Probably not too optimistic to expect that Q3 metrics will meet low bar set by analysts relying on cautious tone in Q2 conference call. Two big questions, over which management has no influence, are the evolution of the possible macro recovery (presumably leading to job recovery in 2010) and market expectations concerning VLCM in that context? The forceful upward price moves in PSUN and ZUMZ during the past week or so have probably surprised many of us. Although I've been long on these three names for several months there was scant little company-specific information that permitted any clairvoyance on the recent moves in PSUN and ZUMZ. And I have been on the lookout. Can some of these rising expectations be extended to VLCM? More than a few fast money players now attribute the recent (since March) abrupt moves up in small caps to a return of some, if not excessive, risk assumption. It may be that simple, and if so, we need to watch out below. However, with the considerable personal losses sustained in the past year this view can also be inverted by asking whether the risk-averse effect isn't still lingering in the price, and, consequently, the price jumps not because alpha hunters are adding risk but because risk evaders are gingerly taking some small steps back into the fray, finally. But it all comes back to expectations. What are the real expectations for Q3 at VLCM (not the consensus view of 9 trained parrots with their .35 to .39 estimates) and, more importantly, what are the real expectations for VLCM going forward? The stock price is more than 30% higher than it was 10-12 weeks ago. Will Mr. Woolcott and associates report a performance and/or guidance that is 30% better than Q2 results and call? I hope so. This company's product-market strategy, brand strength in the sector and financial amplitude suggest an expansion potential not yet in the price. But, maybe not. Maybe the 30% price move since June or so is all we can ask for under present conditions. Or maybe 30% is all we can ask for until the 2010 job market improvement expectations begin to flow into the mainstream financial press loudly enough to attract back the frightened mainstreet players.


Sentiment : Strong Buy