Given the high level of economic uncertainty currently facing the nation, investors are searching harder than ever before to find stocks capable of thriving in a potential recession.

The tide is shifting towards necessity plays and companies that offer more value for the consumer’s buck. Speaking of necessity, America currently houses more than 15 million labor union workers. Each one has approximately 3 dependents and they all need dental and health care. And guess what? Their annual household income has never been spread thinner, and that’s before mortgages, credit cards, and college funds are even taken into consideration.

One company helping make dental care more affordable for labor union workers while growing its own bankroll at the same time is Union Dental Holdings Inc. (OTCBB: UDHI).

UDHI Has The Market Cornered

Before we delve deeper into the discussion on why I think that UDHI is headed in the right direction, think about this: Union workers typically receive only $1,500 in annual allowable dental expenditures. The typical Porcelain-fused-to-metal dental crown ranges in price from roughly $600 to $900. That doesn’t leave a whole heck of a lot of wiggle room (no pun intended) for a union worker with a few bad teeth.

With the proven ability to produce dental prosthetics 20%-30% cheaper than the competitors, UDHI pretty much has the market cornered here.

Back to Today’s News:

UDHI is back on our radar screen this morning with news that 2007 year-end revenues are expected to reach $2.5M for an improvement of about 13% over ‘06. After turning a profit during Q3 and announcing today that they are in the later stages of executing an acquisition that would allow them to embark on the next stage of its growth strategy, 2008 is shaping up to be quite interesting for the company. With the CEO swallowing up shares like crazy, it appears that something is indeed brewing at UDHI.

If the preliminary, un-audited results are on point, this would mark at least UDHI’s 3rd consecutive year of record revenue growth. The growth rate would also more than double that of last year (6%).

For those of you that don’t know, UDHI is the premier provider of network dental based services to America’s 15+ million labor union members. Currently boasting a network of nearly 2,000 dental practitioners across the U.S. and a customer base possessing more than $190,000,000 in annual purchasing power, UDHI’s labor union clientele is highlighted by such sizable organizations as:

Communications Workers of America (CWA) – (700,000 members)
International Brotherhood of Electrical Workers (IBEW) (750,000 members)
United Association of Plumbers and Pipe Fitters (UA) (300,000 members)
Association of Flight Attendants – Communications Workers of America (AFA-CWA) (55,000 members)

UDHI About to Hit Ignition Switch on Stage 2 of Growth Strategy:

What I really love about this company is that it is thriving without even executing a “game breaker” move yet. They are still in the first prong of a multi-pronged growth strategy. In addition to building a fast growing national dentist network, UDHI is also making moves to acquire dental practices in key strategic areas. Since Union Dental has an exclusive contract with two telecom unions in the Charlotte area and also with The Association of Flight Attendants, the deal on the table in NC is ideal for the company.

For those of you that are out of the loop, Union Dental announced back in November that they had entered into a purchase agreement to acquire a 7,000 sq ft dental building in Charlotte, NC. Representing the dawn of what could be a new era of growth for the company, UDHI plans to use the facility to house its newly acquired Jakubek Dental subsidiary. The new building would be the “cookie cutter” model for Union Dental’s future expansion and will allow the company to generate revenue from a few new streams.

UDHI Shares traded up more than 16% yesterday, and with news of record revenues and the prospect of the Charlotte facility acquisition hitting the press this morning, we are shaping up for an exciting day in the market. The micro-cap world could sure use it right now!

To the American Consumer: Check Yourself Before You Wreck Yourself.

While cutting rates provides America with a short-term fix to a long-term problem, the country must now buck up and take responsibility for the choices that have brought it to the top of a very slippery economic slope. With consumers accounting for roughly 2/3 of the economy, both their mentality and that of lenders must be put under the microscope now before the country finds itself at the bottom of a hole it can’t dig its way out of. No matter how much money it prints.

Here’s a recommended view on why cutting interest rates is not the long-haul solution.

http://www.youtube.com/watch?v=yAwvlDJgJbM

In this video, Congressmen Ron Paul (Texas) speaks with Ben Bernanke regarding inflation and the need for America to take a long, hard look at how we got here before we move forward in any positive manner.

