As a follow-up from yesterday’s discussion of the global ‘green-friendly’ trend, the Micro Cap Press is citing some names of companies that make for interesting discussion. WorldWater & Solar Technologies (WWAT) is one of those names.

The organization’s name is more complicated than the company itself. Basically, they make portable solar-powered irrigation pumps and crop sprinklers. There may be a battery component to some of the devices as well.

Not a bad idea really, particularly for locations where electricity isn’t available.

Is there a major need for such a device? Actually, yeah, this is an obscure-but-significant issue. One of our other macro trends we follow is the growing lack of food - on a global basis. As the need for more crops increases, so too will the need to convert non-crop land into something that can actually support plant growth.

This is a multi-year (multi-decade?) opportunity, and WorldWater seems to be the only player. Go to the WorldWater site by clicking here.

Do you know of any competition or alternatives? How about some stats on the size of this market? Chime in with the ‘comments’ area below. 

Per Wednesday’s newsletter, we want to use the blog to start some discussion of ‘green friendly’ investing ideas. One of the stocks we mentioned was BioSolar (BSRC). BioSolar is self-described as…

BioSolar, Inc. engages in the research and development of bioplastic materials from renewable plant sources for use in photovoltaic solar cells. The company develops bio-based plastics components that meet the thermal and durability requirements of solar cell manufacturing processes for conventional crystalline cell designs, as well as thin film photovoltaic devices in an effort to capitalize on cost advantages to current petroleum based solar cell components. Its bioplastic materials can be also used directly in conventional manufacturing systems, such as injection molding and thin-film roll-to-roll, to create superstrate layer, substrate layer, and backsheet, as well as module and panel components.

Our ‘plain English’ description is this…they’re working on a technology that replaces the petroleum-based components of a solar cell with bio-organic components. Why? In the long run, it’s cheaper (in additon to being green-friendly).

The upside is, the idea has merit. The downside is, they have no commercial product yet, and we’re not even sure one is needed. How much petroleum-based product is needed/used to make solar panels? We’re not sure it’s worth the trouble, though enough people do seem to think it’s worth the effort and investment dollars. Go to the BioSolar website by clicking here.

Have an alternative idea? How about a cheer or jeer for BioSolar (or solar power in general)? Leave a comment below.

Two months ago, small cap stock Clearly Canadian (CCBEF) just looked lost. Now it looks like they’ve been found again…at least by a small piece of the investing world. After hitting a peak of $3.25 in 2007, the move to a low of 37 cents in mid-December pretty much took out even the last of the die-hard bulls. Like your mom often said though, it’s always darkest before dawn. CCBEF has pushed its way back up to 75 cents, and left behind a chart most technical analysts would consider very bullish.

Here’s the case…

• Higher highs and higher lows. We’re seeing them for the first time since the first half of 2007. It’s an ugly higher high, and could be argued. However, almost all recoveries start out as questionable.
• The key short-term moving averages have been crossed, and are now pointed higher. Moving averages are incredibly simple technical analysis tools, but that’s why we like them. If they’re pointed higher, the trend obviously has to be bullish. (Who said trend-spotting has to be complicated?)
• Clearly Canadian shares are coming out of a very long-term, very oversold condition. The chart’s itching for a rally.
• The current market cap is about $15 million. Last quarter (a seasonally slow quarter) they drove around $3 million in sales. The last two quarters they’ve done about $4.4 million in revenue. Though not by leaps and bounds, the company is undervalued compared to its peers.

The key to it all as far as traders are concerned - as we see it - is a break above 78 cents…the high from early January and again in early February. If CCBEF can break that ceiling, the ‘higher high’ theory will decidedly become reality. By default, January’s low of 47 cents will become a ‘higher low’.

With all that room to move before the next likely ceiling is reached, our technical analysis leads us to think Clearly Canadian is a high-odds idea worth watching over the next few days. The 200 day average is at $1.80, and the nearest Fibonacci retracement level is at $1.48. Either way, the distance between ‘here and there’ on the chart makes for some big trading potential.

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If you were waiting on micro cap Universal Delivery Solutions’ (UDSG) chart to start behaving better before jumping in, you might want to take notice of some recent developments. The stock pulled out of the funk it was in during Q4 of last year, and is trying to find a new, bullish groove. Chart watchers take note - there’s a whole lot to think about here; we’ll look at just some of it.

