Monday, April 07, 2008
Newsletter for April 7, 2008

Weekly Market Overview

Stocks rose today after reports of potential corporate deals surfaced and sent the indexes higher. Washington Mutual led the pack with speculation that it might get a $5 billion investment from private equity firms. Such deal-making is often seen as a bullish sign and could signal that stocks are starting to recover from a decline in consumer credit amid a slowing economy. The other big story was the exchange between Yahoo and Microsoft where a three week deadline was established but no further news emerged. All in all, this deal-making is great news for the markets after last week's disappointing employment data.

Top 10 Stocks to Watch this Week

Fundamental Analysis

  1. Motorola Inc. (MOT) - Motorola Inc. will be calling upon two of Carl Icahn's nominees for election to its board as part of a truce with the activist shareholder. Let's just hope their using Motorola phones: The cellphone-maker's shares have fallen nearly 50% over the past year thanks slowing sales. (Read More)
  2. Select Comfort Corporation (SCSS) - Select Comfort shares may be well off of their $19/share 52-week highs, but at several professional investors are giving this stock a second look. The depressed levels have led to several analyst upgrades as well as at least one activist hedge fund that has taken a positive stance. (Read More)
  3. Southwest Airlines (LUV) - Airlines are struggling to get any lift amid record oil prices and a weakening economy. ATA Airlines and Aloha Airlines both shut down operations and filed for bankruptcy this week alone while larger carriers like Northwest Airlines are raising prices and cutting routes to stay alive. In fact, the only airline eking out a profit seems to be Southwest Airlines. (Read More)
  4. Bassett Furniture Industries Inc. (BSET) - Bassett management was caught sitting around on the job, according to at least one activist hedge fund. Costa Brava, which owns just over five percent of the company, recently expressed its disappointment with the furniture business and initiated a proxy contest in order to install its own board members to enforce change. So, should shareholders support these new board candidates? (Read More)
  5. Dillard's Inc. (DDS) - Dillard's announced an agreement with many of its dissident shareholders in a move designed to avoid an expensive proxy contest. Activist hedge funds Barington Capital and the Clinton Group agreed to forgo a proxy contest in exchange for the voluntary nomination of four of its proposed directors. Additionally, the board agreed to review whether the company's real estate assets and capital are being optimally deployed to build shareholder value. (Read More)

Technical Analysis

  1. JDS Uniphase Corporation (JDSU) - Intermediate-term bullish bottom triangle.
  2. Crocs Incorporated (CROX) - Long-term bullish continuation wedge.
  3. Corinthian Colleges Inc. (COCO) - Intermediate-term bullish bottom triangle.
  4. Lam Research Corporation (LRCX) - Intermediate-term bullish double bottom.
  5. Coach Incorporated (COH) - Intermediate-term bullish megaphone bottom.

Stock of the Week : Bassett Furniture Industries Inc. (BSET)

Bassett Furniture Industries Inc. (NDAQ: BSET) management was caught sitting around on the job, according to at least one activist hedge fund. Costa Brava, which owns just over five percent of the company, recently expressed its disappointment with the furniture business and initiated a proxy contest in order to install its own board members to enforce change. So, should shareholders support these new board candidates? (Read More)

Article of the Week : Need More Time to Pay Your Taxes?

Taxes comes up quicker than most people expect and sometimes it can be difficult to come up with the cash. Those who are not able to file their taxes by April 15th can file a Form 4868, or an application for automatic extension, with the Internal Revenue Service (IRS) to get an additional six months to pay. The extension is an affordable way to get more time to come up with the money to pay your taxes. (Read More)

Final Words

The future of the U.S. economy remains uncertain despite an improvement in the financial sector thanks to dealmaking. Overall, the economy seems to be heeling, but consumers may lag a bit behind as weakness in spending is seen for at least a couple more quarters.

4/7/2008 6:43:14 PM UTC  #     |  Trackback
 Monday, March 31, 2008
Newsletter for March 31, 2008

Weekly Market Overview

Stocks rose moderatley today as investors await data on the manufacturing sectors and details of a government plan to overhaul the way Wall Street is regulated. Volume was also light as many institutional investors had closed their books for the quarter that ended with this session. The quarter itself was disappointing as financial conmpanies continue to experience credit market losses while the poor economy wiped out any appetite for individual investors. There were a few up days, but the overall market still trended down. Whether or not it improves during the next week and quarter depends largely on an economic recovery.