The US is Still a Dominant World Economy.

Before you go jumping off of the Brooklyn Bridge or converting all of your hard earned greenbacks into Euros, think about this: The US GDP is expected to weigh in at nearly $13.22 Trillion for 2007. That effectively makes it the size of the next four largest economies in the world (Japan, Germany, China, and the UK).

I found a very interesting map on TheGlobalGuru.com website that puts a lot into perspective. The map originally published here: “puts the size of the United States’ global rivals in perspective. On the map, the name of each U.S. state is replaced by a country, whose GDP equals approximately that U.S. state’s GSP (gross state product.) A quick glance at the map leads to some fascinating — and unexpected — comparisons.”

Many Areas of the Economy Continue to Prosper

The education and healthcare (about a $3.5B economy itself), telecommunications, energy, and agricultural (particularly grains) markets are all thriving. The US Dollar is still the crème de la crème of world currencies, and a controlled interest rate, at least for now, facilitates investment. So, there is definitely a lot of positive going on that goes unheralded.

Don’t get me wrong. Clearly, consumers and government officials alike are guilty of economic mis-management. Sure, we have gotten ahead of ourselves in regards to spending and borrowing, but it’s a trench that we can dig ourselves out of. With the prospect of new and improved leadership at the helm very soon and the American people known worldwide for their resilience and tenacity, the country still has a fighter’s chance of steering its economic ship straight.

Putting aside the financial ramifications of the country’s “War on Terror”, housing and credit are two major drivers of the ongoing economic slowdown.

With the average consumer carrying 4 credit cards and the average balance eating up about 5% of their income, before mortgages and other loans even come into the picture, the credit market needs to tighten up quickly. This is happening now by nature because banks can’t afford to give away credit as they have in year’s past. In my opinion, this is a correction that needs to be made and is being made.

Housing construction has slowed, which is actually good in a sense. Less new construction, for now, means less loan defaults. I think of it as more of a “correction” than a downturn. We couldn’t afford or sustain the immense growth our nation saw in its housing market over the past few years. So eventually, the bubble had to burst. Shame on us for getting to this point, but we are seeing a correction, which is good.

A Back to the Basics Approach is Necessary:

Generations ago, our parents and grandparents relied minimally on credit. Sure, everybody had their mortgage, which in most cases was spread over a lifetime. No biggie. Now Americans spend something silly like $51B per year on fast food with credit. In my opinion, this reflects a MASSIVE fundamental flaw in both our society and economy. If the US consumer does not become savvier with how it chooses to use its credit, and fast, doom is imminent. Before we even get into discussions on unscrupulous lending practices, we need to focus on the” worry about it later” mindset of the US consumer.

So, for now, let’s educate the public on the ramifications of their actions; both from a macro and micro perspective. Let’s weather the correction that will be seen by tightening up credit and eliminating predatory lending. And most importantly, let’s not lose sight of the fact that we are still the world’s dominant economy.

Betting on the demise of the US economy has been almost as popular of a sport over the past 40 years as pro-football. Too bad for the nay-sayer’s that they’ve come out looking more like the San Diego Chargers rather than the New England Patriots in the grand scheme of things.

Less Bang For Your Buck

I was driving to the gym the other day when I realized I was low on gas, so I pulled into the closest gas station which happened to be Chevron. After filling my tank I looked up at the screen noticing I had just paid $52.68 for just a little over 16 gallons ($3.29 a gallon for premium grade). Then it hit me. If gas prices are reaching record highs and affecting our buying power then what other consumer goods are having the same affect on our economy?

We are all well aware of the rising gas prices in our world today, but when was the last time you noticed the price of your grocery bill? According to July’s report from the Department of Agriculture, the price of food is on a rise with dairy products out front hitting an all time high. Milk is selling for an average price of $3.80 a gallon up 51 cents since February due to the shortages in Australia and Europe and the increased use of corn for biodiesel production.

