Stony's Saturday Reader*

and friggin NUAN is on fire.

 

I'm back in the Yinglee Green ! - YGE -
I don't know why.

Want to buy SYNA and I think I shall. Announced a pretty impressive buyback.

Very interesting chart developing on MDCO
(Warrior) a pop through $20 would yield us a quick $5 bucks providing they get their ducks in order with this off patent issue....

Somebody finally said something good about SIRF, I'll track it down later and post... still wary ... but that Google phone is just days away... CREE is looking played out moving on. (short away JR!)
~stoney

 

In on Synaptics! w/ da Cree dough....

Only stocks in my universe still to buy-

SIRF

GHDX

PTEC

CRY

ARTE

AKAM

VNUS

MDCO

 

>>> One of the most important things about investing is in order to turn a market around you really do need the right song. This works for most things in life too but certainly investing needs an up beat and we found the right theme song for this week don't you think? ~stoney
DOW +214.12 (+1.75%)
NASDAQ +25.08 (+1.08%)
S&P 500 +20.63 (+1.54%)

 

Internet manager rates most techs a sell; but does have 2 buys AND 1 IS SERF/////!?
Marketwatch - February 12, 2008 11:12 AM ET

Related Quotes
Symbol Last Chg
YHOO Trade 29.66 -0.21
MSFT Trade 28.32 +0.11
GOOG Trade 529.19 +8.03
SIRF Trade 7.29 +0.11
TSCM Trade 11.04 -0.22
IBAS Trade 4.93 +0.47
JNPR Trade 26.53 +0.71
JUPM Trade 3.10 -0.02
GYI Trade 24.34 +0.17
WZEN Trade 3.20 -0.03
Real time quote.

BOSTON (MarketWatch) -- Ryan Jacob, manager of the Jacob Internet fund, says that the revaluation of multiples for all stocks is hitting the technology sector particularly hard and noted that investors will be dealing with "significant headwinds" in tech stocks all year.

In a radio interview with Chuck Jaffe, MarketWatch senior columnist, Jacob noted that investors who want to swim upstream need to concentrate their picks, choosing fewer stocks and picking them with particular care. Not surprisingly, the majority of stocks he reviewed during the interview were classified as sells.

Jacob said he expects a Yahoo-Microsoft merger deal to get done eventually, most likely over the next few months and at a price below the $40 per share that some Yahoo investors are hoping for. That said, the uncertainty over the deal made Yahoo (YHOO) a hold in Jacob's book and made Microsoft (MSFT) a sell based on its short-term characteristics -- even though he noted that he likes the looks of the stock for the long haul.

Jacob put buy rating on Google (GOOG) and Sirf Technology Holdings (SIRF), the latter in spite of a 70% haircut in its stock price in the first six weeks of 2008. He put a hold label on TheStreet.com (TSCM).

Every other recommendation during the interview was a sell: Ibasis (IBAS), Juniper Networks (JNPR), Jupitermedia (JUPM), Getty Images (GYI), Webzen (WZEN) and NetSuite (N).

In another interview from Jaffe's weekday radio show, Ken Shreve, markets desk anchor for Investor's Business Daily, said that a screen of stocks whose "relative strength line" hit a new high on Monday provided him with four stocks poised to be emerging leaders when the stock market turns around.

The relative strength line compares a stock's price performance against the Standard & Poor's 500. Shreve said it tends to deliver stocks with strong fundamentals and technicals and "robust earnings increases."

The four stocks: Somanetics (SMTS), Bucyrus International (BUCY), Western Digital (WDC) and State Street (STT); Shreve said the screen is not a purchase recommendation, but rather an indication of which stocks to look at first when IBD's market model turns positive and suggests buying again.

 

Of that other dudes stuff IBD guy... SMTS I used t own for a sleep drug which now there is no mention of but stock is anything but sleepy looking @$26... resting after a big vol surge breakout on no news which we always like-

Shares of Somanetics Corp (SMTS) jumped 6.82% on Thursday as volume surged almost three times the three-month daily average! There were no news or any significant events that could be detected.

Somanetics develops, manufactures, and markets medical devices primarily in the United States. It offers the INVOS System, a non-invasive patient monitoring system that provides continuous information about changes in blood oxygen saturation levels in patients with or at risk for restricted blood flow.

The company has a small market cap of only $357 million. It has more than $50 million in cash and no debt according to the latest Yahoo! financial data.

The company has been experiencing great growth in revenue and net profit over the last few years with the sale of the INVOS System.

Shares of SMTS closed at $26.80 on Thursday, which is just shy of the 52-week high of $26.88 reached on the same day.

