FORD

[David Randolph]

Forward Industries, Inc.(FORD). The Group's principal activity is to design, manufacture and market customized soft-sided carrying cases made from leather, nylon, vinyl and other synthetic fabrics.

A stock is never too high to begin buying or too low to begin selling:



An ascending triangle formation gives a technical price target of $23.6. Buying the open on FORD.

Everyday we scan the entire US market to come up with the best 3 stocks to buy on a short term basis. If you wish to keep track of our moves and join our stock analysis community, please subscribe to our free newsletter (it takes only 10 seconds)

[David Randolph]

FORD

[David Randolph]

FORD is losing momentum. Lock in 7% profit and move on.

[Athakinu]

FORD sent out a very clear buying signal today I belive. Bouncing of the ascending trendline and the MA (50) and forming a Doji that would imply that this is the turning point from short term bearish trend. And FORD is also looking great fundamentally. Any comments?

[shawFund]

1. Yes it is doji. Need confirmation for bullish reversal;
2. 61.8% retracement from $29 high is at $21.
3. previous high (support) is at $22.50. So it is at support.
4. It started short term down trend 16 days ago. Last short term down trend lasted 18 days.
5. KD(18,5) 32, not in oversold area.

May wait for two more days to take a position. That is my opinion.

[Athakinu]

Ford is running. We could be looking at a major short squeeze. More then 40% of float is short.

[Athakinu]

Ford is looking very bullish even without all the shorts (major short squeeze coming). Today it broke resistance in the 25 area and closed at the top of the day.
Anyone have an idea of a price target?

[willey]

Hi,
Clear to me that the target is at least $35  That's what the chart shows & its a high-probability trade.  In case I'm wrong, place a sell stop inder $22, or so.

happy trading & good fortune to U

Willie

[akclide]

ford is hitting it's 200 dma.Buying opportunity

[David Randolph]

Profile: Forward Industries, Inc. (FORD). The Group's principal activity is to design, manufacture and market customized soft-sided carrying cases made from leather, nylon, vinyl and other synthetic fabrics. The products are utilized for transporting portable electronic products such as cellular telephones, medical instruments and computers. The Group operates through its wholly owned subsidiary, Koszegi Industries Inc. The Group markets its products to original equipment manufacturers, principally in the communications, medical and testing and measurement equipment industries. Substantially all of the Group's products are manufactured in China. In 2004, the Group acquired Abbot Laboratories. Major customers of the Group for fiscal 2004 are Motorola, Inc, Nokia Corp and Abbott laboratories. Three largest customers of the Group are Motorola, Inc, Lifescan and Abbott.

Technical Analysis:

Long Term Chart:



We can see on the all history chart that FORD spent 8 years building a base for a huge run up in 2005. Also there's a long term support at $13.50, which was the previous all time high for the stock.

Medium Term Chart:



The stock was in a strong upward trend from January until October. In October FORD broke down its ascending trendline, turning bearish. Then made a classic throwback to the broken trendline, the retest was successful and a fall to new lows began.

The medium term chart is bearish at this point.

Short Term Chart:



Three important things to note on this chart:

1) There was a big gap down ($23.06-$21.97) on the 18th of November. That gap down was due to this: «Mr. Ball continued, "Our levels of quarterly sales and net income are highly variable and subject to significant changes over short periods of time. With regard to the first quarter of fiscal 2006, based on current confirmed and anticipated orders and consistent with this high level of variability, we expect sales to be higher than the first quarter of fiscal 2005, driven primarily by the three "in-box" programs, but will not approach the exceptional level of sales achieved in the fourth quarter of fiscal 2005. While we anticipate that we will receive additional "in-box" business, it is difficult for us to assess the timing and contribution of such business to our future results at this time."»

Remember the stock was already bearish prior to this earnings release.

2) There was an important support area at $16.60-$16.75. It was broken on the downside, so now it is a resistance area.

3) The 61.8% Fibonacci retracement level is standing at $14.30 and it is the ultimate support for the long term trend to remain bullish. If FORD decisively breaks $14.30, let's say if it closes below $13.50 (the previous all time high on the long term chart), there's no possible technical defense to the stock's bull case.

