My 2 picks for 2'nd half of 2005

silk · Jun 15, 2005

Here are my picks. Please share your picks if you like and give feedback on my picks and those of others. Enjoy.

My long pick is SOHU. ($21.34 6/15/05) What currently is so exciting about SOHU is that its search engine SOGOU.COM has increased its traffic by 400% over the last few months and is now neck and neck with Yahoo's chinese offering as the #3 search engine in china. Also SOHU owns 3 other web properties each of which is in the top 30 of chinese websites based on traffic data by Alexa.com. SOHU is also the #2 web portal in China. One out of every 20 internet users on planet visits one of SOHU's sites. This provides lots of traffic for its quickly growing search engine. The amazing thing is that you get all of this for only $750 million. In comparison, ASKJ has a market cap around $2 billion with far less traffic. In my mind SOHU's dominant position in the fastest growing internet market should be worth at least ASKJ's valuation. That would be a tripple. Technically, SOHU just broke out from a multi-month base and its moving averages have just recently turned up. A few more points and it will be hitting 52wk high lists. The PE is very low for an internet stock and SOHU beat earnings for the last quarter which broke a string of 3 dissapointing quarters. Fundamentals and chart both turning up after a 12 month slumber. Target $30-$50.

My short pick is FTO. ($55.85 pre-split 6/15/05). FTO is a very small independent oil refiner. It operates 2 small refineries and has few growth prospects. It trades at 13 times earnings when refining stocks have historically traded at 5-7 times peak earnings. Refining margins are most likely at a peak so FTO should probably be trading at the $35 pre-split that it was at just a few months ago. VLO recently bought out PCO for a 10 pe. So FTO is trading at a 30% premium to that take out price which many analysts questioned as being too expensive. Margins can only fall for FTO from here. If oil prices fall the sector will likely take a big hit. And unlike exploration companies that own oil and gas fields, FTO will not necessarily benefit from further increases in the price of oil. If there is an oil shock a global recession would likely kill refining margins because of less demand for diesel/gasonline/jet fuels ect. FTO may be the loser regardless of which way crude goes from here. Wind fall profits from sour margins have been contracting in the last several months so it seems that fundamentals may have peaked last quarter. The stock is in blow off phase now. Target $38-$42 pre-split.

Disclosure, i have these 2 positions.

da-net · Jun 15, 2005

your SOHU long pick looks good, target I am not sure about. I hope your play on FTO works out for you, but I would not play it short.

da-net · Jun 15, 2005

forgot to list my pick....SCLN long stock or options...good uptrend, insiders buying...disclosure I own options on this one... currently looking at two ther small plays that have options...when ready I may list them...

Slim Harpo · Jun 15, 2005

I like a few stocks at the moment but if I had to bet on only 1 stock from tomorrow until the end of 2005 it would be:

DSTI which after todays close is $13.45

Trend Fader · Jun 15, 2005

Quote from silk:

My short pick is FTO. ($55.85 pre-split 6/15/05). FTO is a very small independent oil refiner. It operates 2 small refineries and has few growth prospects. It trades at 13 times earnings when refining stocks have historically traded at 5-7 times peak earnings. Refining margins are most likely at a peak so FTO should probably be trading at the $35 pre-split that it was at just a few months ago. VLO recently bought out PCO for a 10 pe. So FTO is trading at a 30% premium to that take out price which many analysts questioned as being too expensive. Margins can only fall for FTO from here. If oil prices fall the sector will likely take a big hit. And unlike exploration companies that own oil and gas fields, FTO will not necessarily benefit from further increases in the price of oil. If there is an oil shock a global recession would likely kill refining margins because of less demand for diesel/gasonline/jet fuels ect. FTO may be the loser regardless of which way crude goes from here. Wind fall profits from sour margins have been contracting in the last several months so it seems that fundamentals may have peaked last quarter. The stock is in blow off phase now. Target $38-$42 pre-split.

Disclosure, i have these 2 positions.
More...

