Weekly Market Overview

Stocks began the week with a decline despite a Federal Reserve fueled rally late last week after rates were cut. Technology companies led the pack with gains in spending without significant inventory buildup. Meanwhile, General Motors shares fell amid a strike by UAW workers after the union failed to meet a deadline for contact negotiation. Internationally, the USD also reached a new low against the Euro while oil came under selling pressure from fears of a tropical depression in the Gulf of Mexico. In the end, this week promise to be interesting as investors gauge market strengths post-rate hike.

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)

Technical Analysis

Computer Programs & Systems Inc. (CPSI) - Long term bullish double bottom.
Verisign  Incorporated (VRSN) - Intermediate term bullish symmetrical triangle.
Seattle Genetics  Inc. (SGEN) - Long term bullish upside breakout.
Optium Corporation (OPTM) - Intermediate term triple bottom.
Take-Two Interactive Software (TTWO) - Intermediate term bullish head and shoulders bottom.

Stock of the Week : Brinks Buyback Not Enough (BCO)

The Brink's Company (NYSE:BCO) took its first major step towards unlocking shareholder value recently after receiving a lot of pressure from Thomas Hudson's Pirate Capital. The security company agreed to insitute a $100 million share repurchase to please the activist shareholder, according to an 8-K filing with the SEC. (Read More)

Article of the Week : Credit Crisis Threatens Activist Investors

Activist investors have worked to unlock value for shareholders in hundreds of companies over the past few years by holding a sword to the throats of board members and executives. The results have been spectacular with one study reporting that activism targets between 2001 and 2005 outperformed the overall market by more than 7 percent in the short term. Unfortunately, this shareholder revolution may be coming to an end as the credit crunch puts a hold on many common activist strategies. (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.

Weekly Market Overview

Stocks began the week with a decline as investors wait to see whether or not the Federal Reserve will cut interest rates tomorrow. There is concern amongst traders that the Federal Reserve will only cut interst rates by 25 basis points as opposed to 50 basis points. Trading is expected to remain light ahead of the decision as the market is very divided as to the magnitude of any cuts creating a two-way market. The rumors have caused many financial stocks to decline as many banks had hoped for a 50 basis point cut. Brokerage stocks also declined on poor earnings. In the end, this week will largely depend on the FOMC decision.

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)

Technical Analysis

1. Corcept Therapeutics Incorporated (CORT) - Long term bullish head and shoulders bottom.
2. Radioshack Corporation (RSH) - Intermediate term bullish continuation wedge.
3. Mirant Corporation (MIR) - Intermediate term bullish head and shoulders bottom.
4. Tyco International Limited (TYC) - Intermediate term bullish symmetrical continuation triangle.
5. Lockheed Martin Corporation (LMT) - Intermediate term bullish symmetrical continuation triangle.
   

Stock of the Week : Lichtenstein Pushes for Changes at IKON (IKN)

IKON Office Solutions (NYSE:IKN) may face some problems with activist investor Warren Lichtenstein's Steel Partners who believes the company's shares continue to trade well below intrinsic value, according to a Schedule 13D/A filing with the SEC. Shareholders are hoping that the activist investor can work to correct this gap in valuation and unlock value. (Read More)

Article of the Week : How to Analyze the Retail Industry

Retail is the second largest industry in the United States both in the number of stores and employees. It collectively generates approximately $3.8 trillion in sales annually ($4.2 trillion including food sales), which works out to approximately $11,993 per capita. Not only do people spend a significant portion of their income on retail products, but 11.6% of the U.S. population is also employed by retail establishments. In fact, retail trade accounts for about 12.4% of all business establishments in the United States with the largest obviously being Wal-Mart. (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.