Making the technical approach that the stock is still in a long term bull trend, but on a short and medium term decline phase, we could make the case that a buy order at $14.30 is sensible, if it has attached a stop order on a close below $13.50. That's about a 7% risk.

Fundamental Analysis:

Revenues:



It's amazing how the revenue chart could almost fit the stock chart. Revenues were pretty stable on low levels until 2005 when they started to grow a lot, as the stock price. Obviously there was a pretty strong fundamental shift in 2005 for this company. The question now is:

Was this fundamental «upgrade» a long term issue or a temporary one? What happened?

1) The company changed its focus from cases for medical kits to cases for cellular handsets:

«OEM Product Sales. In the three fiscal years ended September 30, 2005, 2004, and 2003, OEM products sales for cellular phone handsets accounted for 67%, 34%, and 30%, respectively, of our total net sales, and OEM product sales for blood glucose monitors accounted for approximately 23%, 43%, and 50%, respectively, of our total net sales. In the three fiscal years ended September 30, 2005, 2004, and 2003, approximately 7%, 11%, and 8%, respectively, of total net sales represented sales of carrying cases for products other than blood glucose monitoring kits or cellular phone handsets: these include custom cases for cameras, portable oxygen tanks, bar code scanners, MP3 players and other consumer electronic devices»

2) The company increased its relationship with Motorola, Sagem and Nokia. Basically now the company sells its products not to the end costumer, but as an «in-box» solution for major firms. Example: you buy a Motorola mobile phone and in the box, say as a gift, you get a FORD case for your mobile phone. FORD outsources production in China and sells each case for prices ranging from $0.60 to $8:

«We have two channels of distribution for our products: first, direct to our OEM  customers, which package our carry solutions products in box with their products, although increasingly, we may ship directly to the OEM customer's contract manufacturer, which similarly packages our products in box. The second distribution channel for our products is under our license agreements, as separately packaged carry solution accessories bearing our licensor's trademarks to distributors and retailers for sale in the aftermarket.  In the three fiscal years ended September 30, 2005, 2004 and 2003, approximately 97%, 89%, and 88%, respectively, of our net sales were made to OEM customers (or their contract manufacturers), and sales of licensed products designed and developed by us  under license accounted for approximately 3%, 11%, and 12%, respectively, of total net sales.»

These two trends seem to be here to stay. The company now won't go away from the mobile handset market and their relationship with Motorola (56% of sales in 2005, 25% in 2004) has strengthen in 2005:

«Motorola License.  Effective October 1, 2004, we entered into a new license agreement with Motorola pursuant to which we are granted the non-exclusive right to sell cellular telephone handset carry cases and other carry solutions bearing Motorola trademarks in the EMEA Region.  The license permits us to sell and distribute such licensed products based on our proprietary designs or Motorola designs directly to third party distributors, including wholesalers and retailers in the EMEA Region.  This license agreement, which expires on December 31, 2007, unless earlier terminated in accordance with its terms, modifies and continues the arrangements to sell licensed products bearing Motorola trademarks in the EMEA Region under the initial license agreement that we entered into with Motorola effective January 2001 and which expired September 30, 2004.  In July 2005 the current license was amended to expand the licensed territory to include the APAC Region in consideration of payment of additional royalties on actual sales in that territory.»

Earnings Per Share (EPS)



Earnings per share are steadily growing since 2001 and 2005 was a blockbuster year. With EPS of $1.26 the company now has a trailing P/E of 12.

Revenue growth in 2005 was 155%, EPS growth was 320%, yet, the earnings multiple is just 12.

General Overview:

Everything seems to be fine from a fundamental standpoint with FORD. But, CEO's words are putting pressure on shares. Let's read again what he said:

«With regard to the first quarter of fiscal 2006, based on current confirmed and anticipated orders and consistent with this high level of variability, we expect sales to be higher than the first quarter of fiscal 2005, driven primarily by the three "in-box" programs, but will not approach the exceptional level of sales achieved in the fourth quarter of fiscal 2005.»