Nice analysis but one thing i learned about shorting stocks is that you need a near term catalyst.. u cant just short because u think stock is overvalued.

Global recession or drop in oil prices does not cut it... u can make the same case for almost any oil stock.

Oil sector is deep cyclical so as long as oil stays high.. dowside is capped.

My favorite potential short is HANS.. the stock is just a one product beverage company.. once their sales for monster start to slow down.. the stock will get cut in half.. in the meantime enjoy the power rally. Once early signs of slowing demand trickle in and the stock starts to breakdown.. is when the short comes into play.

dividend · Jun 15, 2005

silk, this 'increasing web traffic' == 'increasing profits' reminds me of the late 90s when a million "hits" to the website would pop the stock price

Hydroblunt · Jun 15, 2005

Uhh you're a few years late on SOHU, the great run up already happened.

Here is a short pick, check out GAP. Make sure you can read financial statements & conference calls. Hilarious.

dividend · Jun 16, 2005

i dont see why sohu cant run up again... at least thats the lesson to be learned from taser

Quote from Hydroblunt:

Uhh you're a few years late on SOHU, the great run up already happened.

Here is a short pick, check out GAP. Make sure you can read financial statements & conference calls. Hilarious.
More...

Hydroblunt · Jun 16, 2005

Quote from dividend:

i dont see why sohu cant run up again... at least thats the lesson to be learned from taser
More...

And I don't see why Dow cant go to 20,000 by the end of the year so anything is possible.

Sure SOHU can run up but in percentage terms it won't even come remotely close to the real run up 2.5 years ago. Either way, it's very late to be getting excited about this stock.

Lights · Jun 18, 2005

i think telecom/cable is the growth story from here on. voip, cable content.

(insert star wars themesong here)

Quote from silk:

Here are my picks. Please share your picks if you like and give feedback on my picks and those of others. Enjoy.

My long pick is SOHU. ($21.34 6/15/05) What currently is so exciting about SOHU is that its search engine SOGOU.COM has increased its traffic by 400% over the last few months and is now neck and neck with Yahoo's chinese offering as the #3 search engine in china. Also SOHU owns 3 other web properties each of which is in the top 30 of chinese websites based on traffic data by Alexa.com. SOHU is also the #2 web portal in China. One out of every 20 internet users on planet visits one of SOHU's sites. This provides lots of traffic for its quickly growing search engine. The amazing thing is that you get all of this for only $750 million. In comparison, ASKJ has a market cap around $2 billion with far less traffic. In my mind SOHU's dominant position in the fastest growing internet market should be worth at least ASKJ's valuation. That would be a tripple. Technically, SOHU just broke out from a multi-month base and its moving averages have just recently turned up. A few more points and it will be hitting 52wk high lists. The PE is very low for an internet stock and SOHU beat earnings for the last quarter which broke a string of 3 dissapointing quarters. Fundamentals and chart both turning up after a 12 month slumber. Target $30-$50.

My short pick is FTO. ($55.85 pre-split 6/15/05). FTO is a very small independent oil refiner. It operates 2 small refineries and has few growth prospects. It trades at 13 times earnings when refining stocks have historically traded at 5-7 times peak earnings. Refining margins are most likely at a peak so FTO should probably be trading at the $35 pre-split that it was at just a few months ago. VLO recently bought out PCO for a 10 pe. So FTO is trading at a 30% premium to that take out price which many analysts questioned as being too expensive. Margins can only fall for FTO from here. If oil prices fall the sector will likely take a big hit. And unlike exploration companies that own oil and gas fields, FTO will not necessarily benefit from further increases in the price of oil. If there is an oil shock a global recession would likely kill refining margins because of less demand for diesel/gasonline/jet fuels ect. FTO may be the loser regardless of which way crude goes from here. Wind fall profits from sour margins have been contracting in the last several months so it seems that fundamentals may have peaked last quarter. The stock is in blow off phase now. Target $38-$42 pre-split.

Disclosure, i have these 2 positions.
More...