456K, expected 4435K.
• Productivity for Q2 at 8:30am, actual -1.8%, expected -1.7%.
• Unit Labor Costs for Q2 at 8:30am, actual 1.1%, expected 1.1%.
• Factory Orders for July at 10:00am, expected 0.3%, prior -1.2%.
• Pending Home Sales for July at 10:00am, expected 0%, prior -2.6%.

Futures Prices

• Dow Jones +7.00
• S&P 500 +2.00
• Nasdaq +1.50
• Crude Oil -0.44
• Natural Gas +0.012

InoLife Jumps on Plavix Test Marketing Agreement

InoLife Technologies Inc. (INOL, Free Analysis), a healthcare products company, jumped more than 2,000% higher after announcing that it will provide and market a proprietary metabolizing test to physicians and practitioners to identify how a patient’s genetic makeup may affect the body’s response to Plavix (colpidogrel). The move comes after Plavix was forced by the FDA to carry a so-called “Black Box” warning label after some patients suffered fatal strokes or myocardial infractions.

Despite the optimism, investors may want to practice some caution in this name. Since its inception in June of 2009, the healthcare company has reported no revenues and accumulated a net loss of more than $1.1 million. As of June 20, 2010, the company also reported only $81,790 in assets compared to $336,522 in current liabilities, suggesting that it may need to raise additional funds.

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Cloud Centric Surges on VizualMobile Acquisition

Cloud Centric Systems, Inc. (CLDR, Free Analysis), a provider of cloud-based technologies to deliver critical applications, surged more than 60% higher after acquiring VizualMobile, a European-based technology firm. The firm provides technology that enables companies to manage their mobile phone accounts of employees, regardless of their platform/carrier.

Despite the optimism surrounding the company, investors should be aware that OTC Markets lists it as a Pink Sheets Limited Information Company. According to the organization, the designation is designed for companies with financial reporting problems, economic distress, or in bankruptcy to make the limited information they have publicly available.

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AvStar Aviation Soars on Ambitious Plans

AvStar Aviation Group Inc. (AAVG, Free Analysis), an acquirer of businesses in the aviation industry, moved sharply higher after announcing that it is actively working with several potential lenders to secure the needed funding to refurbish their fleet of aircraft, which will provide additional capacity on existing routes and enable it to expand into new markets.

Last quarter, the aviation company announced revenues of $55,844 and a net loss of $221,531. Meanwhile, the firm’s balance sheet appears a little weak with total assets of $370,792, versus current liabilities of $669,156, suggesting that it may need to raise additional capital to support its operations within the next year.

Click Here: Get a Complete AAVG Stock Analysis!

Medifast, Inc. (MED, Free Analysis) is a provider of weight management and disease management products and other consumable health and diet products. Despite a poor economic environment, the company reported earnings growth of 77.8% this year and analysts expect that figure to remain steady at around 25% per year over the coming five years.

Despite the strong performance, many traders are placing bearish bets on the company’s upcoming earnings results. Currently, short sellers have borrowed approximately 18% of the firm’s float in short trades, which indicates a strong bearish sentiment on the stock. But judging on past performance, many investors are inclined to stick with the stock as it continues to trade near its highs.

With a 25% 5-year projected earnings growth rate and a forward price-earnings multiple of around 15.27x, Medifast’s stock trades with a price-earnings to growth ratio of only 0.61x, which indicates that it may be significantly undervalued given its growth potential. The figure could also be read to suggest that investors are really only expecting 15% growth over the next five years.

So, will this growth continue? Since its Take Shape for Life channel accounts for approximately 63% of its total revenue, investors can take a look at open source ways to measure this segments performance to get an idea of the coming quarter. For instance, a quick search on www.alexa.com for www.tsfl.com yields a chart showing a 12% one month gain that could indicate continued success in this segment.

Meanwhile, the segment’s health coaches also offer it a high competitive barrier, since these individuals are highly incentivized and focus on one-on-one communication with their clients. At the same time, many individuals are pursuing this career path given the current economic environment and the desire to achieve supplemental income, which has driven its number of health coaches past 8,000 last quarter.

In the end, Medifast is a rapidly growing company that has seen blistering growth. Many traders are betting that this growth will slow down sooner-than-expected, but many investors disagree as the stock price remains high, while some open source measures also suggest continued growth. As a result, this is a stock that investors may want to keep an eye on moving forward.

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While China’s wealth may have financed U.S. consumers up until 2010, the coming decade may mark a shift from others’ consumers to its own. The shift is necessary in order to help China reduce its reliance on exports and help the U.S. and E.U. return to more normalized trade balances. After all, China’s massive exports have fueled record trade deficits in the U.S. and other Western countries. So, what companies will benefit most from this shift from an export to a consumer economy?

An Educated Bet on China’s Entrepreneurs

China Executive Education Corp (CECX, Free Analysis) is an educational services provider that offers comprehensive training programs to entrepreneurs and other executives in China. These entrepreneurs are the cornerstone of a consumer-centric society, providing much-needed products and services, as well as providing work to a large portion of the population.

With some 35 million entrepreneurs with little formal training, the company addresses a large and growing need in the marketplace that is expected to grow from $294 million in 2002 to $4.4 billion by 2012, representing a 31.1% compound annual growth rate. And having served some 2,874 business owners already, the firm is well-positioned in the marketplace moving forward.