Top 10 Stocks to Watch this Week

Fundamental Analysis

  1. Gannett Company (GCI) - The newspaper industry is making the news, but not in a good way. The Newspaper Association of America reported that ad revenues in the industry have fallen by 9.5 percent in the biggest drop in any year since 1950. The decline comes at the heels of an economic slowdown and an increase in online advertising that together have put a damper on the fourth quarter - a peak period for ad sales. (Read More)
  2. Citigroup Inc. (C) - Investors are looking for change and new chief executive Vikram Pandit is ready to act. The bank announced a broad restructuring move after the banking giant loss half of its market value in six months thanks to the sub-prime crisis. The new additions to the larger restructuring plan involve breaking up the consumer banking group into regional divisions and separating its credit card division. (Read More)
  3. Take-Two Interactive (TTWO) - As reported here Wednesday, Take-Two Interactive Software's board rejected Electronic Art's most recent buyout offer, saying that it was not in the best interest of shareholders. Instead, the company also confirmed that it would explore strategic alternatives to maximize shareholder value in other ways that could deliver a higher value than the current $2 billion EA offer. (Read More)
  4. Captaris Inc. (CAPA) - Captaris may be able to efficiently manage business data, but a strategic review of its own company is another story. Private equity firm Vector Capital offered to acquire the software company for $4.75 per share just last week, but the deal fell through after the company failed to take any decisive action. Now many shareholders are left wondering whether any deal will be done at all. (Read More)
  5. Motorola Inc. (MOT) - Motorola Inc. may have agreed to Carl Icahn's proposed spin-off, but they are not out of the woods yet. The billionaire activist investor sent another letter to the board (via a Schedule 13D/A filing) earlier this week bringing up several concerns about the speed and manner in which a new management team is selected for the mobile devices division. (Read More)

Technical Analysis

  1. Sohu.Com Inc. (SOHU) - Intermediate-Term Bullish Symmetrical Continuation Triangle.
  2. Novartis Ag Ads (NVS) - Intermediate-Term Bullish Megaphone Bottom.
  3. Energy Conversion Devices Inc. (ENER) - Long-Term Bullish Diamond Bottom.
  4. Fuel Systems Solutions Inc. (FSYS) - Intermediate-Term Bullish Head and Shoulders Bottom.
  5. Dealertrack Holdings Inc. (TRAK) - Intermediate-Term Bullish Continuation Wedge.

Stock of the Week : Google Inc. (GOOG)

New research data shows that online advertising is beginning to run out of steam at what could become a turning point for the industry. Many analysts have been concerned that such trends would continue as the industry began to mature, but the decline in consumer spending could expedite the process as fewer consumers click on ads while more publishers are looking to fill ad inventory. The big question is whether or not this trend will be permanent. (Read More)

Article of the Week : Predict Stock Momentum with the MACD

Moving Average Convergence/Divergence (MACD) is one of the most common tools used by traders to determine the direction and momentum of a given stock. The standard MACD formula involves subtracting a stock's 26-day exponential moving average (EMA) from its 12-day EMA to create a single line that fluxuates above and below zero. The theory is that the movements of this line can be used to make accurate predictions. This article will take a look at what exactly the MACD is and how you can use it to profit! (Read More)

Final Words

The future of the U.S. economy remains uncertain desite an improvement in the financial sector. Overall, the economy seems to be heeling, but consumers may lag a bit behind as weakness in spending is seen for at least a couple more quarters.

3/31/2008 8:28:09 PM UTC  #     |  Trackback
 Monday, March 24, 2008
Newsletter for March 25, 2008

Weekly Market Overview

The big news on Wall Street today was J.P. Morgan's quintupled buyout price for the trouble Bear Stearns, which came as a result of one faulty line in the original buyout offer that promised to cover liabilities indefinitely. Meanwhile, the housing market got some good news when the number of home sales increased quarter over quarter for the first time in seven months, signaling that a bottom may be in sight. However, on the other side of the coin prices dropped over 8% in the largest downward move on record. All in all, the financials are continuing to improve this week while consumers may still have awhile to go!

