The back story: I got interested in Castle Brands earlier this year when the company announced a deal with WalMart to put its Goslings brand ginger beer into more than 4,500 Wal-Mart stores. Everybody loves a great Moscow mule, but I also like companies where you have a billionaire – Phillip Frost in this case – owning one-third of the stock and an industry known for takeover threats.

I started buying the stock in March and have traded it ever since, building a profit of more than $42,000 on it this year.

See Jason Bond’s mid-June take on ROX

My current position: I got back into Castle Brands for my long-term portfolio in mid-July, and have rebuilt my position in it, most recently adding 15,000 shares on Sept. 26 at $1.24, taking my total long-term position in ROX to 65,000 shares at a weighted-average cost of $1.52 per share.

I also put 20,000 shares – purchased Sept. 27 at $1.37 – into my swing-trade portfolio.

What’s next: Castle will release Q3 earnings the second week of November 10. The timing of this report is critical, in that as the stock price has retraced the critical 61.8% Fibonacci retracement of the big rally following the Walmart deal.

I’m expecting technical traders to work with fundamental investors to lift the stock back into a continuation of the seven-month-long rally. I strongly suspect the next wave up of the stock price should be the largest move for ROX.

There must be a catalyst for that kind of move, and I’m betting – with more than $85,000 based on my current position in the stock – that an all-cash take-out is coming.

The play: There’s still room in this trade. Anyone buying the stock now actually has a better entry point than my weighted average long-term holding. It’s a good buy between $1.30 and $1.45, with a swing-trading goal in the $1.50s and a long-term goal north of $2.

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   Jason Bond runs JasonBondTraining.com and is a swing trader of small-cap stocks. At the time this was published on RagingBull.com, as described in the article, he held the 65,000 shares of ROX in his long-term portfolio at an average weighted cost of $1.52, and another 20,000 shares in his swing-trading portfolio, purchased Sept. 27 at $1.37 per share. He had no additional options or open orders in ROX.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

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