In late January, UDSG broke above its 50 day moving average line for the first time in a long time. That move also shattered what was becoming a fairly troubling resistance line. Nice, but better still was how shares found support there on the 11th, and pushed off the 50 day line on the 12th.

As it stands right now, that’s a higher high and higher low. Though a little ambiguous, it’s also a decent start to a recovery.

Some traders would look at the chart and suggest a move above the early-February peak of 6 cents would be even more bullish (and we’d agree). But, if you don’t know to watch for it between now and then, you may miss it when it happens.

As for the levels Universal Delivery Solutions is likely to start or stop, we’ve got Fibonacci lines to help us draw that map.

The short-term Fib lines don’t really tell us much. Spanning from the October peak of 8.8 cents to the January low of 2.7 cents, we don’t see any relationship to the most recent (February) highs and lows.

When we zoom out and use last June’s high of 12 cents as a peak, then the recent high of 6 cents starts to make a little more sense.

A 38.2% retracement of that pullback would put the stock at 6.3 cents…just a hair above where we were a few days ago. We think that line is still in play though. If-and-when we revisit it, be alert. If we happen to cross it, the next potential ceiling lies at 8.5 cents. That’s also the high water mark for Q3 of last year, so we wouldn’t take a stall there too lightly.

All the same, the current momentum seems to be favoring the bulls. There hasn’t been much supporting news from the company over the last few days, which is a bit uncharacteristic of UDS Group. However, they continue to work on upgrading from their pink sheet status to the OTC bulletin board exchange.

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Back on January 23rd when we first mentioned small cap Technical Communications (TCCO), we loved the fundamentals, but were leery of the chart. Though the momentum was bullish, TCCO was heading into a potential brick wall…the 2004 high of $7.25. That level had the potential to be a bearish reversal point, or the beginning of a new era for the stock. Since then, the issue has been forced - TCCO hit $7.49 on Monday, and closed at $7.40.

Technically speaking, that’s a breakout. Most good traders would probably not buy into it though, concerned that the strength and volume was just a very brief flash of brilliance…and a blow-off top. The gap doesn’t make it any easier to follow.

Those same traders might wait until the stock settled back to the 20 day moving average line (and closed the gap) before starting to test the waters. By doing so, they’re likely to achieve a much better entry level. In the meantime, we’d probably use the short-term bullish burst as an exit point, at least on part of any position.

Of course, the longevity of any uptrend - or recovery after a pullback - for Technical Communications is rooted in the performance of the company, which as we said has been impressive. Just to recap…

• P/E of 11.6 (versus industry average of 21.2)
• P/S of 1.8 (versus industry average of 1.31)
• Profit margin of 17.8% (versus industry average of 36.9%)
• Operating margin of 15.6% (versus industry average of 0.62%)
• ROE of 22.8%
• Revenue growth of 107% (versus industry average of 13.8%)
• Earnings growth of 896%

The market cap is $9 million, with sales at $5 million and growing. No wonder the chart is starting to run.

Once TCCO can get and stay above $7.25 or so, we think this stock has an excellent risk/reward ratio.

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The last time we looked at small cap company Cytocore (CYOE) on February 5th, the ceiling/resistance at $4.00 was still intact. Though we liked the potential upside, we didn’t want to get too excited until that barrier was broken.

Though we haven’t yet seen a trade above $4.00 since then, we got what we think may be the next best thing…a pullback, followed by a rebound. After reaching as low as $3.25 on the 7th, a support line appeared and pushed CYOE back up to the current price of $3.76…and it’s still pointed higher (with good volume to boot).

The $4.00 mark is still the key line in the sand, but if it’s broken we could see Cytocore really start to run. Past $4.10, and it could move even faster.

We’ll keep an eye on it, but you may want to go ahead and put it in your watchlist as well. For the complete background on CYOE, click here to read the original comments.

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Though we took a pretty good technical and fundamental look at Lighting Science Group (LSCG) just last Wednesday, the potential breakout here deserves a timely update. The $10.00 level is still the hurdle, but the attack on that resistance line has been relentless. In the meantime, a support line has appeared, creating a bullish wedge formation.

