This morning I sent you the results from our recent vote on what kind of Trading Idea you’d like to see as the last trade for 2010.
“Long Term” won the vote by a hair.
Before we dive into the last Trading Idea of 2010, I just wanted to point out that last weeks Trading Idea, AMPW, closed last Friday (December 17th, 2010) at 1.19.
We profiled AMPW last Monday (December 13th, 2010), and the opening price was .93.
AMPW has shown us all some very nice, steady growth over the past week, and as of the close last Friday, we are all looking at an increase of 28% in one week.
Today I have a Trading Idea for you that I think you’re going to like for a variety of different reasons, so let’s get started:
Company Name: Advance America, Cash Advance Centers, Inc.
Trading Symbol: AEA
This company is poised to have some very significant gains in the year 2011, and below I’m going to highlight what AEA does, and some highlights.
Okay, so what does Advance America do, and who are they:
AEA is the largest provider of payday cash advance services in the United States, as measured by the number of payday cash advance centers operated. Payday cash advances are small-denomination, short-term, unsecured advances that are typically due on the customer’s next payday. They provide these services primarily to middle-income working individuals.
Look at these stats:
- AEA has a Market cap of $323.8M.
- P/FCF ratio at 2.65.
- 5-year average ROA at 12.38% vs. industry average at 2.07%.
- 5-year average ROI at 14.48% vs. industry average at 2.16%.
- 5-year average ROE at 21.91% vs. industry average at 18.19%.
- Short float at 2.69%, which implies a short ratio of 4.6 days.
- Dividend Yield of 4.90%
Furthermore, AEA has lost -10.94% over the last year. (2010)
There’s pretty good potential for AEA to have a few Day Trading opportunities in my opinion for some modest gains, same goes for the swing traders out there. Personally, I feel the real gravy is with a longer term hold for a few reasons..
The company’s P/E is under 5, and while the company trades for $230 million, it has earned over $200 million in the last four years! The company has been able to generate returns on equity in the mid-to-high 20 percents, showing that it’s got an economic moat.
Warren Buffett was quoted saying, “In business, I look for economic castles protected by
unbreachable ‘moats’.”
According to Buffett, the wider the business’ moat, the more likely it is to stand the test of time.
Learn more about what Warren Buffett has to say about business moats HERE
Above I pointed out above, AEA has earned over $200 million in the past four years, what I didn’t point out is that their cash flow is even better! AEA brought in $350 million in just the last two years. There is clearly a large difference between the company’s earnings and its operating cash flow.
Looking at technicals for AEA didn’t surprise me either:
Analysis -
OVERALL: BULLISH
- Short Term: Bullish
- Intermediate: Bullish
- Long Term: Bullish
MACD Indicators are very strong as well, being BULLISH across the board
EMA Indicators are Neutral short Term, VERY BULLISH Intermediate, Neutral Long Term.
On December 17th, 2010 (Last Friday) Recent Candlestick analysis for AEA showed a Engulfing Bullish pattern, and is VERY BULLISH.
Support and resistance for AEA is also good. We have support at it’s current levels and minor resistance at 5.72 according to
stockta.comAnd lastly, if all the above information still doesn’t seem too appealing to you, then consider this. Institutional investors currently own 47,762,102 shares vs. 43,490,906 shares held three months ago (9.82% change).
Now why would that increase? Could that be yet another BULLISH indicator?
I’ll let you make the decision, but moving forward I feel there is very strong potential for AEA, and I think you should put it on your watch list Tomorrow first thing as the markets open.
This IS the last Trading idea of 2010. I will post a few trading articles between now and 2011, but there will be no more Trading Ideas until 2011, so I hope you’ve enjoyed this years Trading Ideas.
We’re looking forward to an even stronger 2011, and are very excited for what the future holds.
Have a great evening, and please realize I may send this e-mail out a couple more times to ensure nobody misses our last Trading Idea of 2010.
All the best, and put AEA on your radar in the morning!
START THE TRADING WEEK WITH TECH!
Cavitation Technologies, Inc., a development stage company, engages in the development of bio-diesel fuel production systems in the United States and internationally. The company designs and engineers NANO technology based systems that use its patents pending, multi-stage, continuous flow-through, hydrodynamic cavitation reactors with systems that have commercial application in industries, such as vegetable oil de-gumming, renewable fuels, water recycling and desalination, alcoholic beverage enhancement, and crude oil yield enhancement. Its products include the Green D De-gumming System, a vegetable oil de-gumming system; and the Bioforce 9000 Reactor Skid System, which performs the transesterification process during the production of biodiesel. The company is headquartered in Chatsworth, California.