XPEL - New 78 Day High - Good Revenue, Income and Cash - De-listing at TSXV and registration with NASDAQ

XPEL ANALYSIS, August 29, 2019

XPEL last August 21, 2019 appeared on our stockfetcher New 78 Day High. This prompted me to go deeper in checking out this ticker symbol.

When I looked at Finviz of what XPEL was, the description is merely an automotive company that produce and manufactures automotive products. After careful investigation I found out that they were not just manufacturer of automotive spare parts. They specialize on investment protection for vehicles. This company creates and innovates special protection devices for automobile and trucks. In their website XPEL.COM they mentioned that they use cutting-edge products described as self-healing technology in protecting automobiles.

Yahoo finance reported XPEL's Second Quarter Revenue highlighting a revenue of $30.1M with improved gross margin of 35.3%.

If we follow our 1 kick cycle in Trading the steps to follow are:

1. Investigate: the chart, fundamentals, market sentiment
2. Calculate: the target price
3. Weight: the Risks and Reward using the Target Price and Stop Loss
4. Execute: the trade
5. Repeat: the cycle.

Steps 1 to 3 is planning the trade.

Step 4 is trading the plan.

Step 5 Repeating the cycle.

So let us follow the steps and apply it with XPEL. In the case of this blog, we will tackle only Steps 1 to 3 and it is up to you to continue on Step 4 and 5.

A. INVESTIGATE: 

We will investigate its chart for technical analysis, then its fundamentals if the bullish move will have the breath of pumping up the price to a higher level. Then we also investigate the sentiment of the market.

XPEL'S CHART using Tradingview.com (Showing its listing with NASDAQ to voluntary de-listing with Toronto Stock Exchange Ventures (TSXV) until August 29, 2019.

XPEL's chart with Mutiple Top Breakout

XPEL's CHART using BigCharts.com (This is 1 decade span - monthly candlestick chart)

KEY OBSERVATIONS based from the 3 charts:

1. Sep. 18, 2013 huge volume of 517K with price peaking at a high of $1.30
2. March 31, 2015 560 days after that huge volume the price reached to a high of $6.12. A significant gain of $4.82 from #1. It was a gain of 360%.
3. The March 31, 2015 run pulled back on the same day from a high of $6.12 to a low of $2.94
4. The slide to $2.94 continued until Jan. 11, 2016 (287 days after) up to the bottom of $0.64. This is a -89% drop from $6.12 which is equivalent to -$5.48.
5. It gained $4.82 from the 1st high volume then dropped $5.48 on small volumes. As a tiny company you could expect this kind of manipulation. I think Market Maker saw that there are big pocket Investors lining up to get a share of the pie. These big guys they only buy at a discounted price but on volumes. The only way, the Market Maker can satisfy their hunger is to shake the tree and let the weak hands to surrender their shares. 
6. From the drop to $0.60 the price slowly stabilized creating a volatility contraction of its price in smaller volumes until a break-out occurred and price surpassed $6.12 which retested at $4.00 then broke out the former high and reaching $8.55 on Aug. 21, 2019 
7. Look at XPEL's chart on Tradingview.com. On April 3, 2019, XPEL listed itself on NASDAQ. The price surged to a high of $7.20, although it also went as low as $4.81 with just 150K shares of volume. Take note of this height, because this is the height of which it will create a new breakout.
8. The low on April 3, 2019 served as the base until it broke out of 200EMA (yellow-orange line). Then the top of $7.20 served as the breakout point to a new high when it had a large volume on August 21, 2019. 
9. From Aug. 30, 2018 to August 21, 2019, XPEL made 4 Tops or Multiple Top Breakout on a a huge volume. This is a signal of a strong Bullish Move.
10. Current price is touching the upper line of the Price Channel. So there is a tendency that we will be seeing pullback that would make the price touch on the lower channel. This is where you must be prepared to take on XPEL.

ANALYSIS:

If at first 500K it added $4.82 and now it made another 500K + of Volume, then let us assume that it will just add the same amount, then the 8.55 could somehow easily go to $13.37 before pulling back the price -$5.46 lower, which would then come out at a price level of $7.91. 

This analysis is based on its historical move. As history repeats itself, then there is a great probability that it will follow the same pattern. If the secondary volume that may occur after these 500K new volume would result to a bullish volume with a  gap-up on its price then we could probably see our Target Price of $19.67 to be likely hit.

Review the move of SPPI from August 4, 2017 to Oct. 18, 2017 and you will find similarity of this move from XPEL.

INVESTIGATE THE FUNDAMENTALS:

Looking up XPEL with otcmarkets.com and checking its Disclosures we found interesting stuff.

1. 10-12B was filed 2019-04-03. This is the listing of XPEL with NASDAQ.
2. 8-K filed 2019-08-16 voluntary de-listing of XPEL from Toronto Stock Exchange Ventures.
3. 10-Q filed August 21, 2019 showed the following financial report.

SUMMARY OF 2019-08-21 10Q (2019 vs 2018)

1. Revenue: 30M vs 28M
2. Net Income: 3M vs 2.5M
3. Cash: 5.4M vs 1.5M

ANALYSIS:

1. NASDAQ move could trigger move upside.
   Most stocks that leave Toronto Stock Exchange and concentrate on US Exchange usually enjoy a good ride with price increase. The listing on NASDAQ of XPEL showed what top price it could achieve when it reached $7.20 on April 3, 2019. Although it came back down on that same day, it managed to pull back up and surpassed that $7.20 high and made a new high again at $8.55 on August 21, 2019. As of this writing August 29, 2019, the current price top at $10.07.
2. With their positive 10Q report with Revenue, Cash and Net Income combined this company just showed good management.
3. Visiting also on their website and knowing that they cater cutting-edge technology in the automotive Industry on specialized protection, they just found a niche. This is promising.

