This week a quick review of a few stocks we're following mid to long term. I am not presenting anything new until we see how Fannie and Freddie play out this week. I mentioned last Monday that weakness in Fannie Mae (NYSE: FNM, Stock Forum) and Freddie Mac (NYSE: FRE, Stock Forum) was creating serious risks. That proved true as mid-week both companies collapsed – this was then also followed by problems at Lehman Brothers (NYSE: LEH, Stock Forum).

On Sunday, the Bush administration asked Congress to approve a sweeping rescue package that would give government officials the power to inject billions of federal dollars into Fannie and Freddie through investments and loans. This should prevent an outright disaster (and panic) but it still underscores the depth of the problems facing the U.S. real estate market and underlying financial institutions.

Many feel the government should leave well enough alone and not intervene – in a "natural correction" of sorts. In theory, this may be the solution but it would also cause tremendous financial hardship and during an election year, the last thing the Republicans need (to go along with Iraq), is the collapse of the backbone to almost 60% of U.S. mortgages.

As discussed last week, you can get current (and daily) updates on our StreetSignal site:

http://ww2.streetsignal.com/0508ee.htm (URL valid until mid-August).

1) Gryphon Gold (TSX: T.GGN, Stock Forum, 37 cents) www.gryphongold.com – the junior gold sector continues to suffer but all these problems in the U.S. can only mean good things for the price of gold and mid- to long-term gold investors. Several are riding near lows and offer significant value. Gryphon just happens to be one we've followed for the past year. Once the sector turns, many should recover quickly. One region of their property in Nevada (Borealis) has a proven resource of almost 2.5 million ounces of gold. The company has a clean balance sheet with almost $5 million in the bank and 62 million shares outstanding. Even at 40 cents, the market capitalization is $25 million. This values 2.5 million ounces of gold at only $10 per ounce. Even in a half-decent market we were able to use $25/oz as the bottom end benchmark.

2) Western Prospector (TSX: V.WNP, Stock Forum, 74 cents) www.westernprospector.com – the proposed takeover by Khan (TSX: T.KRI, Stock Forum) is still open but I'm not holding my breath that this will go through. WNP has more than $30 million in cash, what appears will be more than 40 million pounds of uranium on their properties, and significant mine infrastructure. The share exchange ratio is an insult in relation to what Khan brings to the table. A combination of the two companies makes a lot of sense, but not under the terms proposed, which appear opportunistic on the part of Khan.

3) Longview Capital (TSX: T.LV, Stock Forum, 22 cents) www.longviewcp.com – a holding company of various investments and an excellent way to play the junior resource stocks as their portfolio is very diverse and will move as the market moves. For many it’s a much better way to spread risk and allocate capital – especially when the low 20-cent range represents a discount in excess of 50% to current market value of the investments. This website, which I've been tracking out of Europe for the past several months, is surprisingly accurate in relation to the numbers reflected in their financials. 

4) PharmaGap (TSX: V.GAP, Stock Forum, 20 cents) www.pharmagap.com – GAP is a mid- to long-term play for us, but were it not for the fact that early results were so promising (cancer research), I wouldn't waste my time. We watched this one run on huge volume from the 20-cent range to over $1, but it has now given everything up. This is the perfect example of a penny stock with real fundamentals (and potential), but a share structure that is a complete mess. Biotechs are notorious for not only testing investor patience, but often screwing up their share structure so badly that even good results rarely hold the gains. I would like to just dump this one but prefer to hold a small piece of the pie in case something significant really does come out of this.

5) Netlist (NASDAQ: NLST, Stock Forum, $1.96) www.netlist.com – We started covering this in the $1.20's (below cash value) and will continue to follow. The company is close to profitability and any well-established tech company with revenue in the range of $100 million should be worth close to one times annual sales. Even if we discounted revenue to $60 million and said it was only worth 0.50 times annual revenue, the business should still be worth $30 million. With only 20 million shares out, that is $1.50/share + $1.25/share in cash value = $2.75. In a decent market or with sector strength, one times annual sales ($80 million) with 20 million shares out makes the stock worth $4 to $5. If we only use the $2.75, it creates little risk in holding onto these gains longer.

6) Minaean International (TSX: V.MIB, Stock Forum, 25 cents) www.minaean.com – I've mentioned several times that India will become a major economic powerhouse, much like we are seeing with China. Small and micro-cap plays on India are very difficult to find and this one in particular is a play on the huge demand for housing and infrastructure. If you review their website you will see the products and services they provide. Recently they have also landed important building projects in British Columbia (in addition to Oregon). These are relevant because the building codes in B.C. are very strict and it proves the merit (and potential) of what they are doing within India.