Top 10 Stocks to Watch this Week

Fundamental Analysis

  1. Capital Senior Living (CSU) - Activist investors have successfully pushed this company towards a sale situation. The operator of senior living centers announced that it has appointed two new activist directors while agreeing to explore a potential sale.
  2. Borders Group (BGP) - Activist investor Bill Ackman offered the company financing along with a low-ball offer to purchase its international businesses. While the activist's offer is low, it may prompt other bidders to pursue the company that can now afford to stay alive for at least another year.
  3. Micrel Inc. (MRCL) - Shareholders in this company have demanded that it immediately pursue a sale to unlock value. Given their 9.6% ownership in the company, this is a situation that is definitely worth watching.
  4. General Mills (GIS) - This well-known company has benefited from a well-timed derivatives hedge against rising commodity prices while also outperforming many of its peers. These strong fundamentals make this company one worth watching over the next few months.
  5. NYSE Euronext (NYX) - The most popular exchange in the world unveiled two new plans to boost shareholder value: a dividend and share buyback. Combined, these can only mean good news for shareholders despite minor concerns by ratings agencies that it may weaken their balance sheet.

Technical Analysis

  1. Knight Capital Group (NITE) - Intermediate-term bullish continuation diamond.
  2. Mastercard (MA) - Long-term bullish continuation diamond.
  3. Telefonos De Mexico Sab De C.V. (TMX) - Intermediate-term bullish continuation diamond.
  4. Alliance Data Systems (ADS) - Intermediate-term bullish bottom triangle.
  5. Janus Capital Group (JNS) - Intermediate-term bullish continuation wedge.

Stock of the Week : Bear Stearns (BSC)

The Bear Stearns (NYSE: BSC) roller coaster ride took another sharp turn today after J.P. Morgan (NYSE: JPM) agreed to quintuple its offer for troubled investment bank. The move came amid widespread criticism that J.P. Morgan was getting a free ride on the backs of Bear Stearns shareholders. The new $10 per share takeover is slated to close by April 8th and now has much greater shareholder support. (Read More)

Article of the Week : Recover from Investment Losses more Quickly

Many investors have experienced a loss on an investment and simply want to break even on the trade. Unfortunately, this isn't possible without committing more capital to your losing position in order to "average in" at a lower price. Or is it? The Stock Repair is an options strategy that lets you give up any profit potential in exchange for a new, reduced break even point, without committing any new capital! (Read More)

Final Words

The future of the U.S. economy remains uncertain desite an improvement in the financial sector. Overall, the economy seems to be heeling, but consumers may lag a bit behind as weakness in spending is seen for at least a couple more quarters.

3/24/2008 8:20:17 PM UTC  #     |  Trackback
 Tuesday, March 18, 2008
Newsletter for March 18, 2008

Weekly Market Overview

The big news on Wall Street this week was JP Morgan's buyout of the troubled Bear Stearns for a mere $2 per share. The markets dropped several hundred points early in the day on the news, but ended up 21 points as investors were encouraged by actions taken by the Federal Reserve. The trend on the street has been a clear move towards blue-chips and out of small-caps as investors look for reliability in a weak economy. Finally, investors are also looking forward to today's Federal Reserve meeting where the central bank is expected to sharply lower interest rates.

Top 10 Stocks to Watch this Week

Fundamental Analysis

  1. Magellan Health Services (MGLN) - The firm is under pressure from Shamrock to unlock value through the declaration of a special $12 per share dividend financed through free cash and debt.
  2. Captaris Inc. (CAPA) - The technology company received an unsolicited $4.75 per share buyout offer along with several other expressions of interest. The firm is now undergoing a review of its strategic options.
  3. Enzon Pharmaceuticals (ENZN) - Billionaire activist Carl Icahn disclosed a 7% stake in the company and suggested that it explore strategic alternatives relating to its royalty streams and other relatively intangible assets.
  4. Conseco Inc. (CNO) - The firm is under pressure from Steel Partners to explore strategic alternatives including the possibility of a sale. The company is trading at depressed levels and Steel believes it is undervalued.
  5. Electronic Arts (ERTS) - The firm is continuing its attempt to takeover Take-Two Interactive after an unsuccessful initial attempt to buy the firm at $26 per share despite the steep premium.

