Remember the Summer Lovin’ with SPNG? We’re betting YRCW could be Just as Fun!
Nothing got a trader’s heart beating fast than riding the SpongeTech Delivery Systems Inc. (SPNG) wave last summer. From its pre-blastoff price of under a penny per share in late April of 2009 to a mind-bending moon shot of 23 cents in August of 2009, it’s rumored that some traders got fatigued due to lack of adequate sleep during all the excitement last summer. The ride certainly took a toll on us (albeit a pleasant one).
Scores of traders raved about the fortunes they were making with this stock – and rightfully so. A $1000 plunked on the stock turned into as much as 46 big ones in FOUR months if you were sharp enough to see the coming NASA space launch.
In the spirit of knowing that there’s always another SPNG on NASA’s drawing board – which can easily turn your measly $1000 into two years of endless fun in Bangkok -we have what appears to be another SPNG-like mission craft to the stars for you – the company is YRC Worldwide (Nasdaq: YRCW).
This beleaguered U.S. trucking stock has taken a pounding during the two-year long financial meltdown. After crashing from its high of $22.50 only two years ago at this time, then trading down to $6 in September of 2009, YRCW has cratered to under 50 cents, today.
At less than half a dollar, traders have handicapped this company to succumb to the worst case scenario – liquidation.
Not a chance. The past two weeks have changed everything.
UPS’s (NYSE: UPS) strong earnings report on July 22 prompted traders of YRCW to get serious about taking a stake in this huge turnaround story. But FedEx’s (NYSE: FDX) numbers and upbeat guidance on Monday cinched for us that not only will YRCW escape the auction block, but will hand traders a play this year not seen since SPNG of last summer. On Monday, following the FedEx news, YRCW soared 10.1% to 37 cents on 220 million shares (more than three times the average daily volume in the stock).
YRCW’s spike on Monday also confirmed, technically, that the recent sharp “V-shaped” uptrend which began on July 12 (the day the company reported a significant pickup in freight volume) isn’t a mere head fake to ultimately lower stock prices, but instead, a signal that a lot of smart money has moved into YRCW prior to the fireworks of much higher prices sure to come.
However, the truly savvy money masters are way ahead of us all on the YRCW “steal” play of 2010. With institutions and mutual funds already owning a massive 64% of YRCW’s float, not even the no-brainer bet that the Fed wouldn’t let Citi (NYSE: C) go to the wolves attracted only 35% in institutional holdings of Citi’s total float.
The Fed couldn’t care less about a U.S. trucking company, and a bailout of YRCW was never a factor anyway in the decision of institutions to swarm all over this stock. The decision to go big into YRCW just made sense, and not due to impending government bailout nonsense. Yet, nearly two-thirds of the stock is held by institutions—with the smartest guys in the room from BlackRock Investment Management among the top shareholders at cool 24 million shares of YRCW. That’s a sure ‘convincer’ the stock must be cheap!
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