Spicy Pickle, Inc (SPKL.OB) – Picking the Proper Price For the ‘Pickle’

In recent blog entries I’ve talked at great length about the difference between investing and trading. In my memory, the most profitable market participants are the ones who understood that difference. The discussion resurfaced again when we introduced Spicy Pickle back on September 22nd. We knew its momentum at the time was mostly built on hype and newness, yet we still made some very quick money on the trade – it moved from 69 cents to $1.40 in only a few weeks, letting many of you pocket some big gains. 

As I later said when I told you to lock in the gain, euphoria wears off. When it does, stocks can fall back (which is why I said to lock in the gain). Sure enough, SPKL fell back. In fact, it made a full 61.8% retracement of its big run-up. More than that, the support at the 61.8% line held up as support on Thursday, and actually pushed the stock higher again on Friday. In other words, the ‘easing’ phase after its euphoric rise may also be complete. 

Now that the initial ‘trading’ is out of the way, I think we should be looking at the stock from an investor’s point of view, which is a longer-term view. However, it doesn’t mean you can’t take advantage of a short-term pricing opportunity. If you liked the company’s long-term prospects but were waiting for the perfect time to get into the stock, I think we’re there now. 

That’s not to say there won’t be volatility injected again in the future. That’s going to happen over and over again. In fact, I think they have earnings coming up pretty soon, which should push the stock around pretty good. What I’m talking about is looking past the upcoming quarterly numbers, and instead looking at next year’s likely numbers. In those terms, I think Spicy Pickle is a great value at $1.34.