GROW (US Global Investors)

GROW had an incredible move in the last half of 2006. Every day it seemed it would make a new high and I would be left wondering how I could have missed such a name but I was paralyzed and could not get into the stock because it was clear that the risk of a pullback from such a lofty height could result in significant losses and a quick failed trade.

Sure enough, at the beginning of this year, GROW sold off and lost 30% of its value. It broke through the 50 day but held significantly above the longer-term 200 day average. Most recently, the stock has consolidated in a tight formation right around $45.00 and I put it on my watch list as it looked like a good setup.

Yesterday, the stock broke out swiftly on strong volume and I was quick to jump on it taking a 3% position at $47.20. The stock traded well througout the day and into this morning leaving me a quick 10% gain in less than 24 hours. While I don't expect this type of movement to continue, I do expect a challenge of its previous high at some point in the coming couple of months.

The company's earnings and sales growth is tremendous and because of this growth, the stock is actually not all that expensive. Currently there is not much of a following which makes forward visibility a little difficult but could add to incremental demand for the stock if an analyst or two picks up coverage on this name.

Feb 13, 2007

The stock traded down quicly yesterday morning and stopped me out. I took more than a 10% loss on the position exiting at $41.30 but this was mainly because the stock droped so quickly i couldn't get my position off before i was down 12% instead of the 10% mandatory stop point. I am definitely disappointed but I know the stock is volatile and is bound to shake investors out from time to time. I will continue to watch for better spots to get long this name as fundamentally I really like the company but discipline says I need to cut my losses before they become a bigger problem.