-Executive Summary-

• The broader market (SP-500) was FLAT to down a bit and the DOW also.  Tech stocks advanced a bit in light of favorable Consumer Electronic Show buzz …See below.
• SMC holding Zagg Inc. (Ticker: ZAGG) moved UP firmly higher and we issued an SMC Intra-Day Update with some details… more below.

This Stock Market Companion 15MinuteStocks Market Update is a powerful tool designed to help you make money in the stock market.  It’s web-based, therefore available wherever and whenever you are.  It is your essential link to the markets, delivers a broad to narrow summary of important market and company specific conditions and events, and prepares you to be ready for actionable ideas.  We show you when/where we put our own money to work… and when/where we take our profits/losses.  Please see our short (2 minute) website videos for more information.

– Markets “At a Glance” –

(Please scroll down to the end of the report to see your favorite benchmarks – Dollar, Oil, Gold … closing prices and daily direction.)

– Market Trends –

*Summary of terms from Trader Vic II-Principles of Professional Speculation (pg. 140-141)
*_________* Represents a change in trend rating.

– Market Perspectives –

For your added perspective, we’ve included these two different views of the broader market –

1. SMC SP-500 ETF Daily Chart (Click to open helpful chart in a separate browser window).

2. SMC SP-500 Weekly Chart (Spanning back through 2007)

– Today’s Highlights –

The markets were relatively indecisive this morning and pointing in a negative direction as news about a possible bailout of Portugal provided some CONCERNS for the market.  Influencing the market also was news about an Oil pipeline leak in Alaska, which would possibly lead to a shutdown of 15% of American crude supply.

Most importantly, today marks the beginning of quarterly earnings announcements – with Alcoa kicking-off the season after the market close with their published results.  The market is in “wait and see” mode, with a modest profit-taking bias after December’s strong rally.

– Story-Stock Investing –

On Friday we wrote… “We like how Zagg Inc (ZAGG) closed above $9.04/share today into the close.   Closing positive on a modestly down day for the market is a bullish sign for this small/micro-cap stock.   Stocks in small companies often magnify broader market moves – so a -4% down day for Zagg today was entirely possible.  It moved higher instead.  Let’s make this real clear however – Zagg is a consumer electronics accessories manufacturer – and as such movements in these types of stocks can be enormous – BUT they are rarely lasting.   We are not falling in love with this stock.  If or when this stock makes an extended move higher – we will not hesitate to take our profits.  ZAGG is not the next Qualcomm or Apple Inc.  … BUT it can make a big move.“

Today, Zagg Inc. moved significantly higher and held the lion’s share of its gains.  We sent out this SMC Intra-Day UPDATE with the details …

Dear Subscriber-Friend –

Stock Market Companion stock holding Zagg Inc. (Ticker: ZAGG) moved decisively higher today on strong volume.   Here’s what we like about Zagg and the Zagg stock –

1. Today’s strong up-move came on a negative day for the market.  This means that, in spite of profit taking taking place in the broad market there were buyers willing to step up and pay a premium for the stock.  At least today, buyers were not willing to wait and see if they would get a lower price – They stepped up, paid the market price and bid the stock higher.
2. Zagg Inc. has approx. 23.6 million shares issued, of which approx. 16 million are available to the general public (float).   Many Stock Market Companion subscribers understand that this type of supply can lead to strong supply and demand imbalances that can cause the stock price to move significantly – both UP and DOWN.  With the stock moving higher, this imbalance is working to our advantage.
3. As of Dec. 15th, there appears that there were approx. 18% of the stock sold SHORT.  This means that stock has been borrowed (on margin) and sold by investors at a higher price with the intent of purchasing it at a lower price.  On any given day, a short percentage below 10% is mostly insignificant.  When the short percentage moves above 10% AND the stock is of the kind that already has a very small “float”, there is real opportunity for stock price appreciation if the stock begins to advance higher and short sellers become forced to cover their losses.  Today’s advance above Zagg’s 52 week high is a significant move for the stock and may signal further upside as short sellers begin to realize that their investment is ill-timed.
4. REAL Earnings and revenue growth.  On November 9th, Zagg reported quarterly earnings of $0.16/share and year over year revenue growth of 138%. (Info. courtesy of Briefing.com)  If we assume that at least 0.16/share per quarter is achievable for the company, then that represents 4×0.16=$0.64 annual earnings per share.  If we take Zagg’s stock price of approx. $9.00/share and divide it by $0.64 we arrive at a Price Earnings Ratio (P/E) of 14.1.   The market average price earnings ratio is approximately 17, so even at a $9/share price, Zagg is selling at a strong 21% discount to the market.  In other words, Zagg’s stock would have to increase approx. 21% above $9/share to arrive at a stock price that would be equivalent to broader market share prices.  Now, this doesn’t even include a premium for Zagg’s blistering +138% year over year revenue growth rate, and the fact that the company is participating in two of the hottest markets currently = smart phones and tablet PC’s.So why are investors selling the company’s shares short?  Because they are looking at how far the company has already come in terms of share price appreciation = In June 2010 the stock was selling for $2.37/share, and they conclude that this advance is unsustainable and that some profit taking should materialize, from which they want to earn 10-30% returns (or more).  Unfortunately for them, even if this advance was irrational these famous words of John Keynes apply –  the market (or a stock) can “remain irrational for a longer period of time than an investor can stay solvent”.
5. We like the products that the company offers.  One of the hottest areas of growth are the smart phone market and the tablet PC market.  If a consumer shells out money for these products, why not spend an extra $20 to protect the glass display?  This company’s revenue growth will not last forever but for the moment the products that they offer are in the “Bulls-Eye” for the smart phone and tablet PC market.  You can see their innovative products here at http://www.zagg.com/
   
