Small Cap Network Blog

If you’re wondering what got into small cap stock Clearly Canadian (CCBEF) on Monday when it gained 12.2%, we can tell you - CEO Brent Lokash sent a letter to their shareholders updating them on the company’s 2007 progress. All well and good, but maybe too little/too late at this point. Monday’s 17 cent rebound doesn’t even come close to recouping the $1.29 (-47.1%) lost over the last two months.

Ultimately I attribute the selloff to one of two (possibly-related) things. The first one is just a lack of results. The company has been on an expansion rampage, and should at least be reporting strong top lines. Have they been? That’s the second problem…how would anybody know? They’ve not communicated much of anything substantial - good or bad - in weeks, except for a $9.3 million private placement on September 26th. Their quarterly numbers were posted in late August without even a press release. The numbers were up, but only due to acquisitions. Take those out, and you actually have a pretty good-sized dip in sales of beverages.

I used to like this company…I really did. But, this is the second time I’ve seen them drop the ball in the communications department. Some small and micro cap companies can afford to do that, but CCBEF isn’t one of them.

They’ve put a lot of other people’s money on the line with some aggressive acquisitions. Granted, they were all high-quality acquisitions, but I don’t sense any real growth yet. Quite the opposite actually. I think the market is getting a little impatient, and I can’t say I blame them.

It’s a few weeks until their earnings announcement. Maybe that will redeem them. At this point though, I don’t think any small cap stock speculator has, or wants to have, a trading position here. The company has talked theory and philosophy and strategy, but nothing in the way of numbers. I kind of hope I’m wrong, but I’m afraid I’m not.

I’ve mentioned this a few times already, but the company has come through in the meantime and validated my opinion. When Clearly Canadian (OTCBB: CCBEF) first hit the scene more than a decade ago, you could safely call it an alternative beverage. Water - even sparkling flavored water - was relegated to the corners of the few stores that would carry the line at all, though the small niche of consumers that wanted it seemed to be able to find it just fine.

But, over the last 15 years or so, the old ‘alternatives’ seem to have become the new ‘mainstream’. Clearly Canadian is a prime example. How so? I’ve previously mentioned the grocers and convenience stores that added at least some of Clearly’s product line, but two more big ones have come on board within the last few days.

Whole Foods Markets’ Canadian outlets will soon be exclusively marketing a new Clearly Canadian line of dried fruits and nuts, under the brand name of ‘Country Mile’. Just a few days ago we learned Wal-Mart of Canada was going to start offering Glengrove Organic’s products - one of the new lines added thanks to the acquisition of DMR Food Corporation back in February. It’s hard to label Wal-Mart an ‘alternative’, while Whole Foods Markets aren’t exactly obscure anymore either.

And the number of these new product placements is getting very lengthy.

I have to believe Clearly’s revenue figures are going to show some massive improvements over the next couple of quarters - much more so than many people may realize. If they do as well as I think they will based on all these new relationships, I’ve still got a hunch the stock could be a fast-and-furious mover.

Check out all the recent news, and our coverage of it, by clicking here.

To tell the truth, it wasn’t the news from Clearly Canadian (OTCBB: CCBEF) today that prompted this blog entry…..that was just a coincidence. But, if the news comes up at the same time the chart hints at a move, so much the better.

The ‘news’ - It kind of struck me the other day how 15 years ago, Clearly Canadian’s novel water drinks were considered alternative beverages…..a term still used to describe them today. I think, however, it’s time for consumers to accept something - they aren’t really alternatives anymore. Healthy-choice drinks are now mainstream. While Coke and Pepsi haven’t been shoved into the corners of convenience and grocery stores just yet, today’s announcement tells me good ol’ H2O may be a bigger piece of the market than really anyone realizes.

The evidence? Canada’s largest grocer - Loblaw’s - now carries Clearly’s Natural Enhanced Water lines. The coup follows this product line’s introduction to 100 other supermarkets who have already added Natural Enhanced Water since April. This new water line is also starting to roll out in the United States - an even bigger consumer market.

Alternative? Not anymore it isn’t. For more on the news, click here.

In the meantime, here’s what I really wanted to show you……

We’ve all probably used the term ‘roller coaster’ to describe an up-and-down chart. However, I don’t think the description could be any more fitting than when applied to CCBEF’s current chart. We’ve seen nine ‘ups’ and eight ‘downs’ since hitting the November bottom…..not an easy thing to ride out.

However (eventually), this chop is going to cease, and we’re going to see a sustained trend. Could now be the time? Maybe.

