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Despite Recent Selloff, This Is Still Our Best Performer

Let’s update what’s going with Pareteum.
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Pareteum (TEUM: Nasdaq) shares have sold off fairly hard over the last six weeks. Still, the name remains at the top of our portfolio in terms of performance, while also remaining one of our heaver-weighted positions.

That's the good news. There's more.

Friday morning, Oppenheimer' s Timothy Horan, who is rated as a 5-star analyst (out of 5), by the way, initiated TEUM with a "buy" rating and a price target of $7. Two weeks back, Michael Latimore of Northland Securities, also rated at 5 stars, maintained his “buy” rating, and his $7.50 price target. Horan has no track record in this stock, but Latimore has had a good handle on this name in the past, in our opinion.

It may be of interest that on March 28, the total short position in TEUM stood at 11.8 million shares, or 11.6% of the entire float. Just so you are completely cognizant, that was up from a short position of 9.36 million on Feb. 27. That's an extremely large increase over one month.

The fact that the number was so large at the end of March also would stand as evidence against explaining those highs of mid-March as a mere short squeeze. We find this very interesting, and really can't wait to see where that number is in a couple of days when the April numbers are reported.

A word of caution to the short crowd. Forget about our obvious bias in favor of this stock. As a rule, I back away from shorting low-priced stocks that already have aggregate short positions that amount to anything larger than 7% to 8% of the float. Just too little potential reward at the cost of too much actual risk.

Earnings Due

Not yet, but on the radar. Pareteum has announced that it will report first-quarter results after the closing bell on Tuesday, March 7. Management will host a conference call and webcast at 4:30 p.m. ET that afternoon.

Current expectations are for a loss of roughly $0.04 per share on revenue of $18.53 million. That revenue, if realized, would print as 350% year-over-year growth. No typo there.

As the massive order backlog is monetized, the company is expected to be profitable by 2020, but I am getting ahead of myself. Let's let Chairman Hal Turner, and CEO Vic Bozzo tell the story. We are in this one for a long-term investment.

The Chart

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Fibonacci support has worked twice close to the $3.65 level. We would not even consider adding above that spot. The 50-day simple moving average is being tested from below again Friday. We see this as something of a potential pivot.

With only 7% fund ownership, I don't know how much of an algorithmic response we'll see if that line cracks, but our thought is it will be visible.

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