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A Powerful Bet on Domestic Expansion

China Power Equipment Inc. (CPQQ, Free Analysis) is a provider of transformers and related power products in China. These are essential components of any power grid that perform final voltage reduction before power is consumed. As China becomes richer on a per capita basis, cities will grow larger by 240 million people over the next 15 years, creating the need for more and more power.

Earlier this month, the company reported revenues that increased 27.3% to $7.49 million and net income that increased 31.5% to $1.72 million, or 8 cents per share. Meanwhile, the firm remains very well capitalized with $13.6 million, or $0.70 per share, in cash and more than $26.5 million in total assets compared to total liabilities of just over $1.86 million, making it a relatively safe bet.

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An Under Appreciated Oil Giant

PetroChina Company Limited (PTR, Free Analysis), a provider of oil and gas in China, is perhaps one of the best known Chinese public companies, but it appears undervalued to many investors. Currently, the company trades at just 11.5x its trailing 12-month earnings, despite posting growth rates of 31% this year and projections of 28% growth next year, while also paying a 3.5% dividend yield to kick.

With General Motors projecting that China’s auto market will grow faster than in the U.S., the oil industry is sure to benefit from greater demand for gasoline. Meanwhile, increasing wealth inevitably leads to greater use of natural gas powered heat and cooling systems. Even rubber products, made from oil, tend to grow along with a consumer population – all creating demand for PTR.

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Ameresco Initiated with an Overweight

Ameresco Inc. (AMRC, Free Analysis), a provider of energy efficiency solutions for facilities in North America, was initiated with an Overweight and assigned a $15.00 per share price target by Stephens. Other analysts that initiated coverage on the stock earlier this week have price targets ranging from $14.00 to $18.50 per share.

Since its initial public offering in July, the energy efficiency solutions company’s stock has risen nearly 20% to $12.18 per share. Earlier this month, the firm announced that it agreed to acquire Quantum Engineering and Development, Inc. in order to expand its presence into Oregon and Washington schools, cities and towns.

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Analysts Mixed on VMware’s Future

VMware, Inc. (VMW, Free Analysis), a provider of server virtualization solutions designed to lower IT costs, was favorably mentioned by Needham ahead of the opening bell. The analyst raised its price target to $90.00 per share after checks at the company’s analyst day and user group conference led it to believe that estimates for the company may be conservative.

Other analysts like Deutsche Bank disagree, saying that the company is trading at 20x its 2011 free cash flow, suggesting it may be overvalued. The analyst currently rates the stock a Hold with a $78.00 per share price target that is considerable less bullish than others. Whether or not the company can justify its valuation remains to be seen as new competitors enter the market that continues to grow rapidly.

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Saks’ Real Estate Could Make it a Buy

Saks Incorporation (SKS, Free Analysis), a retailer focused on distinctive luxury apparel, shoes, accessories, jewelry, cosmetics and gifts, could be a compelling private equity buyout target, according to the Daily Mail and Morgan Stanley. After the Daily Mail suggested the possibility, Morgan Stanley conducted an analysis and noted that a group could monetize its $1 billion in real estate assets.

A private equity buyer could monetize the $1 billion in assets through sales or leasebacks in order to serve as a cheap source of financing for a potential leveraged buyout. Many firms have also been embracing the low interest rate environment to make cheap buyouts while still available. The analyst believes that an $11 per share buyout would generate IRRs between 5-10% with 35% debt.

Click Here: Get a Complete SKS Stock Analysis!

Stocks to Watch

• G-III Apparel Group, Ltd. (GIII) jumped more than 20% ahead of the opening bell after announcing better-than-expected second quarter earnings. Net sales grew 39% to $189 million, while net income reached $0.15 per share, compared to a loss of $0.17 per share a year ago. Looking ahead, the company expects to generate earnings of $2.60-2.70 per share on revenues of over $1 billion for the full year. Click Here: Get a Complete GIII Stock Analysis!
• Exelixis, Inc. (EXEL) moved up nearly 10% in premarket trading after Delloitte Recap issued its Breakthrough Alliance Award for early stage collaboration in cancer to Sanofi-Aventis and Exelixis. The move fueled speculation that EXEL could become another possible acquisition for the hungry giant. Click Here: Get a Complete EXEL Stock Analysis!
• Microvision, Inc. (MVIS) rose nearly 6% ahead of the opening bell amid continued speculation that its projector product could be used in Apple’s new iPod product. Its Pico Projectors are expected to make their way into university dorms and classrooms in 2010 and 2011, according to tech journalist Robin Raskin, with sales expected to reach $13.9 billion in 2018, according to DisplaySearch. Click Here: Get a Complete MVIS Stock Analysis!

Earnings Releases

• Before the bell: JOYG, EXPR, GCO, IL, GIII, LTXC, BGP
• After the bell: SAI, GEF, PSS, MATK, OXM, HOV, CGA, CWST

Economic Indicators

• ADP Employment Change for August at 8:15am, actual -10K, expected 13K.
• ISM Index for August at 10:00am, expected 52.9, prior 55.5.
• Construction Spending for July at 10:00am, expected -0.7%, prior 0.1%.
• Crude Inventories for 8/28 at 10:30am.
• Auto Sales for August at 2:00pm, expected 3.9M, prior 3.8M.
• Truck Sales for August at 2:00pm, expected 5.1M, prior 5.14M.

Futures Prices

• Dow Jones +76.00
• S&P 500 +9.00
• Nasdaq +17.25
• Crude Oil +1.12
• Natural Gas -0.056