~si

 

i actually like IBD. by the way i missed LZ. saw the upgrade and mised it pre mkt. punked out and it flew to 59.

 

that IBD got me in so much trouble, I'll never forgive them for how they got caught up in the internet craze and left us all hanging. I haven't been able to read it since. O'neal is a fraud in my view. And those " accumulation ratings " to think I once made buy and sell decisions off moving from " c" to " B "

That was a tough paragraph for me I'm baked now. This morning se$$ion was great. MELI was a traders delight if only one didn't have wives looking up carpets and sick 4 year olds downloading viruses on the one grubby laptop we all share so desperately...

Anyhoo, the longer we hold up 200 the more likely for an epic late sprint DOW UP 330 anyone?????

Doubt there's much to do now but you never know... that NUAN is it worth the effort???

So much in this thread has worked so well I'm almost afraid to push it.... Or is that the herb talking?

Boy at one point today I screamed at my wife " JUST FOLLOW THROUGH! " It felt so good to be the one indigent and yell that triumphantly! But what I was asking for was for her to sit cuddling my sick child so that he would stop screaming long enough for me to chase down the Rhodesian Ridgeback that just stole the only thing he's been able to eat with these soars in his mouth long enough for me to buy Yinglee Energy and WHAT! what now? Why is he crying? My wife had the nerve to leave his side to do something. To accomplish something. Arrrrg. How could she? Just follow through- sit there like I asked you, long enough for me to get his tea and make a trade and catch the dog, and put my hand down his throat, walk him too and get back to you! follow through BAbe, oh it felt so good to be on the right side of one of those general, question your work ethic, jabs she usually throws out, until I realized what I was asking for- her to do nothing, like I do.

Where the hell is Topdown by the way? ~stoney

 

Just getting to the table now. My first thoughts this morning was on American Superconductor, I shall be looking seriously at doubling DOWN as my cost is extremely HIGH as well I will be looking at
a falling knife, Carbon play Zoltek and my wife woke up today with her words of wisdom for the day " corporate jet, those aren't going out of favor... " so , alas, I'll be tearing apart Textron too and any others I can find.

As this Saturday reader winds to a close this week, I must tackle the prospect of whether it should just keep rambling on Saturday after Saturday.... or if it should end triumphantly after predicting an up week- several days in a row in fact- when no one else would... and come back on occasion, when the world events and the stock research warrant it? ~ stoney

 

The question of the day-

‘We flagged all periods since 1948 when the unemployment rate increased by greater than or equal to 0.6 percentage points over a 12 month period. There have been 10 prior episodes where this has occurred. In all ten prior episodes we were in recession . . . ALL 10! This is the eleventh such occurrence. It could be different this time but as we wait to find out, I think it is prudent to lower the risk in our equity portfolio.’ (Myles Zyblock)?

The Answer of the day-

‘Since 1949 every government-sponsored stimulus package has worked.’ Stoney

From raymond james research-

This point counter-point recession question is precisely what the various markets are struggling with currently, which is why they too have had a point counter point. Consider this – we wrote about the Dow Theory “Sell Signal” that was registered on November 21, 2007 indicating the DJIA has been in a bear market since July 19, 2007. That was one of the reasons we began the new year in a pretty cautious mode and with an oversized cash position. Our other reasons for caution that we thought would get more clarity later in the year were: the housing situation; the subprime contagion; the political environment; and whether the under saved/overspent U.S. consumer is finally sated with debt.

However, we wrote about the equity market’s positive counter-point in our January 7, 2008 report, noting:

“The last time the Fed reliquidfied the system like this equities were over valued, while bonds, commodities, and real estate were under valued. Today the opposite is true. Indeed, using the Fed Model, which compares equities ‘earnings yield’ (earnings ÷ price) to the yield of the 10 year T’note, shows equities’ ‘earnings yield’ is over 4% greater than the benchmark T’note’s yield (according to a study of 29 various countries compiled by Lehman Brothers). The last time such a wide dispersion occurred was back in September 1974 right before the equity markets rallied strongly. While other valuation metrics (price to book, price to dividends, price to sales, etc.) are nowhere near as ‘cheap’ as they were in 1974, it is worth noting the Fed Model’s current valuation in light of the probability of lower short-term interest rates. We mention the Fed Model this morning for while we are cautious, we think it’s a mistake to become too bearish.”

