Recent High Flyers - Investing (Canada)

With the U.S. Federal Reserve showing "restraint" by raising interest rates a quarter percent and declaring a "neutral bias" on inflationary expectations, the markets roared back with a vengeance last week and Internet stocks went along for the ride. Some, in fact, did more than take a ride. Some positively soared!

Currently I am charting 40 stocks on my Canadian Internet Stock Average, 17 on my Metamorphosis Index (Internet-Come-Latelies that used to be engaged in other endeavors), and 9 on my Yankee Index (Canadian Internet companies listed exclusively on U.S. exchanges). Of those 56 stocks, 10 gained more than ten percent in value for the week. Below is a chart of the stocks and their gains.

Stock	June 25	July 2	% Change
Cornucopia Resources	0.09	0.19	111.1 %
Starnet Communications	17.13	24.72	44.3 %
Entrust Technologies	25.69	31.63	23.1 %
Uniglobe Online	3.90	4.75	21.8 %
Orinoco Resources	0.70	0.85	21.4 %
Em Net Corp.	3.80	4.50	18.4 %
Internet Direct	5.85	6.75	15.4 %
Research in Motion	26.50	30.10	13.6 %
Ezenet Corp.	3.20	3.60	12.5 %
Millenium Network	0.65	0.72	10.8 %

Note that the top three are all from the Yankee Index. Coincidence? Or could it be that is why these companies prefer to be listed on a U.S. rather than a Canadian exchange?

Cornucopia Resources - The huge leap in price for Cornucopia Resources all happened Friday as the company traded for the last time under that name. Effective Tuesday (as Monday is an American holiday) the company's name changes to Stockscape.com Technologies Inc. with the new stock symbol STKSF. Stockscape Technologies was a privately owned Internet investment website until the two companies agreed to merge last March. Cornucopia shareholder approval was finally obtained in late June.

The Stockscape website started as a precious metals mining industry analyst when launched three years ago, but has broadened its scope considerably since. It has added such subsidiary sites as IPO Dispatch, LivePortfolio.com (which I use to track my Yankee Index as the site I use for my CISA index does not follow OTC BB stocks) Silicon Stocks, and more. Among the many features is a newsletters section with free samples of many of them. Visit their NewsStandExpress and you can receive 20 newsletters free for three months.

In a previous article called Dumb Luck, I related how I had bought into an ill-chosen penny stock in January 1998 (at 56 cents a share). The stock dropped to as low as 2 cents and then announced it would become an Internet company. The stock leaped back to 14 cents, and in January 1999 when its name changed, it jumped to as high as $5.00 a share before settling back.

I kind of scoffed at the stock, Cosmoz.com, in my article because I did not think there was much substance to a failed pretzel vendor becoming an Internet presence. And indeed, the company was slow in developing. It aspired to become another CMGI, the Internet conglomerate that has made it big by acquiring other Internet companies. Cosmoz.com dropped back to 90 cents, but as it acquired new websites under its umbrella and developed its own portal site, it started to look more respectable, and today trades in the $2-$2.50 range. It now has eight subsidiary sites.

I anticipated a repeat performance from Cornucopia/Stockscape, particularly since I had met Trevor Newton, the head guy at Stockscape and interviewed him for these pages in February last year. He's young, energetic and a sharp thinker. So when the announcement came out, I bought some. With Friday's close I've made almost 300% on my investment.

The stock is consolidating its shares on a ten for one basis, reducing the available pool to around four million shares, so the price should start out on Tuesday around $1.90 a share. By contrast, Cosmoz.com made its rise to $5 with one acquisition, no website, and a 40 million share float. I think there is still considerable upward momentum on Stockscape and will be watching it carefully this week looking to lock in some profits and hold the balance for the ride.