Technical Analysis

  1. Solarfun Power (SOLF) - Intermediate-term bullish continuation wedge.
  2. US Steel Corp. (X) - Intermediate-term bullish ascending continuation triangle.
  3. Dick's Sporting Goods (DKS) - Intermediate-term bullish bottom triangle.
  4. Waddell & Reed (WDR) - Long-term bullish continuation diamond.
  5. Smith & Wesson (SWHC) - Intermediate-term bullish bottom triangle.

Stock of the Week : Magellan Heath Services (MGLN)

Magellan Heath Services (NDAQ: MGLN) may be good at managing the health of its patients but the company is another story. The healthcare company's stock is trading more than 20 percent off of its 52-week highs and many shareholders are now demanding the company take action to unlock shareholder value. Unfortunately, the company has been unresponsive to these shareholders who are now threatening to take their argument public. (Read More)

Article of the Week : How Much Do You Need?

Retirement may draw images of sunny beaches and pina coladas, but many preparing for retirement do nothing but stress. Financial advisors say that the you can live on 70 to 80 percent of your current income, but does that hold true in all cases? Unfortunately, there is no perfect number for all situations particularly when the economic climate changes so rapidly. So, how do you know how much you'll need to retire comfortably? (Read More)

Final Words

The future of the U.S. economy remains uncertain with more problems in the financial markets. The Bear Stearns blow-up did a number of the financial sector while consumer spending is also very week, Many are hoping that steeply lower interest rates will help boost the economy, but others are skeptical that it will only send inflation more out of control.

3/18/2008 6:21:19 AM UTC  #     |  Trackback
 Monday, March 10, 2008
Newsletter for March 10, 2008

Weekly Market Overview

The U.S. stock markets continued to exhibit volatility today as investors sorted through a range of reports on how companies are handling a slumping economy and tightened credit markets. The top story was Elliot Spitzer's ironic admission to participating in a prostitution ring that may end in his resignation. Meanwhile, rumors about liquidity concerns at Bear Stearns caused a sell-off that continued throughout the day despite the fact that it was proven false. Financials led the decline amid concerns about margin calls at brokerages while McDonald's announced some positive news for restaurants and retailers with rapid same-store growth. In the end, the future of the economy is still uncertain and leading to substantial volatility that will likely continue.

Top 10 Stocks to Watch this Week

Fundamental Analysis

  1. Select Comfort (SCSS) - Shareholders have definitely been losing sleep over this stock, which has declined nearly 80% during the past 52 weeks. This prompted activist hedge fund Clinton Group to suggest several changes aimed to turning the company around and restoring profitability. (Read More)
  2. Wal-Mart Stores (WMT) - Wal-Mart may not be the latest hot pharmaceutical company, but it does have solid earnings that appear to be improving. The company reported posted strong quarterly numbers that an more and more customers are looking for bargains. (Read More)
  3. Kraft Foods (KFT) - Warren Buffett was a buyer of this company back when it was trading 5% higher. Now, investors have the chance to invest alongside the legendary investor at an even lower price! This company is cheap by all standards and ready for a turnaround. (Read More)
  4. Spanish Broadcasting Systems (SBSA) - Activist shareholders are pressuring this small company to unlock value through a sale, suggesting that it could obtain a price more than 100% higher than where it's trading now. Apparently, the company has many interested suitors but a stubborn management. (Read More)
  5. Yahoo (YHOO) - Yahoo is continuing to play hard to get as it attempts to ward off an acquisition by cash-heavy Microsoft. The company continues to insist that it the current offer substantially undervalues the company given its international holdings in high-growth Asian markets. (Read More)

Technical Analysis

  1. BMC Software (BMC) - Intermediate-term bullish symmetrical continuation triangle.
  2. Casella Waste Systems (CWST) - Intermediate-term bullish continuation wedge.
  3. Suntech Power Holdings Corporation (STP) - Intermediate-term bullish continuation wedge.
  4. Amphenol Corporation (APH) - Intermediate-term bullish continuation wedge.
  5. Altria Group (MO) - Intermediate-term bullish continuation diamond.