6. From time to time companies like ZAGG Inc. come along that are publicly traded and they catch the imagination of investors.  The freshness of the product, the real earnings, revenue growth, low float, and short ratio make up a potent mix for share price explosion.  The stock can advance as long as it is putting up good earnings and attracting investors.  We could of course be all wrong, be we suspect that ZAGG is still not on too many investors screens and that there is quite reasonably a good push higher possible.  Zagg reports their earnings again on March 16th.  That’s a good 2 months away – which provides ample time for this stock to move higher on “anticipated” earnings.  Of course, if future earnings are somehow put into doubt then the stock can crumble like stale bread.

For your protection and our own, we would like to remind everyone that this is not an investment recommendation for any particular individual.  We cannot possibly know the risk tolerance and investment suitability of such investments for any particular subscriber. Successful investors know their own objectives, purposes, and risks associated with any investment – whether in real estate, stocks, or other investments.  Each investor is on their own.
We are simply reporting the SMC actions in the market place.

Your – Stock Market Companion

Please remember – at the Stock Market Companion we do not and cannot give individual investment advice. According to the State of Washington RCW 21.20.005 the Stock Market Companion is not a Registered Financial Advisor and we do not render any advice on the basis of the specific investment situation of a particular individual. This information is for a wide readership and is not intended for any particular individual,  and under no circumstances should our Market Update or Watchlist be considered an investment recommendation or plan for any specific individual.  By accessing this material, you agree that the Stock Market Companion will not be held liable for any actions taken by a subscriber or other parties.  Please seek the counsel of a broker or other licensed investment professional for accurate pricing and concerning the suitability of all investments that you may be considering. Disclosure : You understand that the Stock Market Companion holds positions in the above mentioned securities.  Based on market related or personal events these positions may change without notice.

—————————————————————————————————————————————————

Please remember – at the Stock Market Companion we do not and cannot give individual investment advice. According to the State of Washington RCW 21.20.005 the Stock Market Companion is not a Registered Financial Advisor and we do not render any advice on the basis of the specific investment situation of a particular individual. This information is for a wide readership and is not intended for any particular individual,  and under no circumstances should our SMC Intraday Update, SMC 15MinuteStocks Market Update or Watchlist be considered an investment recommendation or plan for any specific individual.  By accessing this material, you agree that the Stock Market Companion will not be held liable for any actions taken by a subscriber or other parties.  Please seek the counsel of a broker or other licensed investment professional for accurate pricing and concerning the suitability of all investments that you may be considering. Disclosure : Please understand that the Stock Market Companion may hold positions in the above mentioned securities.  Based on market related or personal events these positions may change without notice.

– Stock Market Companion – Current Holdings –

– Stock Market Companion – Performance –

Please click on this chart to see the Stock Market Companion 15MinuteStocks stock performance versus the SP-500.  It will open in a separate browser window.
* Gains (losses) do not include brokerage fees.   Our returns are very strong … BUT …  WE have to remind everyone just like all other financial sites in America – Past Performance is No Guarantee of Future Returns.  Unlike others however, our objective is to teach you to be able to make these types of strong returns On Your Own.

All of the investments – stocks, entries, and exits are listed on our Stock Market Companion Watchlist at the bottom of the spreadsheet, in the section labelled Former Holdings.

– Benchmarks “At a Glance” –

Data Source : Financial Visualizations Inc.

Signing-Off for Today,

Your -Stock Market Companion

** Stock Market Companion Disclaimer **

The Stock Market Companion (SMC) Market Update and Watchlist are published documents to subscribers that show how we (SMC) are viewing the markets and what we are watching, investing in or selling today.  This information is for a wide readership and is not intended for any particular individual,  and under no circumstances should this Market Update or Watchlist be considered an investment recommendation or plan for any specific individual.  By accessing this material, you agree that the Stock Market Companion will not be held liable for any actions taken by a subscriber or other parties.  You understand that the Stock Market Companion holds positions in the above mentioned securities.  Based on market related or personal events these positions may change without notice.

Furthermore, the Stock Market Companion, Inc. is a content provider and publisher and not a registered broker-dealer or licensed investment professional.  Our intent is to publish very accurate market information for an audience of subscribers (1000+ subscribers).  By accessing the Stock Market Companion website and/or using the Stock Market Companion products and services such as this Market Update and accompanying Watchlist, you understand and agree that the material provided in the Stock Market Companion products and services is for informational and educational purposes only, and that no mention of a particular security in a Stock Market Companion product or service constitutes a recommendation to buy, sell, or hold that or any other security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.  To the extent any of the information contained in any Stock Market Companion product or service may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.  Before selling or buying any stock or other investment you should consult with a qualified broker or other financial professional to verify pricing information and to solicit advice as to the appropriateness of a given transaction or investment.