Allegiant Travel (ALGT): Earnings short. Allegiant will likely see profit taking into its quarter given the stocks rise over the past 6-months, and the fact that the company already pre-announced better than expected earnings of $1.34 to $1.38 for the quarter. Even still, the path of least resistance for this company and stock, given the bleak macroeconomic outlook is down. Ultimately a longer than expected recession will lead to lower volumes in their tourist based end markets as weak demand shrinks Allegiant’s high margin ancillary hotel business. Acting as a double negative in both volume and price which will significantly hurt the stock price especially since the stock is expensive and sitting at an all time high. Allegiant’s hotel business revenue is derived from the sale of vacation packages including hotels, rental cars, show tickets, night club packages and other attractions; the sale of advance seat assignments; the sale of beverages, snacks and other products on board the aircraft; charging a fee for using our reservation center or website to purchase air travel; the collection of checked bag and overweight bag charges; charging a fee for unlimited changes to reservations; and several other revenue streams. With the majority of Allegiant’s routes focused to Las Vegas (36), Orlando (27), and Tampa/St. Petersburg (14) Allegiant is an indirect way to play the housing collapse in those areas.

Axsys Technologies (AXYS): Long ahead of earnings. Currently the company is up for sale, and any update on the possible $60 price offer could move the stock into the mid-$40s. We know Obama isn’t going to short change the defense sector---he just wanted to make the budget ‘smarter’ this is where Axsys comes into play. Axsys Technologies is a global leader in the design and development of high performance surveillance cameras, imaging systems and related motion control technologies used in various military applications around the world. They make cameras and ultra-high powered lenses used in highway surveillance all the way to unmanned bombers in Afghanistan and Iraq. Their largest customers include Raytheon and the British Aerospace. Over the past 5 years shares of Axsys Technologies are up over 300% versus a decline in the S&P 500 of 45%. From 2004 to 2007 Axsys’s net sales went from $78.2 million to $171.6 million, while operating income went from just $6.8 million t $23.3 million in that time period. Overall, the firm’s backlog, which is a measure of existing orders versus current production levels, grew from $75.6 million to $140.2 million from 2004 to 2007. Backlog here is $200 million dollars with 91% of that backlog being shipped within 12 months. The company recently completed first round action bids from larger defense contractors saying “The Rocky Hill, Conn.-based Company recently said that a steep decline in its share price has led to an "increasing number of overtures from interested strategic buyers."---stock gets bought out by RTN there largest customer for $60

Forest Laboratories (FRX): Long ahead of earnings this week. With $2 billion in cash and no debt on its balance sheet, shares of Forest Laboratories are an interesting long particularly given the recent consolidation in the biotech sector. The company is trading for just 6.62x forward earnings estimates per share, and has several drugs ending phase III testing which may sever as an additional catalyst throughout 2009. Shares of Forest Labs are moving higher this week.

First Cash Financial Services (FCFS): Long ahead of earnings this week. First Cash operates 94 U.S pawn stores and 160 U.S short-term loan stores. First Cash is also positioned to capitalize off of the slowing Mexican economy, as Mexico’s gross domestic product will likely shrink by 1.6% in 2009 hurt by the fact that almost 80% of Mexico’s exports are sent to the slowing U.S economy. First Cash is the second largest pawn-shop operator in Mexico, operating north of 200 stores. For the full year of 2008, First Cash’s earnings per share were up 35%, same store sales were up 13%, total revenue was up 19%.

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