PNK: WHERE DO WE GO FROM HERE?

PNK has doubled since bottoming at $2.82 on November 20th, yet the stock is still down 76% on the year. There have been rumors circulating regarding a PENN takeout of PNK. I don’t have insider information so I can’t speak to the immediate validity of that hearsay. However, I think I made a pretty compelling argument that such a combination should and could happen. See my 11/11/08 post, “LIKE PEANUT BUTTER AND CHOCOLATE”. That view hasn’t changed.

After such a big move in the stock, I consulted our technical and quant expert Keith McCullough for his thoughts. The stock still appears undervalued and there would be significant upside in a takeout scenario. For those of you who need a little more here are Keith’s thoughts:


Looks better and better every week, usually flashing positive performance divergences, correcting on lower volume days … the patient is out of emergency.

Immediate term “Trade” is to 6.57. “Trend” line support is starting to build, but really takes off on a close above 7.26.

Short interest is your friend (21% of float) and so are the insiders who are net buyers all of a sudden. Shareholder list was a big negative factor (too concentrated), and deleveraging by the weaker hands in October simply took it to $3 with more sellers than buyers. Combining the latest quarter’s positive surprise (liquidity) getting mutual fund yr end out of the way are calendar catalysts that play to the bull side.
KM


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