The last three days have pushed CCBEF back above all of its moving average lines, after a not-so-bad pullback led to a low of $2.62. This is the second quick recovery we’ve seen in less than a month, and the volume behind the bounces has been better than the selling volume. And if you take a step back, you can generally see the ups have been better than the downs.

The counter-argument (and a decent one at that) is just that this stock, despite the slightly bullish bias, is still in a choppy mode. I can’t disagree.

Based on the short-term momentum, maybe now is a chance to take a swing on that long-term move. I guess it just depends on your trading tastes. Whether you jump in now or later though, I think the $3.00 level is a big one to watch….for better or worse.

Check out Clearly Canadian’s (OTCBB: CCBEF) recent chart. I saw the beginning of this pattern a few days ago, but it really hasn’t become clear until very recently. Between the May 29th peak at $3.25, the June 7th low of $2.60, and the current price of $3.00, we’re seeing a pretty good ‘V’ shape.

Generally speaking, this is a bullish sign that any major lingering sellers were washed out on June 7th, and the reigns were handed over to the buyers on June 8th. It’s not exactly the kind of thing I’d be willing to bet the farm on, but it at least improves the odds.

Something to add to the observation (and part of the reason I think the scales tipped in favor of the bulls on the 8th)…..look at the volume. The distribution bars were mostly shrinking in early June. On the 8th, we started to see accumulation, which - so far - appear to be getting taller.

There was also a convergence of a lot of moving averages near the June 7th low, which may have enhanced the support effort. Either way, it seems to have worked.

Score another win for the Clearly Canadian (OTCBB: CCBEF) marketing juggernaut…..one of their products has found its way into a huge chain of convenience stores, increasing exposure to consumers. Clearly’s ‘dailyENERGY’ drink - one of their newer enhanced waters - is now going to be carried by the Couche-Tard company.  

If you’ve never heard of Couche-Tard, you’re not alone - I hadn’t either. However, most of our northern neighbors probably have. Couche-Tard is the second-largest convenience store chain in North America. They have a major presence in Canada (being based there), but they also have a strong presence in the United States under a different name….Circle K. All in all, the company has 5300 stores.

Needless to say, this is a big deal. Aside from increasing the number of vertical channels through which a product can be sold, the relationship opens the door for horizontal expansion as well. That just means where one product is being carried now, it may be easier to introduce other products later to these same vendors.  

When I take a step back, I’m again reminded of what’s really been going on here. Clearly Canadian not only did a 180 last year, but has continued down this growth path. I just see today’s news as yet one more piece of evidence to that end.

Side note: The stock has been holding up reasonably well after last week’s bizarre surge from a close of $2.85 on the 25th to an open of $3.25 on the 29th. I tend to get a little nervous after big moves like that, as I’ve seen it just start a vicious cycle of profit-taking. In this case however, there appears to be support being formed at $2.80, while the selling slow-down was also accompanied by significantly (and consecutively) lower volume. In other words, the shake-up is probably temporary, and CCBEF’s chart can now get back to business.

For more on the Couche-Tard deal, click here.

I’m sure if any of you are regular chart watchers like myself, Clearly Canadian’s (OTCBB: CCBEF) chart yesterday may have raised an eyebrow. The stock opened at $3.25 and traded just ridiculously huge volume right off the bat. In fact, some folks may have thought the 5.07 million shares that transacted yesterday had to be a data error….CCBEF’s average volume is closer to about 100,000 shares a day.

So what’s up? Was it an error? I don’t think so. The number of shares tells me it was an institutional level transaction. We discussed at great length the acquisition efforts Clearly Canadian has been making of late, most of which involved stock to at least some degree. We also know James Dines has left the board recently…maybe he was taking his shares with him (though I thought he had less than that).

Either way, we’re really not that concerned. If the float was just diluted, it didn’t seem to matter - the stock closed higher….it just got off to a wild start. If instead it was a major seller, again it doesn’t matter…the stock ended up closing higher anyway. Or, perhaps it was a buyer….that was a very strong open.

I’ll try and find out what exactly happened. In the meantime, I’m not worried about it, and I don’t think you necessarily have to be worried either. In fact, I’m guessing we’ll see more days like this ahead, resulting from a handful of recent financing and acquisition deals.

As much as I like the company and the potential I’m sure it has, I have to admit I’m not exactly in thrills-ville with Clearly Canadian’s (OTCBB: CCBEF) chart right now. HOWEVER, there are still a few things I like that are at least encouraging enough to keep my interest.

