Weekly Market Overview

The markets began the week on a negative note as worries about the subprime markets escalated yet again. News also surfaced that at least one hedge fund managed to profit handsomely by shorting credit and mortgage markets, leading to speculation that there is more money behind a short position that could fuel the fire. Several economic reports also surfaced showing a weaker US Dollar amid improving oil prices. Meanwhile, analysts remain divided as to whether the current market prices are bargains or whether we have only seen the tip of the iceburg when it comes to the credit mess. In the end, investors should be very cautious...

Top 10 Stocks to Watch this Week

Fundamental Analysis

1. Tyco Electronics (TEL) - After recently spinning off from Tyco this stock is down almost 10%, but is starting to catch the attention of value investors. The company is trading well below its peers with strong cash flows. It is also a victim of the spin-off effect, which has made it an even greater value to opportunistic investors. We believe that this company will outperform in the long-term. (Read More)
2. Capital Southwest (CSWC) - Activist investor Ned Sherwood came out with an analysis on this company showing a $200/share valuation. The only thing holding shares back are practices by the company that can easily be changed if they so desire. Unfortunately, the company seems resistant to change now, but this is definitely a stock to watch incase they change their mind. (Read More)
3. United Online (UNTD) - Classmates.com is one of the fastest growing social networking websites on the Internet and this company plans to spin it off real soon. Investors should keep an eye on this development as spin-offs not only represent great investment opportunities, but the social networking space is red hot with names like Facebook and Myspace in the news constantly. (Read More)
4. Brinks Company (BCO) - Activist hedge funds Pirate Capital and MMI Investments are still fighting the company to unlock value through a divesture of several key businesses. Given the difficult credit market, some are now questioning whether or not this is possible. However, if credit markets improve and they hedge funds are successful during the next annual meeting, this stock could soar. (Read More)
5. Ceridian Corp. (CEN) - This activist target has agreed to bend to the pressure of the hedge funds and is definitely a company to watch ahead of its annual meeting where it will fight to retain its incumbant board members. If Pershing Square is successful in installing its own board members, we could see significant share appreciation. (Read More)

1. Novartis Ag Ads (NVS) - Intermediate-term bullish megaphone bottom.
2. Par Pharmaceutical Companies  Inc. (PRX) - Intermediate-term bullish bottom triangle.
3. Exxon Mobil Corporation (XOM) - Long-term bullish continuation diamond.
4. Noble Corporation (NE) - Long-term bullish continuation diamond.
5. Abbott Laboratories (ABT) - Intermediate-term bullish diamond bottom.
   

Stock of the Week : Stake n Shake (SNS)

Steak n Shake (NYSE:SNS) may be in for a shake-up of its own after Sardar Biglari's Lion Fund increased its stake in the company from 7.3% to 8.6%, according to a Schedule 13D/A filing with the SEC. The activist hedge fund has been targeting the company lately, voicing their concern about mismanagement of the company by the present board of directors. (Read More)

Article of the Week : How to Analyze the Retail Industry

Consumer spending is perhaps the most vital aspect of our economy and no industry feels its effects more than the retail industry. The industry is one of the largest in the United States and its growth is largely dependent on the economy as a whole. This article will take a look at how to analyze retailers... (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.