If only for future reference, the editorial staff of the Micro Cap Press wanted to point out a pretty good example of a stock chart’s sideways/consolidation mode. Micro cap stock Universal Energy (UVSE) has been range-bound between 97 cents and $1.25 since late August. In terms of a sideways chart, it’s about as perfect as you could expect from a stock in this day and age of volatility. The horizontal ‘zone’ is marked on the chart, and speaks for itself.

Most technical analysts (chart watchers) would view this as an opportunistic period of consolidation. More often than not, periods of low volatility are followed by periods of high volatility. In fact, the longer each period lasts, the longer the subsequent period lasts. Somewhat needless to say, this nine weeks of lethargic non-movement from this micro cap stock has some traders curious. Though all trading is ultimately done with a ‘when and if’ approach, in the case of UVSE the ‘if’ part could spark a major move - if the market can just get a good ‘when’ catalyst.

The underlying story here is mostly straight-forward. This micro cap company is an oil and gas operation outfit with nine prospects in the works. Drilling on the first two started several weeks ago, and are starting to yield. The final three were started just last week. The other four are somewhere in between the point where drilling has started and extraction has begun.

Though the young company has an outstanding track record so far (in terms of finding good prospects and doing accurate seismic work), it looks like the market is waiting for most - if not all - of the nine prospects to bear fruit….or at least oil and gas.

We’ll keep UVSE on our micro cap stock radar. It will be interesting to see what happens when the ceiling around $1.25 is breached, if it’s breached. We ultimately think the company will find success at all nine drilling sites, and when they do (if not before), we anticipate the stock will indeed move.

The saga continues for this micro cap company - and its stock. Spicy Pickle (SPKL) announced Monday afternoon that two more stores had been opened during the prior week. Adding those two to the two opened the week before, the total number of units now up-and-running is 30. The company plans to have 10 more open by the end of this year, and 50 more franchise agreements beyond those 40 have already been signed.

One of the new stores is in Hattiesburg, Mississippi. The other is near Indianapolis, Indiana - in the Fishers suburb. In both cases it’s the first Spicy Pickle in the area, though not the last. Two more are slated for Hattiesburg, and nine more are planned for the Indianapolis area.

The Micro Cap Press research team believes these are key expansions - not just in numbers, but geographically. As new markets are penetrated, it becomes easier to establish a foothold in other new markets. Potential franchisees see the current rapid growth, and want to establish their restaurants before some other restaurateur claims a territory.

The food is being well received too, as evidenced by busy stores. Consumers tend to follow the crowd…and a buzz. Though it’s counter-intuitive, the longer the lines are, the longer the lines get. We suspect the ‘newness’ of the concept is going to sustain interest and growth with this micro cap company.

The stock? ‘Wow’ pretty much sums it up. The move from 69 cents a month ago to yesterday’s close of $1.88 may have exceeded anybody’s expectations. At this point, we’ve heard some traders are starting to lock in a short-term profit. Though the general consensus is that SPKL will eventually be worth $2.00, or more, as of right now, there are also a few shareholders taking advantage of a short-term overbought situation by selling their position and waiting to buy them back on a dip.

For the full news release, click here.

Excessive alliteration aside… 

On May 25th we took our first look at micro cap company Zhongpin Inc. (ZHNP). Zhongpin, being a Chinese food processing company as well as a micro cap stock, wasn’t likely to garner much attention from the media…or from anywhere for that matter. As we said in the original write-up though, there’s potential in pork.

In Q1 of this year, revenues increased by 83.0% (to a record $55.8 million) over Q1 of last year, gross profit increased 69.1% to a record $7.7 million, and net income increased 77.6% to $4.6 million. In Q2, sales improved to $63.6 million, though net income was down.

Those results were good enough to attract $50 million in private equity a few days ago. When ’smart money’ puts $50 million into an enterprise, there’s usually a very good reason.

Considering the private placement issues were sold well under the stock’s market value at the time (they paid $8 per share versus the market price of $12.20), you might think the transaction could be a drag on ZHNP. Since then, however, the stock has made its way up to $13.50, and is currently at $12.45..

With a value of $10.75 in late May, this food company has gained 15.8% in less than five months. That’s not enormous, but certainly is solid (and much better than the rest of the market).

There’s a lesson to be learned with Zhongpin - results and promise are more important than a high-profile industry.

We’re going to keep following the Zhongpin story. As solid as it’s been so far, we suspect the current growth rates are going to keep this stock moving.

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Remember GlobalScape (GSB) from May 25th? At the time it was a bulletin board stock trading under the symbol ‘GSCP’. We were excited because the company was jockeying for an AMEX listing - which frequently boosts a stock’s value.

Well, the upgrade to the AMEX exchange happened, and it was indeed bullish for the stock. How much? Back on May 25th, GSCP was trading around $2.79. Right now, shares are valued at $6.15. That’s a 120% appreciation, as well as a new all-time high. And, GSB still seems to be going strong. Hopefully you jumped on the idea when we first published it.

Though we still like the stock as a long-term holding, it may not be a bad idea to lock in at least a little of the gain here. The last eight days have been great, yet that same strength also pushed GSB into an overbought situation. Sometimes stocks get overbought and stay overbought as they continue to rise, but risk management should be a healthy part of any trader’s diet.