Specifically, though we fell under the bottom side of the wedge I discussed a few days ago, look where we ended up making today’s low. Does $2.40 ring a bell? It should - that’s where we bottomed on March 14th, March 16th, April 18th, and now, May 7th. Coincidence? If it is, it’s a whopper. I really think someone (or many someones) drew a line in the sand there.

I’m hoping that pseudo-floor buys enough time for the company to finish up some of their current projects they’re working on…..primarily the acquisition of some other ‘good for you’ enterprises, and placements in more big-box retailers. Once the news gets out and the market understands the scope of Clearly Canadian’s growth mission, I feel the stock’s got a much better shot at perking up. In the meantime, the race is on.

You know how volcano’s erupt? The event from our perspective seems to happen in an instant. In reality though, there can be years’ worth of slowly-building pressure under the earth’s surface before the plug is pulled - and the lava is unleashed in a violent explosion. In my view, an exploding volcano is analogous to Clearly Canadian’s (OTCBB: CCBEF) chart right now.

This one’s been fun to watch from a student’s perspective, because there are so many classic technical analysis theories materializing here. The one I most readily notice - like I said - is the likely slow build-up of pressure over the last few months. I have to wonder if we’re on the verge of all that pent-up energy being unleashed, leading to another monster move in the stock.

Specifically, I see a wedge shape. That just means there’s a falling resistance line, and a rising support line…and they’re on a collision course. Most technicians (chart watchers) would see this shape and recognize that CCBEF will eventually have to move outside of those converging lines - and pretty soon. The ‘tip’ of the wedge is around $2.69, but odds are we’ll get a break - one direction or another - before we actually move that far to the right.

And which direction might that be? I still have to think there’s more upside than downside here, making the last few months a consolidation phase…the regrouping of the bulls, if you will. 

I suspect the catalyst, though, will be the underlying performance. It’s not entirely evident with a snap-shot glance at the company (or the most recent news), but a study of Clearly’s timeline reveals their acquisition and growth initiatives aren’t just rhetoric. And here’s the kicker….I don’t think the company is anywhere near done gathering all of its intended acquisitions.

Check out the bottom of this page - it’s the history (just the headlines) of everything Clearly Canadian has done over the last several weeks.

I think you’ll see a very common theme - growth! To me, Clearly could be on track to pretty much double the $7.4 million they did in sales last year. If that’s the case, I sure wouldn’t mind being around once this volcano blows its top.

The footprint continues to expand. On Tuesday, we learned Clearly Canadian (OTCBB: CCBEF) has added another distributor…this one to cover the Pacific Northwest. The Odom Corporation has been tapped to do the job. They’re already handling accounts for Coca-Cola, Miller, Coors, and Arizona Teas. So, we’re pretty certain they’ll be able to handle Clearly’s line as well.

For more, click here.

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Did anybody else notice Clearly Canadian (OTCBB: CCBEF) shares saw their biggest bullish volume day in weeks on Tuesday? As most of you may know, Clearly has been one of our ongoing stories since before this time last year. Though it’s had its ups and downs, we still can’t help but keep coming back to its potential.

So what happened yesterday? They released some news about adding 7-Eleven to the list of vendors who offer their new Natural Enhanced Water line, which will put the product in about 1000 more outlets. To be honest though, I doubt that news is what spurred the buying. I think the upward move was (and no pun intended) mostly organic.

Like we said in Saturday’s edition, CCBEF has been a roller coaster, but at least the ‘ups’ have been bigger than the ‘downs’. I think eventually one of those ups is going to get traction - like it did in May and June of last year when the stock flew from $2.67 to a high of $4.55.

In the meantime, here are the important lines in the sand I see….

Keep an eye on the $3.00 mark. If CCBEF can find a nest above that level for just a few days, I believe the odds of it building a base there become enormously better. A handful of rallies have been capped near this level over the last several months (an exception was made with February’s peak of $3.23), but I sense the market wants to see this stock break that glass ceiling….just to use as an excuse to start buying.

The other key level to watch, in my view, is $3.20. Like I said, we got right up to there in late February, but it’s also worth mentioning we saw this line act as resistance during most of August of last year. I think getting above that line now would be more technically significant than most traders realize.

And one last thing….notice how all the short-term and long-term averages are all crowded around the $2.80 level. In my trading career, I’ve frequently observed how periods of high volatility are followed by periods of low volatility. With all those entwined moving averages, I just have to think this is the calm before the storm. Granted, CCBEF’s storm could be a bearish one - and I’m prepared for that. However, I think this consolidation phase is more likely to result in a rally. Breaking past both of the resistance levels discussed above may be the confirmation of such an upward move.