Stock of the Week : Countrywide Financial (CFC)

Countrywide Financial Corp (NYSE: CFC) shares are down significantly on reports it is being investigated by the Federal Bureau of Investigation for securities fraud, specifically whether it didn’t disclose its true financial condition and the poor quality of its mortgage loans in required regulatory filings. This new FBI investigation is in addition to SEC and Congressional probes already looking into the company. (Read More)

Article of the Week : Has the Fed Lost Control?

The Federal Reserve is set to cut interest rates yet again after recent reports suggested that the economy significantly worsened. The move comes conveniently after a weaker than expected employment report that essentially put the nail in the coffin for the US economy. (Read More)

Final Words

The future of the U.S. economy remains uncertain with more problems in the financial markets. Meanwhile, some pressure is being relieved with an increase in consumer spending and strong earnings by Wal-Mart and McDonald's. In the end, the only thing certain at this point is more volatility as investors sort out the good from the bad.

3/10/2008 8:22:52 PM UTC  #     |  Trackback
 Tuesday, March 04, 2008
Newsletter for March 4, 2008

Weekly Market Overview

US. stocks sank more than 300 points early this week amid bleak corporate forecasts led by the financial sector. Many economists are also concerned that the Federal Reserve may be acting too strongly to lower interest rates at the expense of the declining U.S. dollar and consumer. Federal Reserve officials also warned that more home foreclosures were coming leading to more bank write-downs despite sound cash levels. All in all, the soft economy and weak consumer spending is creating a difficult profit environment for most firms while investors are quick to sell given the bleak outlook. On a positive note, this could mean that there are many deals to be had in today's market!

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.
  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.
  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.
  4. The 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.
  5. Ceridian Corporation (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.

Technical Analysis

  1. Arthrocare Corporation (ARTC) - Intermediate-term bullish head and shoulders bottom.
  2. Bunge Limited (BG) - Long-term bullish continuation diamond.
  3. Harmony Gold Mining Company (HMY) - Long-term bullish megaphone bottom.
  4. Viropharma Incorporated (VPHM) - Intermediate-term bullish bottom triangle.
  5. Omnivision Technologies (OVTI) - Intermediate-term bullish double bottom.

Stock of the Week : Ackman Vs. Whitman (MBI)

Bond insurer MBIA, Inc. (NYSE: MBI) seem to be dropping like rocks, but that isn’t deterring respected value investor Martin Whitman’s Third Avenue Funds from increasing its stake in the company. The move pits him directly against the famous activist investor Bill Ackman’s Pershing Square, which has taken an aggressive short position in the bond insurers and sees imminent bankruptcy. So, where should you place your bets? (Read More)

Article of the Week : Short Selling for the Average Investor

Short selling has traditionally been a technique reserved for the expert traders and investors, but a new set of ETFs released by ProShares may quickly change the landscape. Now, average investors can do more than just sit on the sidelines in a bear market – they can “safely” purchase ETFs that will enable them to profit from declines in the marketplace without being forced to open a margin account. (Read More)

Final Words

The market remains depressed and investors should be careful when investing in these climates. It is best to keep in stocks with international exposure and no credit risk.

3/4/2008 8:44:43 PM UTC  #     |  Trackback
 Thursday, February 28, 2008
Newsletter for February 29, 2008

Weekly Market Overview

U.S. stocks trended down this week as growing concerns about the housing market and consumer spending sparked renewed worries about stagflation. A series of poor jobs reports, declining interest rates, a rise in oil prices, increasing credit card delinquencies, and deepening troubles in the housing market all strongly point to this direction. The Federal Reserve insists that these rate cuts are necessary in order to boost the economy, which it deems more important than the consumer. The result is a bet that the economy will turn around at the cost of skyrocketing consumer prices - a theory that, if wrong, could spark the feared stagflation and send the economy into new lulls. In the end, these negative concerns about the future combined with positive interest rate activity is making this market extremely volatile.