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Our May 20th edition of the newsletter detailed the ever-increasing demand for clean energy alternatives. One of the niches in the ‘green energy’ field is the clean burning of coal. Coal is plentiful and easy to use, but incredibly dirty. Companies able to take the pollution out of the equation - which is soon likely to be mandated by the government anyway - stand to gain from their technology.

Our primary pick highlighted that day was N-Viro International Corp. (NVIC). Since then we’ve seen very little movement out of NVIC, or any of the stocks we mentioned, for that matter. However, we still believe N-Viro has good potential, and we still firmly believe clean-coal technologies are going to see exponential growth in demand over the next few years.

One of the names we didn’t mention at the time but want to add to the watchlist now is Fuel Tech (FTEK). Fuel Tech has developed a way to reduce nitrogen-oxide emissions for plants already up-and-running. Moreover, they have a fuel-chem process that further reduces CO2 output.

Fuel Tech’s edge is being able to drive revenue right now - the nitrous oxide reduction equipment has already been installed at 400 plants globally, while the CO2 reduction equipment has been installed at 25 plants all over the world.

Two things to keep in mind about a ‘macro trend’…it’s not going to happen overnight, and, some stocks won’t finish the race. That’s why we want monitor all these ideas for a while - to see which ones are actually ready to capitalize on the growing demand. It’s likely to take a year or more for any these stocks to realize their full macro trend potential.

Looking for more macro trends that could create huge potential returns for micro cap stocks? Be sure to review our comments on another macro trend we’re following…clean water. Just click here for the lastest word.

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On June 29th, as part of our Macro Trends/Micro Caps series of articles, we suggested water held great investment potential. And when we said water, we meant every facet of it…purification, infrastructure, and desalination. The expectation still stands - we think an investment in select water-oriented stocks today could pay large dividends in the not-too-distant future.

As for the stocks we mentioned in the article, we’ve seen everything under the sun - some hot, some cold, and some tepid. Let’s review some of the more pertinent changes.

The three water infrastructure stocks we cited were Mueller Water Products Inc. (MWA), Tetra Tech (TTEK), Layne Christensen Co. (LAYN). Mueller and Tetra tech have been disappointing, but Layne Christensen has been phenomenal - it’s up 33.2% from where it was trading in late June.

However, LAYN also appears to be at a short-term top. It peaked $58.91 in early October, and a public offering going on right now at $54.50 per share certainly isn’t going to inspire a move higher anytime soon. Our research staff believes there may be more downside in store before any recovery begins.

In the water purification arena we studied AquaCell Technologies Inc. (AQUA.PK), Basin Water, Inc. (BWTR), Megola Inc. (MGOA.PK), and Global Water Technologies, Inc. (GWTR.PK). AquaCell and Megola have been lethargic. Basin Water, on the other hand, has done quite well over the last four months…it’s up 35.1% since June 29th.  The chart has been in a consolidation mode the last month or so, so it’s not clear if this is the end of the road or not; it might just be a rest period for the rally. It’s worth keeping an eye on.

The name we really want to highlight is Global Water Technologies, but not because it’s done well - it’s been just mediocre over the last several weeks. However, some technical analysis of this chart suggests there may be a big recovery move in the works.

We’re primarily keying in on the 200 day moving average line, which is considered by many technical analysts to be the primary long-term trend line. GWTR hasn’t been above it since mid-2005, and hasn’t even been near it since mid-2006. As of a week ago though, it’s within striking distance. The shares last traded at $0.002, while the 200 day line is resting at $0.0023.

Before becoming too impressed, also bear in mind that stocks trading under a penny bring their own special type of pricing, spread, and commission issues. And, a cross above any moving average line is far from an infallible sign of a recovery. We just believe it’s a chart some speculators may be interested in, as it could get far more interesting very soon.

Finally, our water desalination discussion turned up Ultra Pure Water Technologies Inc. (UPWT.PK), and Water Chef Inc. (WTER). These have been a mixed bag as well, though UPWT’s move from 12 cents in late June to 25 cents in mid-July probably reaped a big reward for a few traders who took profits.

By the way, some of the desalination industry forecasts are incredible (and why we became interested in water in the first place). The need for more desalination capacity is expected to draw an investment of $25 billion by the end of 2010. The total will be $56.4 billion by the end of 2015. Moreover, experts believe that more than half of this capital will come from the private sector.

The global community will find a solution to the water scarcity issue, and desalination will be one of the best answers. The question is, who’s going to offer the best solution cheapest, and first? Maybe Ultra Pure Water or Water Chef. Maybe neither. Either way, it’s a macro trend that’s not going away.

Two things to keep in mind about a ‘macro trend’…it’s not going to happen overnight, and, some stocks won’t finish the race. That’s why we want monitor all these ideas for a while - to see which ones are actually ready to capitalize on the growing demand. It’s likely to take a year or more for any these stocks to realize their full macro trend potential.

Looking for more macro trends that could create huge potential returns for micro cap stocks? Be sure to review our comments on another macro trend we’re following…clean-burning coal. Just click here for the lastest word.

Start receiving FREE e-research on select small and micro cap stocks. Get in-depth research reports, comprehensive coverage, exclusive market commentary and more, just by becoming a MCP subscriber today! Look for the submission form at the top of the right-hand column.