No, not literally…..but yes, figuratively. Clearly Canadian (OTCBB: CCBEF), as part of their revitalized distribution plan, has brought two California distributors into the fold. Saccani Distributing will cover the northern half of the state, while Valley Wide Beverage Company will cover the southern half.

This is a big deal. California, aside from being one of the more highly-populated states, is also a big ‘better for you market’. We think these two major distributors will be able to capitalize on the best of both of those realities, reaping some nice revenues for Clearly.

And by the way, we haven’t looked at CCBEF much recently, as a wave of big news from several of our companies has washed over the site. However, we haven’t forgotten the potential here. We still think Clearly Canadian has the potential to be an enormous winner over the next few months, as the company continues to execute its growth plan.

For more on the new California distributors, click here.

Remember a few weeks ago we mentioned Clearly Canadian (OTCBB: CCBEF) was attracting some pretty big names? It was a reference to the kind of major investors now poking their nose into Clearly Canadian’s business….presumably sniffing out opportunities. Well, the company must have smelled like a flower - they just scored $3.5 million worth of financing from three institutional-level shareholders.As if that weren’t enough, we think one of these buyers was James Dines - one of the most prolific investment newsletter publishers in the country. Though the news release doesn’t specify him today, we do know he was one of the interested parties a month ago.

In any case, whether he was one of today’s buyers or now, do you think he knows something good when he sees it? We have to think so. To see him get involved as a board member - and possibly also as an owner - with any enterprise speaks very well for that venture.

Oh wait - it gets even better.

The purchase price these buyers paid was $3.00…..15 cents above the current market price. How’s that for a twist? Institutional owners not getting a cut-rate deal! The end result of the pricing structure means those big players are automatically on the same side of the table as the rest of us.

Oh wait - it gets even better.

As part of the financing, those same buyers also received warrants to buy more shares within the next two years. Ahhh, so that’s how they’re keeping the little guy at a disadvantage, right? Wrong! Those warrants have an exercise price of $3.25….they’re only worth something if CCBEF goes higher. Again, the institutions are on the same side of the table as the individual investors.

The worst case scenario is, these players may end up providing the company an additional $3.8 million worth of financing over the next couple of years. Yeah, that might dilute shares again, but the drawback should be more than offset by the stock’s gains that would be required to make the warrants actually worth exercising.

But again, the deal’s details don’t mean nearly as much to us as seeing the institutional involvement does.

The implication for investors? When smart money speaks, we listen…especially when they pay a premium to become a shareholder. We have to think that Clearly’s ability to attract this kind of money is an excellent sign of their potential.

For more in the financing, click here.

If you were wondering when Clearly Canadian’s (OTCBB: CCBEF) newest water products - Natural Enhanced Waters - were going to be stocked on your grocer’s aisles, the wait may be over. We were just notified by the company that this new line will be landing on store shelves this week (if they haven’t been placed there already).

This is where the rubber hits the road, in a sense. The early word is these newest bottled waters are creating a splash….no pun intended. And remember, the attractive part about the enhanced waters as far as investors are concerned is the marketing strategy as much as it is the product. Clearly’s bottled water will now be heavily marketed by the chain stores, who can sell this stuff en masse. We can’t wait to see the effect on the top and bottom lines.

In the meantime, the stock has turned as healthy as the company’s products are. We saw a nice recovery move after a sharp dip in mid-March. You gotta’ love those stocks that consistently land on their feet.

For more on the ‘big-box’ store news, click here. 

We know it’s been pretty quiet for a while on our end. Titan Global (OTCBB: TTGL) and Stockgroup (OTCBB: SWEB) have been stirring the pot recently, but the slow period of the year seems to have already started.

I attribute much of that to a general market doldrum. After we were all reminded a few weeks ago that stocks are not infallible, it seems like news and company announcements have been put partially on hold. It’s not an atypical response.

However, there are two related ideas I think we all need to absorb now, in this lull…..(1) market interest tends to run very hot and very cold, and (2) that interest can turn on a dime. In other words, I tend to think this quiet period may be the calm before the storm - though I’m still not sure if it’s going to be a bullish or bearish storm. Most companies still appear to be on pins and needles as well.

Here’s my advice - while there may not be an exceptional amount of trading activity to do, there’s still some work to be done…some prep work for when the storm finally gets here. I suggest studying up on the companies you own, or the companies you’d like to own. Specifically, it may be wise to decide NOW what you’re going to do ‘when and if’ something happens in the future, while you have the time.

