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.

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