Daytraders Weekend Aftermarket Lounge 21-24th Oct, page-77

GGE

Like quite a few here, I'm in on GGE and caught with a completely left field announcement (positive ann). Now the chart goes pretty much out the window and I have no idea how to play this one - so these are my thoughts. A lot depends on what the acquisition is but in all likely hood it will put an extremely undervalued stock on the radar of a lot of traders.

Some quick and dirty numbers (and feel free to correct me if anything is wrong):

Earnings = 2.2m (last year, production seems to be increasing as does the PoO)
Cash = 3.2m (last qtr)

Reasonable MC based on a PE ratio of 5 (being very conservative for such a small player)
= 2.2 x 5 + 3.2
= $14.2 m

Current MC = $6m!

That does of course change with the acquisition yet to be announced but it gives a good first target of 1.6 - 1.8c. Will be an interesting Monday that's for sure! Trade will be difficult as some larger players gain interest so I hope we will see a gap up over 1c which is the downtrend resistance. If the acquisition is good that's highly probable.

Trade options:
1) Strap in for the ride
2) Trade conservative with a tight stop (likely to get hit and limit any upside)
3) take a conservative profit at open