Even Milk Prices are Soaring!

This has driven up the price of cattle feed which is added to the cost of milk according to the USDA analyst Ephraim Leibtag. Gas prices are also soaring according to the latest figures from the November economic reports with petrol prices jumping 34.8% a record high since the 1990 Gulf War. Even childcare has become unaffordable for the middle to lower class families forcing them to choose jobs that offer subsidized child care. Average child care fees for one infant range from $3,803 to $13,480 a year, according to the National Association of Child Care Resource and Referral Agencies. To put it into perspective that is an average of 10.6% of a two family income to provide care for one child.

Foreign investors are salivating over the struggling US Dollar

About a week ago, the US Dollar was weakening, trading at .6837 to the Euro and .4904 to the U.K. £. As you can see, as a foreign investor our market looks very inviting because they can buy more for their currency as opposed to buying in their own companies. In turn it will cost us more to invest into international companies as well resulting in making it harder for us to compete and diversify our portfolios.

Not only does this cost us more as Americans to buy foreign goods and companies it also continues to put increasing upward pressure on the inflation rate. Causing an overall decrease in the quality of life one can live based on their current income.
However, one statistic that slightly skews the buying power of the dollar is credit card debt among Americans.

The average household carries a credit card debt of about $2,000. Inferring that consumers are trying to maintain their same levels of comfort or just make ends meet even though they don’t have the means to. Eventually this is going to catch up with the economy putting more downward pressure on inflation making it even harder to climb out of this downward spiral we seem to be in. I think we saw this in December judging by yesterday’s retail report from the commerce dept.

If we take a look at some of the most recent figures that came out we can see a trend of a continuous increase in the inflation rate. According to the Federal Reserve the recent elevated energy and commodity prices, among other factors, may put upward pressure on inflation. This is reflected in the Producer Price Index (PPI). The PPI measures inflation pressure before reaching the consumer hitting a three decade high in November of 3.2%. Indicating even more pressure placed on the dollar weakening it even further.

Finally, let’s take a look at how this all fits together and truly affects our every day lives. Consumers are paying more for gas, milk and an abundance of other goods and services, therefore reducing the amount of consumer spending on other items mainly for the middle to lower class. Even with the Fed’s most recent interest rate cuts of 25 basis points, we may still see a weakening economy going into next year.

This affects the everyday investor who is trying to make a buck on the ups and downs of the market. Because now not only do they have to build a portfolio that is diversified enough to hedge against the swings in the market but now they must also incorporate a plan that will minimize their inflation risk. Additionally, foreign investors can purchase American companies’ at discounted rates due to the upward pressure of inflation, which drives the value of the dollar down even further.

Our economy seems to be entering a downward turn and this is weakening the dollar. It is also causing the consumer’s bankroll to be spread thinner and thinner and is forcing middle to lower class families to make major changes to their lifestyle in order to compensate. The overall opinion of investors seems to be the same across the board. The Fed needs to cut interest rates lower during the next Federal Reserve meeting. This will help boost American companies and investor confidence in the stock market and the outlook of our economy.

First, the unavoidable facts: Total retail and restaurant sales during December declined 0.4% or $1.4B to $382.9B. This marks the first month-over-month decline since a dip of 0.8% back in June.

Ethanol production leading to rising beer prices

This is a superb interview with Jon Arnold, Principal of J Arnold & Associates that I found on TMCnet.com regarding key trends in the VoIP industry.

http://voipservices.tmcnet.com/feature/articles/18141-insights-voip-ip-communications.htm

Here is a list of economic events set for tomorrow:

WASHINGTON — Commerce Department reports on retail sales for December, 8:30 a.m.

It doesn’t look good:(http://money.cnn.com/2008/01/14/news/economy/nrf_2008outlook/) with the National Retail Federation already expecting ‘08 to be the worst in 6 years.

WASHINGTON — Labor Department reports on producer price index for December, 8:30 a.m.

The following is a list of some eye-opening facts regarding the ongoing US consumer credit crunch. I felt this was timely as the Fed updates us on their view on things.

