Last week, a historically slow time on Wall Street brought substantially lower volume to the major indices throughout the shortened holiday trading week.
Given the lack of earnings and political catalysts during this period, it is particularly tough for day-traders to try and game market volatility. In situations like that, it is best to do nothing.
That said, there is an interesting opportunity for nimble investors: Monsanto (MON) , which reports earnings on Jan. 7.
Monsanto, which was just named one of BusinessWeek’s most influential companies in the world, just reiterated its intention to double 2007 profits by 2012 in December. This is due in part to an important metric called the global corn stocks-to-use (the amount of corn in stock which can be sold right now) over global corn consumption (the amount of corn that the world needs). This ratio is at its lowest level ever, solidifying Monsanto’s long-term economic outlook.
Feed stocks to use are below the nearly 50-year average of 24%, and this all-important ratio has not seen this current level in almost 35 years. With revenue of $4.2 billion in 2007, back in late December, amidst all of the economic and financial commotion, Monsanto projected that its revenue in 2009 will be around $7.2 billion to $7.4 billion and $9.5 billion to $9.75 billion by 2012. Few, if any, companies have used the recent drop in the stock market to raise their revenue guidance, and given the fact that shares of Monsanto are sitting near their 52-week low, it is hard not to see how shares of Monsanto do not move substantially higher in the coming weeks ahead.
Monsanto which trades with a forward P/E of 12.75 has operating margins of 25.39% versus the industry average of 17.02%, and gross margin profit of 54.35% versus the industry average of 51.10%. Monsanto’s quarterly revenue growth is nearly double the industry average at 50.90% versus 25.70%.
For more ideas, always check out the Biggest Percentage Losers, a list of stocks that lost big the day before, because they can snap back hard.
When you check this list on Stockpickr, you can see which stocks are owned by the quality hedge funds and mutual funds. Pay attention to those. The funds will be buying at the lower prices and likely supporting the stock.
Ditto for the 52-week low list. You must check these two lists every day if you hope to find volatile stocks.
Here are two more wortwhile lists.
Stocks Rising on Unusual Volume: These are stocks of potential breakouts.
Stocks With Unusual Options Activity: Does someone know something?
By James Altucher. At the time of publication, Altucher had no positions in stocks mentioned.
Posted on Dec. 29, 2008