And just so you know, it’s not like there’s been nothing worth a closer look recently. Just take a glance at Clearly Canadian’s (OTCBB: CCBEF) chart. It closed at $2.40 a week ago, and is now at $2.97…up 23.7% on no news. Titan and Stockgroup shares are also on the rise, mostly based on the news we mentioned above. Point being, not all stocks move with the herd.

You guys know we like small cap companies, and we love the opportunity for shareholders in turn-around situations. So, when we see a stock like Clearly Canadian’s (OTCBB: CCBEF) dip back to a key support line, you know we gotta’ point it out for anybody who wanted to jump in.

In CCBEF’s case though, we actually see two potential floors in play. The first one is a 61.8% retracement from November’s low of $2.00 and February’s peak at $3.23. Shares traded under there for a few moments on Wednesday, but we saw a pretty nice bounce on Thursday. The stock seems to be taking Friday off, which is fine….it’s still holding its ground. Overall though, we’d say the Fib line is acting like a reversal point so far.

The other support level is just the straight-forward support line (orange) that’s now been tested and verified twice since its first node was made back in November (a node is just a point where two items meet….lika a daily bar chart and a support line).

Given what we know about where the company is going in the long-term, and also knowing how the short-term market weakness may be a factor in the current pricing, we’d suggest this dip is a tasty opportunity to put some CCBEF on your plate.

All we can say is move over Donald Trump, and look out Simon Cowell - Clearly Canadian (OTCBB: CCBEF) is the newest contender in the ‘reality TV’ genre. We first mentioned the possibility of the show in the middle of last year, but it looks like it’s going to become a reality - no pun intended. As we said then, we feel the kind of publicity this could generate is almost priceless. And, knowing much of the story firsthand, we suspect it’ll be good TV-watchin’ as well.

High-definition cable network INHD has agreed to finance the reality television series for its ‘MOJO’ prime time block that will feature Clearly Canadian and its turnaround story. Nice company they’re keeping there, but we think the really impressive part of the deal is the producer - Nick Davis. If the name rings a bell, it should. Nick Davis Productions has been involved with several television shows for Lifetime, ABC, UPN, VH1, and USA just to name a few.

For more details, click here.

With the boys of summer putting the finishing touches on spring training, it looks like Justin Morneau of the Minnesota Twins will be doing more than playing first base this season - he’s been named as Clearly Canadian’s (OTCBB: CCBEF) newest spokesperson.

Morneau was something of an obvious choice for Clearly. Aside from the fact that he was the American League’s MVP in 2006, he’s also a British Columbian….where Clearly Canadian is headquartered. If the company’s goal was to get a high-powered endorsement, they certainly did it. The ‘local B.C. boy’ detail is a nice touch too.

He’ll be joining the NBA’s Steve Nash (who’s also from British Columbia) as Clearly’s front-men.

No word on any specifics, but we think this is another good move for Clearly. Morneau is the real deal in the world of baseball, and should be able to convert plenty of his fans into Clearly Canadian customers. Congrats to both sides of the table.

For more on the agreement, click here.

You can frequently tell the difference between a great stock and one only pretending to be great by the kind of interest they draw from the investment world. When funds or pensions start to get involved, we think it’s a great sign that the underlying fundamental story is a good one. As investors, it’s a lead that maybe should be followed.

The reason it matters today? We think Clearly Canadian (OTCBB: CCBEF) just got that kind of powerful endorsement. The company, barring anything unforeseen, has entered into an agreement with some big players….like James Dines, BG Capital Group, and Canadian merchant bank. (James Dines, by the way, is on the board.)

According to the terms of the agreement, Clearly could sell up to 1.7 million shares at $3.00 each. The deal also includes the purchase of a warrant - exercisable at $3.25 - with each share sold. By our calculation, that means the company could secure up to $5.1 million in financing up front, and maybe even an additional $5.5 million on the back end from the warrants.

What I particularly like about the deal is three-fold.

First, while more capital means more flexibility, they didn’t actually need the money - they’ve still got a considerable amount of cash on hand according to their most recent filing. (Isn’t it kind of funny how easy it is to get money when you already have some?)

Second, the deal doesn’t completely deflate any goodwill they currently have with shareholders, since the share price for the private placement isn’t too far under the current market price (they’re currently at $3.10). Better still, this puts the buyers - through the warrants in particular - on the same side of the table as other investors.

Third, even if the maximum number of approved shares are sold, which is 3.4 million, it won’t excessively dilute the current 12 million or so in circulation right now. There’s another potential 2 million shares that could be injected via convertible preferred shares.

In any case, we’d say it’s a nice sponsorship.

For more details, click here.