Starnet Communications - This stock continues on a tear for the second week running as it announced new licensing agreements and partnerships for its gambling empire. On June 14th it announced two new licensees for its software, on June 30th two more and on July 1st it announced an agreement to broadcast live horse racing from Bally's at Ocean Downs in Berlin, Maryland. The stock has jumped from $12.75 on June 18th to $17.13 on June 25th and closed at $24.72 Friday. That's a 93.9% gain in two weeks! Yes, I am kicking myself for not following my gut instinct and buying some! My colleague Rob Rak at the About.com Trading site has written an interesting article on Fear of Pulling the Trigger.

There's no room to write about all the other stocks on the list (actually there's lots of room because I can make this page as long as I want to - but I don't want to be here all night writing it!). So I'll close with some thoughts on a stock not on the list but which has been very much in the news lately and which is flying. Not a small, relatively unknown Internet company, this is one of the biggies - Nortel Networks.

Nortel Networks - On Saturday the Financial Post reported that Nortel Networks topped the list of Canadian companies adding shareholder value for the second year in a row. FP commissions financial research firm Stern Stewart & Co. of New York to rank the top 300 Canadian companies for Market Value Added. (Their website does not have the current report on it.) Nortel added over $23 billion in market value in 1998.

There was some concern after Nortel acquired Bay Networks a year ago that it would detract from the company. In fact, it has added to the company considerably. Formerly known as a manufacturer of telephones, Nortel has become increasingly active in high end electronics and networking. It not only competes head to head with American telecommunications giant Lucent, it also stands toe to toe with networking superstar Cisco Systems.

The company has reinvented itself even to the point of changing its name from Northern Telecom to Nortel Networks. Previously not prone to maintaining a high public profile, the company now is advertising heavily, making itself a recognized household brand. Perhaps you've seen their catchy TV ad with the exec presenting a report to his board. But what he says to the assembled group in their business suits is "Here come old flattop he come grooving up slowly. He got joo-joo eyeball he one holy roller". Yep! The lyrics to the old Beatles classic, Come Together. The theme - Nortel helps people come together.

That was the work of former Nortel President Dave House, the marketing whiz who came to Nortel by way of the Bay Networks acquisition. House announced he was resigning on June 16th to move back to his beloved California, his work with Nortel done. Prior to becoming CEO of Bay Networks, House worked for twenty years at Intel where he coined the trademark slogan "Intel Inside". John Roth, Nortel Vice-Chair and CEO, who engineered the Bay takeover and is known for his technical savvy, remains with Nortel.

It seems that almost every day in the last few weeks, Nortel has been in the news.

Earlier in June Nortel announced a half billion dollar deal with Sprint and MCI Worldcom announced plans to launch trials of Nortel equipment. This is a company on the move in the Internet revolution in a big, big way.

Not surprisingly, Nortel's stock has advanced significantly recently. Trading at $100.50 on May 7th, the stock closed at a record high of $132.05 on Friday, a gain of 31.4%.

Other Articles & Links

Internet Sourcebook - This interesting and useful site lets you narrow down searches on Internet companies with various parameters including country.

Recent Articles

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06/30/99 - Saving Canadian Hockey
Does Canadian hockey need a government bailout to stay viable? Why help just hockey with tax relief? Why not simply abolish the corporate income tax for all businesses?

06/28/99 - Internet Update: Week in Review
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06/25/99 - Place Your Bets!
Our weekly Internet Update looks at companies engaged in the online gaming industry.

06/23/99 - Consumer Clubs: Are They Worth the Price?
My wife and I recently attended a presentation by a large consumer club that offers factory pricing. But there is a catch!

Investing (Canada) Notes

Disclosure: The author owns shares in Cornucopia Resources/Stockscape Technologies and in Nortel Networks.

IPOs - I've dropped the Odds & Sods category from my library of Net Links and added IPOs after a reader inquired about how to find IPO info on Canadian stocks. Fact is, there's precious little available on the Net, but what I've found I've listed! I've also included links for American IPOs for which there is quite a bit of information.

Canadian Mutual Fund Database - Four more fund companies added to the database bringing the total now to 34 companies. I had planned to add more, but got bogged down in other work. I guess I'll have to add 16 this week!

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