Contest Stocks VII
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average rating: 3.75 / 8 ratings
Created by James Altucher
DESCRIPTION:

Date updated:05-20-2007

Nothing is more depressing for a shareholder than to see a great company's stock go into a slump. This week I think the depression is over for several favorites as we watch them begin to break out.

Other portfolios that I used to research this portfolio include:

Stocks rising on unusual volume.

Top 10 potential short squeezes (this portfolio is like the gift that keeps giving.

The Online Advertising Index - this portfolio has had success calling the acquisitions of TFSM and AQNT and I think there are still several to go.

Biggest % Losers - always a good shopping ground for snapbacks.

Latest Activist situations.

symbol name last price % change open
  • +
  • NYX
    Nyse Euronext
  • $25.78
  • -0.39%
  • $25.91

NYX has been in a slump this past two months after hitting an alltime high at 112.00. There's been a lot of discussion both in Cramer's columns and on Stockpickr about the recent slump. However, lets just take a step back and look at the basic fundamentals. - $13 billion market cap, but $1 billion in cash and no debt, leaving it with about a $12 billion enterprise value and an extremely healthy balance sheet. Particularly when compared with a competitor like NDAQ that has $2 billion in cash but over $1.5 billion in debt and lower cash flows ($341mm in EBITDA) to pay that debt. - NYX has EBITDA of $1 billion and that number is expected to rise double digits over the next year. With an Enterprise Value over EBITDA multiple of just 11 that puts it in buyout territory. Now, I don't think its going to get acquired but if it any point they can't find accretive acquisitions it would make sense for them to use cash to buyback shares at these levels. Particualrly since they can leverage up at 6% and buyback shares with an earnings yield of almost 10%. Which, by the way, every hedge fund and buyout fund looks at those types of numbers as well. - Earnings are expected to go from $1.64 per share in 2006, to $2.48 per share in 2007 to $3.37 per share in 2008. The only other place I'm seeing that kind of growth with a market cap this big is on GOOG. - Last week, large NYX shareholder Atticus Capital, took a 4% stake in the Bombay Stock Exchange. This just underlines how in our trade deficit reality, one of our biggest exports is the US expertise in financial services and innovation. The NYX is quietly becoming the world's financial marketplace. This is a 50 year game plan and they are going to be the winner. Atticus Capital, which is one of Jim's favorite hedge funds according to a video where we discussed this, understands this implicitly and has been placing their bets. Click here for the Atticus Capital portfolio. I think this stock makes its move back to $100 quickly and can even hit there this week.

People owning NYX also tend to own: AIGBACCPWRDISFWLTGS

TheStreet.com Rating: D+ What is this?

  • +
  • JRCC
    James River Coal
  • $19.36
  • +0.10%
  • $19.49

JRCC making its way to our stocks rising on unusual volume list. This stock has been nothing but pure pain. Going from the 40s to the 6s in the span of a year. They are a coal company and with the price of coal steadily rising, everyone was making a big bet. But, unfortunately, the costs to extract that coal were rising steadily with the price of oil. So the big bet was for nothing. Until now. With oil holding steady and coal rising I think now is the time to place the bet on JRCC. It already trades at 11x trailing cash flows and that multiple is going to go lower as the spread between the cost of coal and the cost to extract it rises. And if you don't believe be, you can always go over to Street Insight and ask Grange Johnson. We track his portfolio at Stockpickr at the LaGrange Capital portfolio he's been loading up on JRCC.

People owning JRCC also tend to own: DENNDRTEHNZIASGMCDNOOFPBY

TheStreet.com Rating: C What is this?

  • +
  • CKR
    Cke Restaurants
  • $8.60
  • +0.23%
  • $8.58

CKR is a classic case of the short sellers versus the deep value investors. The Chuck E. Cheese restaurant chain finds its way onto our Top 10 potential Short Squeezes list. Other plays on the list, including BSG (which recently announced it was getting acquired) and Perelman play MFW, have already had significant runups. CKR has a short interest ratio of 6, meaning it will take 6 days of nothing but short-covering for the shortsellers to stop the pain if the stock starts to move. Meanwhile, on the side of the forces of good are deep value investor Tilson Focus Fund run by my friend Whitney Tilson (who has had huge success with MCD and WEN, two other fast food chains) over the past 2 years and Hayground Cove who has recent success with fast food chain DENN and is run by retail specialist Jason Ader.

People owning CKR also tend to own: AVNCBABYBRKRBSGGGPMFWNTRI

TheStreet.com Rating: C What is this?

  • +
  • ADI
    Analog Devices
  • $29.84
  • +0.34%
  • $29.49

- Earnings on Tuesday - $2bb in cash, no debt. - 27% Year over year earnings growth - trades for 13x EBITDA with 20% growth expected over the next year - met analyst estimates for the past 4 quarters - will probably follow TXN's success.

People owning ADI also tend to own: CSCOUARMAIGALLAPACATDD

TheStreet.com Rating: B- What is this?

  • +
  • ALOT
    Astro-med
  • $6.63
  • -3.21%
  • $6.75

Quoting the Game Plan for Next week: ALOT , AstroMed Technologies (5)- Boeing trade, they make the software and hardware for Boeing's cockpit printer. A small cap ($60M market cap) with a stellar balance sheet and no long term debt. Boeing orders should incrementally increase sales and EPS.

People owning ALOT also tend to own: ADIBABYCKRHRAYHURCJRCCKONG

TheStreet.com Rating: C What is this?

  • +
  • MM
    Mm
  • $0.00
  • N/A
  • $N/A

Also from the Game Plan of the Week: Metal Management (MM) is a very cyclical stock that is tied to demand for its non-ferrous scrap metal. The company's customers are steel mills, metal brokers, foundries and smelters. The metal that is recycled is inventoried as ferrous metal (contain iron or iron alloys) or non-ferrous metal (aluminum, brass, tin, copper, zinc). Ferrous metal has experienced weak demand domestically and although there is demand oversees to meet supply, pricing is hurt by the cost of transportation. Non-ferrous metal has better pricing, stronger demand, and improving margins. Prices are increasing for two reasons. The commodity prices of copper, aluminum and stainless steel are on the rise AND China is consuming much more non-ferrous metals due to copper shortages. If base metal prices for non-ferrous metals remain strong and China continues their demand, sales volumes of non-ferrous metals and incrementally higher margins should flow through to Metal Management's profit for the quarter.

People owning MM also tend to own: APCATWCYESVHOCIOCNVL

TheStreet.com Rating: No Rating What is this?

  • +
  • KONG
    Kongzhong Corpora
  • $14.16
  • -0.77%
  • $14.08

- trades for less than 5x cash flows - hit over past year because of restrictions from the Chinese govt but that is fully baked in. - more than half the mkt cap is in cash. - earnings on Monday afternoon along with china gaming company NTES

People owning KONG also tend to own: AGIXARIACPSLINODLTONNOECORS

TheStreet.com Rating: C What is this?

  • +
  • HRAY
    Hurray! Holding C
  • $5.1099
  • +2.61%
  • $5.12

- same as KONG above. Drastically oversold, trades at 6xEBITDA - 70% of market cap in cash. - earnings on Thursday.

People owning HRAY also tend to own: CTRPHMINSINASNDAIDIXSUBRKB

TheStreet.com Rating: D What is this?

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