Sweeping layoffs are apparently in effect over at Jim Cramer’s TheStreet.com site, according to this story. While not a particularly pleasant experience, the layoffs are cost-cutting measures which should help TST‘s bottom line. Technically, the issue with the stock is that it has vastly underperformed the broad market since the March 2009 bottom. Beyond that, the stock has been unimpressive since forming a low last November.
Recently, though, the volume pattern has indicated signs of accumulation, with strong buyers popping up over the past few months. In addition, price has recaptured levels not seen since last September. Over the past week, the stock has formed a doji string along the declining 200 day moving average, forming what could be argued as a bull flag. A declining 200 day m.a. is usually a sign that more heavy lifting awaits bulls eager for a turnaround. Nevertheless, the signs are there to watch for a major bearish to bullish reversal in this small-cap stock (in which I currently have no position). To my eye, holding above $2.05 on a closing basis is crucial for the reversal thesis.
Moreover, you are talking about a fundamentally-sound firm that is not going bankrupt anytime soon, with a current ratio of roughly 2.62. I have seen quite a few value investors pound the table on how cheap TST has been for a while now. If this broad market bull run persists through the next few quarters, TheStreet.com is precisely the type of play that will reward them for their patience.