Bes Stocks To Buy 2014, Best Stocks For 2014: Is Uluru Inc. (AMEX:ULU) For Real?

Wednesday, March 14, 2012

Is Uluru Inc. (AMEX:ULU) For Real?

Nine times out of ten, when a stock soars 36% in a day (out of nowhere no less, and leaving behind a big gap in the process) that same stock isn't nearly as bullish - if bullish at all - a week later. In the case of Uluru Inc. (AMEX:ULU) though, today's big surge may actually be the start of something big.

The clues to that end are numerous, with the recent shape of the chart being one of them. Though owning ULU shares has been nothing less than miserable since early 2010, things started to change a little in January. For the first time in a couple of years we started to see this stock not just test the waters above the 100-day moving average line (gray), but hold its ground above it. Indeed, the 50-day and 20-day averages are even starting to act as support, and we've seen bullish crossovers for two of the three. Something's clearly different now.

The final victory Uluru Inc. needed came today with the move above the 200-day average line (green) at $0.467, and though the move is admittedly a little overdone, it still toppled� major stumbling block.

Great, but can ULU actually justify today's move, let alone more of the same? In a word, yes.

Uluru makes a handful of wound-care and oral-care product, including Aphthasol and Aptheal (canker sores), OraDisc A (for oral conditions treated with gels and pastes), OraDisc B, and its flagship product called Altrazeal, a powder dressing for a variety of wounds.

The company is a small one, with a small operation. Before today's 36% romp the market cap was a mere $2.3 million, which is commensurate with $1.0 million to $1.5 million in annual sales that ULU has been generating, on average.

So what sparked today's move to $0.53? The bulk of the credit has been given to the approval of Altrazeal in Australia. And, it's not a bad milestone. An estimated 700,000 Australians suffer from chronic wounds, and the pros think that the annual cost of treating chron! ic wound s in Australia will exceed $1.0 billion in seven years, if not less. Truth be told though, the news of Australian approval was just the straw that broke the proverbial camel's back. The company won the same approval from Europe in mid-January and was given the green light for the Middle East and Africa around the same time. The New Zealand approval came in December. Point being, this critical mass of good news has been building for a while, but for some reason was put on hold until today.

It's not just an oddity regarding Uluru Inc. though... there's something that investors need to understanding about the timing of all these approvals. Though the recent top line (through Q4 of 2011) from ULU has been a bit of a snoozer, with last quarter's $70K being almost not worth bothering with, all the numbers so far didn't include revenue that's going to be created by the opportunities in Australia, New Zealand, Africa, Europe, and the Middle East. The company expects to start reporting sales from those regions beginning in Q2, which could really light a fire under the stock.

In other words, the market's new-found interest in Uluru is well-supported, and likely to be just the beginning.