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.
  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.
  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.
  4. The 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.
  5. Ceridian Corporation (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.

Technical Analysis

  1. Barrick Gold Corporation (ABX) - Intermediate-Term Bullish Continuation Diamond.
  2. Central European Distribution Corporation (CEDC) - Intermediate-Term Bullish Symmetrical Continuation Triangle.
  3. Omnivision Technologies  Incorporated (OVTI) - Intermediate-Term Bullish Head and Shoulders Bottom.
  4. Petroleo Brasileiro Sa Petrobras (PBRA) - Intermediate-Term Bullish Upside Breakout.
  5. Cogent Incorporated (COGT) - Intermediate-Term Bullish Double Bottom.

Stock of the Week : Elan Corporation (ELN)

Elan Corporation (NYSE: ELN) is a pharmaceutical turnaround story that may soon get even better. The pharmaceutical company had a brush with bankruptcy in 2002 and reported a wider-than-expected loss of $405 million for 2007. However, the company said it expects a sharp turnaround in 2008, forecasing revenue growth of over 30 percent and possibly exceed $1 billion, driven by sales of its flagship multiple sclerosis drug Tysabri. The company currently receives 50 percent of the revenues from the drug when sales exceed $700 million. Altogether this turnaround story already has shares trading near their 52-week high, but many investors believe that they could get much higher next year. (Read More)

Article of the Week : Short Selling for the Average Investor

Short selling has traditionally been a technique reserved for the expert traders and investors, but a new set of ETFs released by ProShares may quickly change the landscape. Now, average investors can do more than just sit on the sidelines in a bear market – they can “safely” purchase ETFs that will enable them to profit from declines in the marketplace without being forced to open a margin account. (Read More)

Final Words

The market remains depressed and investors should be careful when investing in these climates. It is best to keep in stocks with international exposure and no credit risk.

2/28/2008 7:33:34 PM UTC  #     |  Trackback
 Tuesday, February 19, 2008
Newsletter for February 19, 2008

Weekly Market Overview

U.S. stocks were mixed today after oil prices soared above $100 barrel and reignited fears that inflation will further injure the already troubled economy. These higher oil prices combined with falling home prices and a volatile stock market has many consumers curbing their spending and worried about the future. The Dow Jones moved down around 11 points while other major indexes also closed lower on the day, but advacing issues are head of decliners on the New York Stock Exchange. In the end, the economy still can add oil back to its concerns today as investors struggle to grip just how severely all of this will affect the all-important consumer.

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.
  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.
  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.
  4. The 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.
  5. Ceridian Corporation (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.

Technical Analysis

  1. Priceline.Com Inc. (PCLN) - Intermediate-term bullish symmetrical continuation triangle.
  2. Hansen Natural Corporation (HANS) - Intermediate-term bullish symmetrical continuation triangle.
  3. Millicom International Cellular S.A. (MICC) - Intermediate-term bullish symmetrical continuation triangle.
  4. Genentech Inc (DNA) - Intermediate-term bullish triple bottom.
  5. Superior Essex Incorporated (SPSX) - Intermediate-term bullish megaphone bottom.

Stock of the Week : Verizon and AT&T (VZ, T)

Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T) shares moved sharply lower after the two telecom providers announced new flat-rate plans. The move marks a shift from high margin services to lower margin staples that could put pressure on margins and may spark further reduction in prices aimed at increasing users. The commoditization of the wireless voice service industry is a move that many investors expected but dreaded as it could end up curbing growth rates and reducing valuations for many telecom providers. So, what does all of this mean for shareholders of VZ and T? (Read More)

Article of the Week : Short Selling for the Average Investor

Short selling has traditionally been a technique reserved for the expert traders and investors, but a new set of ETFs released by ProShares may quickly change the landscape. Now, average investors can do more than just sit on the sidelines in a bear market – they can “safely” purchase ETFs that will enable them to profit from declines in the marketplace without being forced to open a margin account. (Read More)

Final Words

The market remains depressed and investors should be careful when investing in these climates. It is best to keep in stocks with international exposure and no credit risk.

2/19/2008 11:10:49 PM UTC  #     |  Trackback