As before, a break past $10.00 could be good, and a break past $10.60 could be even better. If we jump both of those hurdles, the next ceiling is $13.47. Needless to say, ‘between here and there’ could still make for an outstanding trade.

As for where you may want to enter into that continuum, it depends on your risk appetite. The further past $10.00 LSCG goes, the easier it is to reach $13.47, but you leave gains behind. Welcome to the world of trade-offs.

Of course, it may be moot if we can’t get past $10.00. If we do though, LSCG is one of our favorite ideas. The recent buying volume has been uncanny.

Be sure to click here if you want to review the underlying story and fundamental snapshot. Good stuff.

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Never let it be said that small cap stock Lighting Science Group (LSCG) wasn’t volatile, because it clearly is. However, LSCG’s chart is starting to look bullishly volatile a lot more often than not. Could the company’s long-awaited revenue growth finally be reflected on the chart? A few more resistance levels remain, but somebody certainly likes this small company at its current price.

In case you were wondering why all the recent hubbub, it can be summarized in two words…sales growth. In 2004, the company’s revenues were nil. In 2005, $73K. In 2006, $436K. So far in 2007 (three quarters worth), they’ve pulled in $846K. See any trend in there?

What’s been interesting is how the stock hasn’t seemed to budge since late 2005. As of 12/31/05, LSCG was trading at $10.60; now it’s at $9.96. Yet, sales are almost up ten-fold.

The issue here may be the valuation relative to sales. Even after getting crushed in 2005, the current market cap is still around $57.7 million…5.8 million shares at $9.96 each. Based on current sales numbers, that’s a tough price to justify.

There’s the rub though - are the current numbers the ones to use? The company is ramping up sales by triple-digit percentages. How, and why? Regardless, if they can do more than a million bucks in business in 2007 after doing none in 2004, what might 2008 and 2009 look like?

In all honesty, we don’t know what the future really holds. Lighting Science is an ‘energy efficient’ lighting company. It’s a growing field, and maybe there are millions of dollars up for grabs there. Someone seems to think so anyway - the stock is starting to make higher highs and higher lows (on bullish volume) for the first time in a long time.

So, fundamentally, the company still has a lot to prove, but may well do it. Technically, the chart may precede the company’s growth. There are resistance levels peppered all throughout the recent high of $10.00 and the 2007 peak of $12.40…the $10.80 area being a big one. This one’s going on our radar.

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Based on the way this micro cap stock has been moving since mid-January, today’s move doesn’t really come as a surprise. CytoCore (CYOE) is up 8.7% today, and up 79% for the past month, thanks to the launch of its SoftPAP™ cell collector.

The big move for the small stock started on January 7th…the first day the device hit the shelves in Europe. After a very big month for investors, another log was put on the fire today - the FDA approved the device for use in the United States.

In far too may cases where FDA-approval is finally granted, the actual event is a bit of a let-down (”buy the rumor, sell the news”). In CytoCore’s case, however, we feel this chart may have quite a bit more upside before stalling. It was as high as $7.45 less than a year ago, before the SoftPAP™ was on shelves. At the current price of $3.84, it could gain another 94% before even rivaling the previous all-time high from last February.

If you’re wondering whether or not there’s really any potential in the SoftPAP device, know this - the Chairman of the Board as well as the CEO both just invested a combined total of $600K in the company. That’s not an end-all, be-all sign (and may have been more of a publicity effort), but it’s not like it’s chump change. In fact, the two own about 10% of the company, investing a great deal of their own funds as they steered the company through its turn-around.

And, the turn-around seems to have worked. They’ve already got $10 million in guaranteed SoftPAP orders for 2008/2009.

As for the company as a whole, it’s not clear to what degree the SoftPAP device will shore up hefty sales decreases…and we do mean hefty. In fiscal 2004, they produced $243K in revenue. In fiscal 2006, they did $94K in sales. Neither are great compared to the company’s $132 million market cap, but the strong start to SoftPAP sales is a glimmer of hope.

Though not yet what we’d consider ‘investment caliber’, CytoCore may be trade-worthy while the hype is still echoing. The ceiling around the $4.00 is under attack. It’s still intact, but should it break, we could see CYOE run. On the flipside, if it fails, we may see a very short-term shorting opportunity. Even then, we’d still be apt to buy on the dip once support was found.

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