INVESTIGATE NEWS 

1. Yahoo Finance just reported about their record revenue of 2nd quarter reaching $30.1M with improved 35.3% Gross Margin.
2. Finviz.com showed negative EPS Q/Q and Sales Q/Q of which probably may not reflect just yet with what had been released by XPEL on their latest 10Q report. The average volume shown with Finviz is 43.45K of which may not also reflect yet what the last 6 days of trading occurred with XPEL.
   2019-08-21: 564K
   2019-08-22: 349K
   2019-08-23: 210K
   2019-08-26:   60K
   2019-08-27:   73K
   2019-08-28:  127K
   2019-08-29:  143K
3. Stocktwits.com seemed to be also late in its following of this stock. It is still listing as $DAP.U.CA, which was the TSXV listing. Nevertheless, the tweets of Vittygant who followed this stock last June and early August had the following entries.
   
   Vittygant  Aug 10th, 4:53 am
   $DAP.U.CA next earning we’re riding 5.80$-6$ ...u know fundamentals, you should check up on that! This stock is lit in 2018
   
   Vittygant  Jun 4th, 6:50 pm
   $DAP.U.CA Having such a strong Q1 is very promising for q2 and q3 when car detailing usually is strongest.
   
   This guy was right with his tweet. He just have to probably get back with $DAP.U.CA as XPEL and take a look at what really happened. Had he invested on this, he would have a lot of gain already.

ANALYSIS on the NEWS and SENTIMENTS. 

It seemed XPEL is not so popular yet, Only a few have noticed with this stock currently. The surge of volume of course is something that you can think of that somebody of course has a hand on it already. And once these other big time investors rally to get in, there will be more upward action and even gap up of price.

B. CALCULATING the Target Price

Using our Target Calculator:

TP = ((PH - VL) * 3) + BC

TP = Target Price

PH = Previous High

VL = Volatility Low

BC = Breakout Close

From our Chart above we have the following entries:

PH = 8.74 

BC = 8.45

VL = 5

Substituting the values on the formula:

TP = ((8.74 - 5) * 3 ) + 8.45

TP = 19.67

This is the possible price it could probably hit. Before reaching this price there are a lot of Whole number resistance from $9.00, so it is just a good habit to make sure you create a scale out strategy in exiting the trade. If you plan to buy 150 shares, maybe create 3 exit plans of 50 shares each. The first 50 could be when the price reaches 10.50, then another 50 shares when it reaches 12.50 then probably let the other 50 ride wherever the stock may carry it.

C. WEIGHING THE RISK AND REWARD:

Here is the result for the 5% STOP Loss from the $9.00 entry. 

You will enter at $9.00 but if it goes against your plan and dip down at 8.55 you should be ready to get out. Here you will RISK only $0.45 cents/share of loss against $10.67/share Reward. If you will invest on 138 shares you will profit $1,462.46 or you will have a loss of -$72.10 if the trade does not go as planned.

Here is the result for the 7.8% STOP Loss from the $9.00 entry. 

You will enter at $9.00 but if it goes against your plan and dip as low as $8.30 you should be ready to get out. Here you will RISK only $0.70 cents/share of loss against $10.67/share Reward.If you invest on 138 shares you will make a profit of $1,462.46 or you will risk of losing -$106.88 if it goes against your plan.

Here is the result for 3:1 Risk/Reward ratio. T

his is using a stop loss of 35% against your entry price of $9.00. The risk here is a little bit high since you will absorb at least $3.15 loss / share  against your target Profit of $10.67 / share. You will not be whipsawed right away when price would be so volatile but if the trade does not go as planned then you should be prepared to accept the $444.70 loss against the profit of $1,462.46. 

SEE how XPEL made a move reaching $18.00 high.

Transaction Codes used in Form 4 SEC Filings

The following codes are the common codes used when filing Form 4. If you want learn more on this visit https://en.wikipedia.org/wiki/Category:SEC_filings

General Transaction Codes

P — Open market or private purchase of non-derivative or derivative security

S — Open market or private sale of non-derivative or derivative security

V — Transaction voluntarily reported earlier than required

Rule 16b-3 Transaction Codes

A — Grant, award or other acquisition pursuant to Rule 16b-3(d)

D — Disposition to the issuer of issuer equity securities pursuant to Rule 16b-3(e)

F — Payment of exercise price or tax liability by delivering or with holding securities incident to the receipt, exercise or vesting of a security issued in accordance with

Rule 16b-3

I  — Discretionary transaction in accordance with Rule 16b-3(f) resulting in acquisition or disposition of issuer securities

M — Exercise or conversion of derivative security exempted pursuant to

Rule 16b-3

Derivative Securities Codes (Except for transactions exempted pursuant to Rule 16b-3) 

C — Conversion of derivative security

E — Expiration of short derivative position

H — Expiration (or cancellation) of long derivative position with value received

O — Exercise of out-of-the-money derivative security

X — Exercise of in-the-money or at-the-money derivative security

Other Section 16(b) Exempt Transaction and Small Acquisition Codes (except for Rule 16b-3 codes above)

G — Bona fi de gift

L — Small acquisition under Rule 16a-6

W — Acquisition or disposition by will or the laws of descent and distribution

Z  — Deposit into or withdrawal from voting trust

Other Transaction Codes

J — Other acquisition or disposition (describe transaction)

K — Transaction in equity swap or instrument with similar characteristics

U — Disposition pursuant to a tender of shares in a change of control transaction