CoolBrands International in orbit around Wayne’s World

Sep 24th, 2010 – Comment

I would expect a pullback in the near term. You can see that volume is thinning out and all the good news is in the stock.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Hi Lou,

I have been following COB for a long time from the great highs in the 90′s to the lowest lows. Presently, I don’t own any shares.
Ever since it was announced that they are merging with Swisher (reverse merger) the shares have rapidly increased. What is your opinion about the future of this company? Would it be a good time to buy?

As usual, love your input on 640 AM and your endorsement of Rob Ford as TO’s Mayor.

Bob

Hey Bob,

Thanks for the assignment and your kind words!  I think that Ford is the Ralph Klein of Toronto and would do good things for the city. I have also endorsed Dan Mathieson for Mayor of Stratford and Joe Connelly for Mayor of Calgary. They are all capitalist who are good on my issues. Responsible and accountable management of tax dollars and respect for the citizens in their respective cities.

CoolBrands International Inc. ( COB TSX) is now in the control of renowned capitalist Wayne Huizenga who has built three Fortune 1000 companies and six New York Stock Exchange listed companies over his career. The stock took a jump on the news of COB being brought into orbit around Waynes world. Lets consult the charts to see if the orbit is stable.

The three year chart  depicts a stock that was already moving higher from the December 2009 lows and had established a nice uptrend line that took it to the $1.20 level. After the August 18, 2010 announcement that Huizenga was backing his private commerical cleaning company Swisher International into the public shel,l COB took off like an Atlas Centaur rocket.

The six month chart clearly depicts the most recent events. The MACD and RSI both signaled a shift in momentum as buying started to pick up in early August. Then there was liftoff after the announcement.  As I like to say ” guys in the know – know” if you follow my meaning!

COB is in an overbought situation according to the RSI and the MACD apprears to be making a turn to the downside which should come as no surprise. Charts that have this sort of hockey stick pattern in most cases have gotten ahead of themselves. COB is currently trading way above its moving averages and hasn’t really built much support during its advance.

I wouldn’t want to bet against Huizenga but trees don’t grow to the sky. I would expect a pullback in the near term. You can see that volume is thinning out and all the good news is in the stock. The deal is set to close in November 2010 and it would pay to be patient till then. Once the transaction is finalized the tale of the tape will be about increasing revenue and profits one cleaned  bathroom stall at a time.

Happy Capitalism!

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