Weekly Market Overview

Stocks closed down slightly today erasing earlier gains after Goldman Sachs revealed that it had injected $3 billion into some of its hedge funds hurt by the credit markets. Many analysts say that it will be difficult to predict when the crisis will end given the unanticipated consequences of the subprime collapse. Overseas, central banks around the world continued to add liquidity to the credit markets in order to ease concerns and volatility. Whether or not we will see a quick turnaround from this crisis remains to be seen; however, investors should at least keep a close eye on credit and subprime developments as problems continue to rise.

Top 10 Stocks to Watch this Week

Fundamental Analysis

1. Brinks Company (BCO) – The Brink’s Company remains on our watchlist since both MMI and Pirate Capital still hold significant stakes in the company. The company recently announced higher than expected earnings along with a dividend increase. Pirate Capital recently announced that it has determined that the majority of investors would support at least the consideration of a breakup. They also
   
2. Ceridian Corporation (CEN) – Bill Ackman’s activist play also continues to hold appeal with us since the breakup could unlock substantial value. We have not seen an announcement of an official date, but as of March 13th, Pershing Square is still engaged in a proxy contest with the company’s board of directors. Recently, Pershing Square lost its battle to obtain questionable letters, but vowed to continue pursuing its objectives. However, news came out today stating that one potential buyer of Ceridian was able to obtain $3.5 billion in debt financing, which is great news for shareholders holding out for a buyout. Meanwhile, shareholders recently won a lawsuit against the company that may level the competitive bidding landscape, paving the way for an increased bid.
   
3. Hexcel Corporation (HXL) – OSS Capital demanded today that the company engage an investment bank to explore strategic alternatives. The company’s shares are worth $14 per share above the current market price if priced at its peers’ levels. All we are waiting on is the support of the board of directors! Meanwhile, the company has received several analyst upgrades and sits near its 52-week high.
   
4. Applebees International (APPB) – Breeden Capital Management first approached Applebees several months ago suggesting that the company put itself up for sale. Three weeks ago, the company announced that it had received several takeover offers and would review the bids before taking final offers. Recently, the company also agreed to yield two board seats to activist investor Breeden Partners. The company finally announced a sale today at $2.1 billion - a 4% premium to Friday's close and a substantial increase from when we first mentioned the stock.
   
5. Universal Power Group (UPG) – 3V Capital Management announced last week that they weren’t pleased with the company’s valuation. They recommended several changes that they hope would enhance shareholder value. We are still waiting on more details and a response from the company, but this was definitely a stock worth following!

Technical Analysis

1. Hudson City Bank Corp. (HCBK) - Intermediate term bullish head and shoulders bottom.
2. Investools Inc. (SWIM) - Intermediate term bullish continuation wedge.
3. Ebay inc. (EBAY) - Intermediate term bullish continuation diamond.
4. Medarex Inc. (MEDX) - Long term bullish continuation diamond.
5. Neustar (NSR) - Long term bullish continuation diamond.
   

Brink's Company (NYSE:BCO) shares moved down marginally today after Thomas Hudson's Pirate Capital disclosed a 4.5 percent stake and issued a letter to the board of directors. In the letter, the activist hedge fund revealed a DF King & Co. survey of Brink's shareholders showing widespread support for its proposed breakup of the company. (Read More)

Tip of the Week : Understanding Subprime Mortgages

Subprime mortgages have been causing quite the stir in Wall Street, but what are these types of mortgages and how might the failure in this relatively small sector of mortgages affect the larger economy? (Read More)

Final Words

The market remains optimistic despite questionable yields and other economic data. While this is good news for investors in the short term, be sure to use caution and only invest prudently.