Surprisingly, last week we received another positive counter-point for equities from a savvy seer who stated:

“Jeff, I thought you may find the attached of interest. You may be familiar with Ford Equity Research, one of the oldest independent equity research firms utilizing a dividend discount model to value equities since 1970, as well as indices. When fear and anxiety overwhelm Wall Street, I like to take a more objective view and lean towards valuation and numbers that minimizes the emotions from the decision making process. That being said, barring a black swan event, based upon Ford Equity’s model there have been few times (~3) in the past 30 years that the S&P 500 has been as cheap as it is today, and never in that time frame has a significant decline continued from these current valuation levels.”


So where does all this leave us? Well, it seems to us as though the equity markets put in a bottom of at least near-term significance on January 23rd when the DJIA recorded its second largest daily point swing in history from down more than 300 points in the morning to up nearly 300 points on the closing bell (the largest daily point swing since July of 2002). Indeed, we think the envisioned “selling stampede” ended on that date in session 18 of the typical 17- to 25-session “selling stampede” and are treating those late-January “lows” as the internal lows until proven wrong. Moreover, it is worth noting that a $10 per barrel drop in the price of crude oil is worth an additional one point of P/E multiple expansion for the S&P 500, or a 200-point rally. Further, the DJIA’s closing low of January 22, 2008 (11971) remains un-violated on the downside, as does the D-J Transportation Average’s low of 4140, and until those “internal lows” are breached, we are trading off of those lows bullishly.

As for individual stocks, we were pleased to see that the astute BlackRock organization filed on our Delta Petroleum (DPTR/$21.80/Strong Buy), acknowledging that it owns a large amount of shares. For the more timid types, it should be noted that DPTR has a convertible bond yielding 3.5% (terms should be checked before purchase). We also like our investment position in Strong Buy-rated Schering Plough (SGP/$19.77); except in this case we are using the 7.7%-yielding convertible preferred “B” shares. While this preferred is a relatively new one, we think the risk/reward metrics are similar to the last Schering Plough convertible preferred we owned, which provided us a total return of nearly 30% per annum over our two-year holding period. Like before, the common shares of SGP have recently been devastated because of the fallible “Enhance” study on Vytorin. Our doctor, as well as our analyst, suggests this study encompassed far too small a sample of participants and that Schering Plough’s Vytorin is still a good drug. As always, the terms of the convertible preferred should be checked before purchase.

The call for this week: We think the equity markets are involved in a downside retest of last January’s “lows.” Our notes suggest that six of 10 such retests “see” a slightly lower “low” combined with a selling volume dry-up. Consequently, we are treating the late-January “lows” as THE near-term “lows” until proven wrong . . .



:: On Wednesday January 23rd, when the DJIA had its second largest daily point-swing in history (600 points) and closed “up” nearly 300 points after a 300-point early session slide, we concluded that the selling stampede was ending (on day 20 of the envisioned stampede). We therefore recommended buying some trading, as well as investment, positions on that Wednesday. The vehicles of choice were the Ultra S&P 500 ProShares (SSO/$74.48) and the Ultra Real Estate ProShares (URE/$35.70). Subsequently, we recommended buying a second tranche of these positions last Monday as our confidence grew that the rally would extend.

We also recommended select investment positions, the most recent being Strong Buy-rated Schering Plough (SGP/$20.57), except in this case we are using the 7.7%-yielding convertible preferred “B” shares. While this preferred is a relatively new one, we think the risk/reward metrics are similar to the last Schering Plough convertible preferred we owned, which provided us a total return of nearly 30% per annum over our two-year holding period. Like before, the common shares of SGP have recently been devastated because of the fallible “Enhance” study on Vytorin. Our doctor, as well as our analyst, suggests this study encompassed far too small a sample of participants and that Schering Plough’s Vytorin is still a good drug. As always, the terms of the convertible preferred should be checked before purchase.

Other recent investment recommendations were 8%-yielding EV Energy Partners (EVEP/$28.39/ Outperform), Delta Petroleum (DPTR/$21.34/Strong Buy), Interoil (IOC/$22.63/Strong Buy), and Cogent (COGT/$10.03/Strong Buy), all of which have some kind of upcoming news that we think might provide an upside catalyst. Do these recommendations mean we think the difficult market environment is over? Not really, but we do believe the Fed, the banks, the politicians, et all, have a vested interest in preventing a recession and are pulling out all of the tools at their discretion. Whether they will be successful remains to be seen, but in the near term it looks like the various markets believe they will.

To this recession point, as I sit here in Jackson Hole staring out at the Grand Tetons from my friend’s house, we are discussing business. Mark owns a specialty steel company. When I asked him how business was he responded, “What recession?!” “Indeed,” he continued, “Our business is smoking.....

me too buddy, me too! ~ si