He said the three «in-box» programs in play will continue but the company won't approach last quarters revenue. On the revenue chart above we can see that there was a big jump in revenues on the 3rd quarter (fiscal 4th quarter), from $13M to $18M, or $5M more. On the previous 2 quarters the average increase was of $2.5M, so on the last quarter revenue growth doubled in dollar terms. I think a bit of a setback was to be expected after such a strong quarter.

The CEO also said revenues will be higher than the first quarter of fiscal 2005, which were $5M. This is the worst case scenario, $5M in revenues. The best case scenario is $18M.

That's a big difference and that probably explains why investors are nervous and dumping shares. I think they're looking and discounting the worst case scenario, but considering that fundamental shifts within the company are more or less permanent, I don't see it going back to 2004 revenue levels.

Unless there's something going on behind the scenes that nobody knows (unless you're an insider), the stock seems to be cheap at this point (I'll make a comparison with the industry on next updates, in the meantime if you please check it here: Ford competitors).

The potential for future growth and stock price appreciation is awesome. If the quarter isn't all that bad, say, with $14M in revenues, and then they start rising again after a perfectly natural pullback, FORD is a stock that can go up much beyond $30, it can even hit $100 or more if current long term fundamental trends continue.

Trading Plan:

I know the trend is bearish and a major technical sell signal was made yesterday. Volume is starting to increase, so buyers are feeling attracted by the lower prices. I will also feel attracted by the lower prices and will try to buy around the $14.30 support level we talked about on technical analysis.

This trade presents only about a 7% risk and unlimited profit potential. The stock has to be down more than 5% today for me to buy it. It's possible. If not today I'll buy it tomorrow or next week, probably this price will be reached as the stock builds a base for, I expect, future appreciation.

[metro]

Here are the Fibonacci points and possible support

[David Randolph]

As planned, I bought FORD around $14.30.

The stop level is a close below $13.50.

Wish me luck 

[metro]

Good luck -- did not see that you also has some Fibos on the charts....

[David Randolph]

Good luck -- did not see that you also has some Fibos on the charts....

Thanks metro  I understand the way you put your «Fibos», but since the big move started on that breakout, not before, I decided it was wise to start the «Fibos» on the breakout level.

Also, the way I put it, we can see there was some support at the 50%.

Guess I was a bit afraid of getting too greedy on the downside, since fundamentals seem to be so attractive. I'm in now, so I just have to manage my position. Around $14.30 seems to be providing some support today, and there was a gap down at the open, which bodes well for a recovery.

If we get a white candle or something (perhaps that's too much ambition) maybe people will look at FORD's fundamentals and get to the same conclusion I did.

We'll see ...

[twinpeaks]

BUYINS.NET: FORD, GNLB, HBX, RICK, TASRE, PWHTE have been on BUYINS.NET naked short list for 13 consecutive trading days  
10:30 a.m.  12/13/2005  Provided by  


Dec 13, 2005 (M2 PRESSWIRE via COMTEX) -- BUYINS.NET, www.buyins.net, announced today that these select companies have been on the NASDAQ, AMEX and NYSE naked short threshold lists for 13 consecutive trading days: Forward Industries (FORD), Genelabs Technologies (GNLB), Hana Biosciences (HBX), Ricks Cabaret International (RICK), Taser International (TASRE) and Powerhouse Technologies Group (PWHTE) . For a complete list of companies on the naked short lists please visit our web site. To find the SqueezeTrigger Price before a short squeeze starts in any stock, go to www.buyins.net/squeezetrigger.pdf .

Regulation SHO took effect January 3, 2005, and provides a new regulatory framework governing short selling of securities. It was designed with the objective of simplifying and modernizing short sale regulation and providing controls where they are most needed. At the conclusion of each settlement day, data is provided on securities in which: 1) there are at least 10,000 shares in aggregate failed deliveries for the security for five consecutive settlement days, and 2) these failures constitute at least 0.5% of the issuer's total shares outstanding. Regulation SHO mandates that, if a clearing agent has had a fail-to-deliver position for 13 consecutive settlement days, that clearing agent, and the broker/dealer it clears for, must purchase securities to close out its fail to deliver position.


Short interest 37% of float.  Is this a concern?  (positive?)