• The average interest rate across all existing credit card accounts was 13.46 percent as of May 2007 (Source: Federal Reserve);

• Approximately 14 percent of Americans use 50 percent or more of their available credit, and this group carries an average of 6.6 credit cards (Source: Center for Media Research).

Will Voice 2.0 Take Over in ’08?

After taking a look at a blog mentioning, Ribbit, Silicon Valley’s first phone company, I began wondering how much traction Voice 2.0 could possibly gain in 2008.

Link to Blog:
http://www.lucafiligheddu.com/2008/01/voip-in-2008-will-be-integrated-and-web-based.html

2007 was a tough year in the market for many small caps. At its close, we saw the NASDAQ had barely gained ground over the previous year and the Dow Jones had not fared any better. This year as more investment capital is transitioned from the sagging real estate market back to the stock market, we hope to see new infusion in many of these small cap diamonds in the rough.

Small Cap With Big Potential

Case in point is Commerce Planet Inc. (OTCBB: CPNE) is now trading at a 83% discount off of its 52-week high of $3.48. But while this last year was a difficult one for them in the stock market, it was a progressive one for them internally. The stock continues to flash bottoming signs and more importantly, we could be seeing a sustainable move upwards if the company is able to keep up with its steady pace of positive corporate developments.

With a new and improved business model and management team, no long-term debt, two significant acquisitions executed over the past few months, and the faith to buy back more than 2,000,000 shares, CPNE has steered its ship straight and is sailing into ‘08 with the wind at its back.

www.commerceplanet.com

New Look Management Team – Optimized Business Model

Powered by a restructured management team employing a strong and scalable business model designed to capitalize on an enormous market opportunity (Forrester projects online retail sales to reach $350 billion by 2011) CPNE indeed appears poised for significant gains over the short to mid-term.

The company also appears to have tweaked its biz plan a bit to focus more on the booming B2B sectors versus B2C, which proved costly in regards to customer charge-backs in 2007. Both the Iventa and the potential Value Direct acquisitions should make the transition virtually seamless as both are rooted in the B2B world.

Corporate Team “Buys In” to Revamped Business Plan!

And if we are still hanging our hats on CPNE, it is encouraging to see management is putting its money where its mouth is. According to a release issued on Wednesday, CPNE brass recently bought back 2.2 million shares of its common stock with working capital. The total expenditure was valued at $726,300. This brings the grand total of repurchased shares to 3.02 million since the program’s inception back in November of ‘06.

How many other companies do you see doing this on the OTC Bulletin Board? That’s quite a vote of confidence in CPNE’s future potential if you ask me. The people that know that company best are willing to wager $2 million that the stock will mature from current levels.

Dedication to Accretive Acquisitions Very Positive for CPNE’s Future

Management is not only scooping up shares, they are making some pretty astute moves too. CPNE announced on Thursday that they have executed a Letter of Intent to acquire the operating assets of Value Direct. According to the release, Value Direct logged more than $2.3M in 2007 revenues and is a direct-to-consumer services company with core focus on the real estate housing and the pre-owned automobile markets.

Here’s CEO Tony Roth’s take on the situation:

“We are pleased to have executed this agreement for acquisition as we move to continue diversifying the online offerings of Commerce Planet. Value Direct achieved revenue in 2007 exceeding $2.3 million and we expect the acquisition to contribute meaningful cash flow and pre-tax profits to Commerce Planet in 2008, as well as effectively grow our operating management force.”

On another very positive note, the company has become exponentially better at keeping investors in the loop regarding its endeavors as well as its future outlook. One key factor that in my opinion led to the downward spiral in stock that we all paid witness to in recent months.

Lastly, it is extremely positive that management is not shortsighted in their business ventures. They appear to be quite conservative in their future outlook and recognize that while sales figures may dip during 2008; the changes currently being made will set the table for a far stronger future. As CPNE’s acquisitions are still reaching their potential on the books, shortsighted peers of this small cap will be falling off the charts.